BRITAIN has suspended all financial aid to Uganda over a corruption scandal in which millions in donor funds were embezzled in the office of the prime minister.
Britain's Department for International Development (DFID) said in a statement on Saturday that it was suspending development assistance immediately "as a result of initial evidence" from an ongoing audit.
The British government planned to give STG27 million ($A41.74 million) to the East African country this year.
Sweden, Norway, Ireland and Denmark have also suspended aid to Uganda over the fraudulent loss of up to $A12.64 million in financial aid meant for the rehabilitation of some of Uganda's poorest regions.
Uganda's auditor-general revealed in a report released last month that the funds were lost through widespread fraud and embezzlement, with a network of officials perpetrating a scam in which some of the money was deposited into the private accounts of individuals.
The report documented numerous cases of forgery to justify fictitious expenses, and an accountant has since been taken to court over the scam.
"Unless the government of Uganda can show that UK taxpayers' money is going towards helping the poorest people lift themselves out of poverty, this aid will remain frozen and we will expect repayment and administrative and criminal sanctions," the DFID statement said.
Ugandan Prime Minister Amama Mbabazi has expressed shock over the scandal, saying it must be investigated. Some MPs have called for an inquiry into the prime minister's role in the scam.
Corruption is rampant in Uganda, where critics accuse President Yoweri Museveni, in power since 1986, of not doing enough to punish corrupt officials who are loyal to him.
"The donors need to come out with better alternatives of ensuring that their money reaches the intended beneficiaries," said Cissy Kagaba of the Anti-Corruption Coalition of Uganda. Donors need to work closely with non-state actors and low-level community leaders, she said.
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