Somali President Mohamud says central bank governor 'was clean'

By Lesley Wroughton

WASHINGTON (Reuters) - Somali President Hassan Sheikh Mohamud on Saturday defended the country's former central bank governor, Abdusalam Omer, saying he had resigned to protect the credibility of the central bank and not because of graft allegations made by U.N. monitors.

"The former central bank governor was a very clean person," Mohamud said in an interview. "He preferred that it was in the interest of the bank that someone else should take over now.

"That does not mean he is out of the government ... and he may take on other responsibilities soon."

Omer, who resigned on September 13, has been replaced by Yussur Abrar, who has worked in commercial banking abroad and is the country's first woman central bank governor.

U.N. monitors said in July that the central bank had become a "slush fund" for political leaders and that Omer had played a central role in irregularities surrounding unaccountable disbursements.

But Mohamud said an investigation by independent groups, including a U.S. law firm commissioned by the government to look into the allegations, did not support the U.N. findings.

"There was nothing that supports the position of the U.N. monitoring group, so we are not questioning (Mr Omer's) integrity and his involvement," Mohamud said, adding that there was no evidence that members of the U.N. monitoring group had visited Mogadishu nor the central bank.

"How can they reach a conclusion like that without seeing anybody, or seeing what the central bank looks like?" he said. "We do not deny we have our own weakness but the way they presented this was not true at all."

The U.N. findings came as Mohamud's government is trying to win debt relief from institutions like the World Bank and African Development Bank.

DEBT AND DONORS

Cleaning up Somalia's management of public finances is important to clinching the debt deal and convincing donors that budget support and aid should flow through the government's instead of through U.N. and aid agencies.

Mohamud said the government was working with the International Monetary Fund, World Bank and African Development Bank to develop an economic program necessary to enter the debt relief program of the institutions.

"By mid next year we expect to be in a position to have access to the (international financial institution)," he added.

Donors recently pledged $2.4 billion in reconstruction aid for Somalia on September 16 to back a three-year plan to rebuild the country's economy and shore up its fragile security, a sign of confidence in Mohamud's government.

Mohamud said the Somali government would gradually take over the management of the donor aid as it worked to strengthen its ability to properly management the funds for rebuilding.

Somalia was plunged into two decades of civil war and lawlessness after the overthrow of military dictator Mohamed Siad Barre in 1991.

The country of 10 million people is one of the poorest in the world, with per capita income of just $600 a year. International navies are fighting the piracy that has flourished off its coasts.

In Washington, Mohamud met on Friday with Secretary of State John Kerry, Secretary of Defense Chuck Hagel, White House national security adviser Susan Rice, as well as lawmakers.

After a 20-year hiatus, the United States officially recognized the Somali government following Mohamud's election last year that marked the first vote of its kind since warlords toppled Barre.

For years, U.S. support for Somalia has been through the United Nations but Mohamud said he was trying to cultivate closer bilateral ties with Washington.

"It will take some time for the United States to fully engage in Somalia but for the past year there has been a lot of progress," Mohamud added, citing security and judicial reforms as areas where he wanted to work with Washington.

"Giving Somalia money is not the issue. The issue is technical expertise and diplomatic support in many areas," he added.

While the United States never formally severed diplomatic ties with Somalia, the country's slide into anarchy was highlighted by the 1993 "Black Hawk Down" incident in which military fighters shot down two U.S. helicopters over Mogadishu.

In subsequent years, al Qaeda-linked al Shabaab insurgents seized control of large areas in the south and central parts of Somalia before Ethiopian, Kenya and African peacekeeping troops began a U.S.-supported counteroffensive to restore order.

Al Shabaab was linked to Saturday's deadly shooting at a mall in the Kenyan capital of Nairobi, but Mohamud said that, though the group is headquartered in Somalia, its members are also Ugandans, Kenyans and Ethiopians.

There are continuing security concerns in Somalia and it is hard to move freely throughout the country.

(Editing by Doina Chiacu)