[ 2014-12-15 ]

British aid bankrolls Ghana’s legion of ghost civil servants
MILLIONS of pounds of European Union aid — much
of it from British taxpayers — has been paid to
“ghost workers” in Ghana in a huge corruption
scandal, The Sunday Times can reveal.

Tens, possibly hundreds, of thousands of
fictitious state employees were kept on Ghana’s
public payroll, which is partly financed by the EU
and Britain.

The European Commission has been accused of
covering up the scandal after the Accra government
“lost control” of its budget and EU officials
learnt of the potential scale of the abuse last
year.

About £400m of commission funds were allocated to
Ghana for 2008-13. More than £135m has been
withheld since last year after EU officials learnt
of the corruption — but they failed to inform
legislators and the public.

After being alerted by this newspaper’s
investigations, the commission informed the
European parliament last week of potential
irregularities and mismanagement. The EU’s
anti-fraud agency is looking into the claims.

According to some estimates, more than 1% of
Ghana’s GDP — several hundred million pounds
— was spent on “ghost workers” last year.
Some estimates say fictitious workers make up more
than 20% of the workforce.

Britain contributes more than 13.5% of the £6.3bn
of EU aid paid to developing countries each year.
However, the potential abuse in Ghana also affects
UK funds distributed by the Department for
International Development (DfID).

The scandal will put renewed pressure on the
coalition to justify the controversial policy of
ring-fencing aid from public spending cuts,
despite protests from Tory MPs.

The revelations also shine a light on a
controversial form of aid, known as “direct
budget support”, under which donor countries pay
money directly to countries such as Ghana without
having any means of monitoring how it is spent.

Britain, which is the largest individual donor to
Ghana, has allocated £250m in aid for the 2012-15
period. More than £9m has been withheld this year
following the revelations about the ghost workers
and Ghana’s wider budgetary problems.

Ingeborg Grässle, a German MEP who chairs the
budget control committee that scrutinises EU
spending, said the commission’s handling of the
affair “smacks of a cover-up”.

“It is outrageous that the European Commission
failed to inform the European parliament about the
potential loss of huge amounts of taxpayers’
money to corruption, even over a year after they
froze the payments to Ghana,” she said.

Britain continued to give direct aid to Ghana for
six months after the EU froze its contributions.

DfID said that it was now holding back payment to
Ghana amid a “discussion” on how Accra could
improve the management of its economy.

EU and British sources said they had no way of
investigating the allegations and had to rely on
the International Monetary Fund (IMF) to
scrutinise the Ghanaian budget.

A senior IMF official in Ghana said: “Is there a
massive fraud involving foreign aid fund? We will
not know the extent of it until a thorough reform
has taken place, but it is apparent that the huge
increase in the public payroll is the main reason
for the growing deficit.”

A senior EU source said the abuse of European
funds in Ghana was not as bad as the “grand
larceny”going on in some other African countries
that receive aid from both Brussels and national
capitals such as London.

“We have no hard evidence of the number of ghost
workers but the [state employees’] wage bill
makes up 70% of government spending and some
estimates put the [ghost workers’] figure at
20%,” the source said.

EU aid for developing countries in 2014-20 is
expected to be more than £37bn — and direct
budget support accounts for about a quarter of
that.

Last week a damning report by the European Court
of Auditors, in charge of monitoring EU accounts,
criticised as “inadequate” the way the
organisation accounted for the way its aid was
spent.

Pawel Swidlicki, of the Open Europe think tank,
said the scandal demonstrated that “pursuing
development policies via direct budget
contributions is a risky strategy — even in a
comparatively well-governed state like Ghana”.

Many developing countries lacked “control
measures” to prevent funds being lost to
corruption, he said.

The European Commission said it had expressed its
concerns to Ghana’s government.

“We are in close dialogue with the authorities,
the IMF and other donors to address the issues and
find a solution,” a spokeswoman said.

“We want to continue helping Ghana meet its
development goals.”

Source - The Times(UK)

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