These include sh36.8m paid to Kaddunabbi as leave allowance, sh87.2m paid as compensation for leave not taken, and sh57.4m linked to travel allowances for activities of the Africa Reinsurance Corporation.
A forensic audit commissioned by the Auditor General has raised serious concerns about financial and administrative practices at the Insurance Regulatory Authority (IRA), placing former Chief Executive Officer Ibrahim Kaddunabbi Lubega at the centre of a series of disputed payments and management decisions.
The special investigation, completed in May 2026, examines allegations of financial mismanagement at the regulator and points to irregular leave-related payments, salary adjustments, foreign travel allowances, and recruitment practices that auditors say were not fully supported by policy, law, or approved procedures.
The inquiry was launched after the Permanent Secretary and Secretary to the Treasury requested an independent review of claims that public funds may have been mismanaged at the Authority.
Sh181m Flagged
Auditor General Edward Akol identified three major transactions that he says resulted in irregular expenditure or financial loss totaling approximately sh181.4m.
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These include sh36.8m paid to Kaddunabbi as leave allowance, sh87.2m paid as compensation for leave not taken, and sh57.4m linked to travel allowances for activities of the Africa Reinsurance Corporation.
According to the report, the payments did not comply with the applicable employment terms, IRA’s Human Capital Management Manual, or established government guidelines.
Questions Over CEO Salary Increments
The investigation also scrutinized salary increments awarded to the IRA chief executive during his second term in office.
Kaddunabbi was reappointed in June 2021 on a gross monthly salary of sh46.3m. Although he later sought an increase to sh55m, the Minister of Finance reportedly declined the request and advised that any future adjustments should be based on inflation and be specifically recommended by the IRA Board.
Despite this guidance, the CEO’s salary rose steadily over the following years, reaching sh60.85m by the 2025/26 financial year.
While the increases were reflected in annual budgets approved by the Board, auditors found no evidence that the Board formally considered and recommended the salary adjustments to the minister as required.
The Auditor General concluded that the increases did not follow the procedure outlined by the appointing authority.
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Leave Benefits Found Irregular
A significant portion of the report focuses on leave-related payments.
Auditors found that Kaddunabbi received sh36.8m in leave allowance despite a lack of records showing he had taken leave during the periods for which the payments were made.
The report notes that under IRA policy, leave allowance is payable when an employee actually proceeds on leave, not merely because leave has accrued.
Investigators also questioned a separate payment of sh87.2m made in November 2023 as compensation for leave allegedly not taken during Kaddunabbi’s first contract period between 2016 and 2021.
The Auditor General found no evidence that he had applied for leave and been denied, a condition considered necessary for such compensation. The payment was therefore deemed irregular.
Kaddunabbi reportedly maintained that the benefits formed part of his employment entitlements, but auditors disagreed, citing the relevant legal and policy provisions.
Foreign Travel Payments Under Scrutiny
The report further examined payments made to the CEO for travel related to his role as a non-executive director of the Africa Reinsurance Corporation.
Auditors established that Africa Re was responsible for covering travel expenses associated with board meetings and related activities. However, IRA paid Kaddunabbi nearly sh90m in per diem allowances for five international trips.
Under IRA policy, employees participating in fully sponsored activities are entitled to only 30 percent of the standard per diem rate.
Based on that provision, the Auditor General calculated a financial loss of sh57.4m.
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The trips reviewed included meetings and events in Nigeria, Egypt, South Africa, and Rwanda between 2024 and 2025.
The report also notes discrepancies between some travel accountability documents submitted by the CEO and immigration records reviewed during the investigation.
Recruitment Decisions Raise Fresh Concerns
Beyond payments made directly to the CEO, auditors examined recruitment exercises conducted by the Authority.
The report found that while several positions had been advertised with specific vacancy numbers, more employees were eventually recruited than originally approved.
In six job categories, 14 positions were advertised but 24 people were hired, creating a surplus of 10 recruits.
Internal audit findings referenced in the report estimated that the additional hires resulted in unplanned staff costs exceeding sh647m over a 13-month period. Separate figures cited by the Board Chairperson placed the recurrent expenditure impact at more than sh654m.
Auditors found no evidence that the decision to recruit beyond the advertised numbers was formally discussed, documented, or communicated before implementation.
Several department heads interviewed during the investigation reportedly stated that they had not requested the additional staff.
Governance Concerns Highlighted
Although the report does not make criminal findings, it paints a troubling picture of governance and internal controls at the insurance regulator.
Auditors noted that several of the questioned transactions were either approved by Kaddunabbi, paid directly to him, or both, raising concerns about oversight and potential conflicts of interest.
The report concludes that the CEO benefited from or authorized payments that lacked adequate legal, policy, or documentary support, exposing the Authority to financial loss and avoidable expenditure.
The findings now leave the IRA Board, the Ministry of Finance, and other oversight bodies facing difficult questions over whether the disputed payments should be recovered, whether administrative action is warranted, and what reforms are needed to strengthen accountability within the regulator.