DEPARTMENT of Foreign Affairs officials have "held their hands up" and admitted "mistakes were made" on their part that led to the misappropriation of €4m of Irish Aid Funds in Uganda.
The money is now to be reimbursed to Ireland by the Ugandan government "within days".
An interim report compiled following a visit to Uganda by officials in October, concluded that this had been a "very sophisticated, elaborate fraud involving collusion at the highest level".
Around €11.6m of foreign aid had been misappropriated – including €4m of Irish monies.
The report found key controls were bypassed by individuals and there was collusion not just in political circles but also within the Bank of Uganda.
A delegation from the department told a Dail Public Accounts Committee that the theft had been a "serious crime against the Irish taxpayer but also against the severely disadvantaged communities in north Uganda".
David Cooney, secretary general of the department said the situation had come as a "significant shock" to all involved in the Irish Aid programme and had also "convulsed" the political system in Uganda.
"This has been a wake-up call," he said, adding that he was now working to ensure that such a thing "in so far as possible will never happen again".
Mr Cooney explained that that there were arrangements in place to involve the tracking of the money through the system to ensure it ended up in the right account.
However, this did not happen, Mr Cooney said.
"We were all caught out," he admitted, saying tracking was something "that should have been done and needs to be done."