Tuesday, October 18, 2011


CHOGM report: The case against VP, 9 ministers Print
Written by David Tash Lumu
Sunday, 16 May 2010 21:33

Parliament’s Public Accounts Committee ended its seven-month inquiry into the 2007 CHOGM related impropriety and tabled its report in Parliament last week. DAVID TASH LUMU abridges the report against individual government officials accused of impropriety.

The Committee observed that during inspection of roads in Entebbe Municipality by the State Minister for Works, Hon. John Byabagambi, he directed the consultant engineers (M/S Multiplan) to carry out additional works.
The Minister did this outside the law and in total disregard of the Accounting Officer. The Committee noted that this variation led to extra costs of over 1.7 billion outside the CHOGM budget. When the minister appeared before the Committee, he said:
“I stand by the directive I made and have no regrets whatsoever, my work is to direct and it was imperative upon the Accounting Officer to identify where funds are”.
The Committee, however, was concerned that these variations did not follow procurement regulations but were directed by the minister on the basis of arbitrary rates. This denied opportunity for competition which could have saved public funds.
The Committee was concerned that some of the variations included noncritical works. The authorities in place decided to abuse the trust and included in the list roads that led to private property.
The Minister of State for Foreign Affairs (Regional Cooperation) [Isaac Musumba], for example, on June 11, 2007 is reported to have written to the Minister of Works and Transport requesting the inclusion of the road to Enkombe Apartments in Mbuya.
lCritical roads which had earlier been designed were not worked on, and were sacrificed in favour of non-critical roads that led to private properties, yet funds were spent on the designs.
lExamples of non-critical roads that were not designed but were worked on include Serunkuma Road, leading to the Enkombe Apartments at Shs 302 million; Golf Course road parking and Access Road to Entebbe Municipal [Council] at Shs 176 million; and the variations on Salaama Road leading to Hon. Suruma’s and Hon. Rukutana’s residences which cost Shs 362 million.
All these roads were not in the CHOGM budget and therefore not critical, but were costs that the taxpayer was made to bear.
lReduction in scope for four roads to cater for roads leading to a hotel in Kampala were also requested by Hon. John Nasasira. Although this was good, this request should have been planned and needed not to have waited for CHOGM.
lSeveral contracts underwent variations, which amounted to 30% across all contracts. This led to an increase from the overall cost of 74.7 billion to Shs 96.5 billion, an increase of 30% above the original budget.

The Minister of State for Works Hon. Byabagambi be held responsible for flouting PPDA laws and causing a loss of Shs 1.7 billion. He unilaterally directed the contractor to do additional works.
The Minister of Works Hon. John Nasasira be reprimanded for allowing astronomical variations without due justification and process.
Hon. Isaac Musumba, the Minister of State for Foreign Affairs, be held responsible for abuse of office and influence peddling leading to a loss of Shs 302 million.
Hon. Mwesigwa Rakutana, the Minister of State for Education, and Ezra Suruma, the former Minister of Finance, be held responsible for abuse of office and influence peddling causing loss to Government of over Shs 362 million.The Committee recommends that the matter be taken over by the IGG.
The Engineer in Chief, Eng. S. Bagonza who was responsible for executing CHOGM works and went ahead to allow these unplanned and unfunded variations be held liable for the loss, and be charged for causing financial loss. (Deputy Speaker Rebecca Kadaga has since ordered PAC to give Rukutana and Musumba a chance to explain themselves).

The Transport Committee under the Ministry of Works and Transport was mandated to procure vehicles for the CHOGM event. The vehicles were to include executive vehicles for Her Majesty the Queen and other Heads of Government, Police motorcycles, lead cars, ambulances, command and patrol vehicles.
Total payments made in respect of vehicle purchase costs were Shs 20,219,798,136. The solicitation of bids was advertised in May 2006, for the procurement of vehicles for Heads of Government. Forty firms had picked bids and of these twenty- three had returned them by 11th July 2006 to the Cabinet Sub-Committee.
However, only three days before the closing date of the bid submission, the Minister Hon. John Nasasira, halted the procurement indefinitely citing a Cabinet sub-Committee directive. On the 4th December 2006, a decision was made by the Cabinet Sub-Committee for direct procurement to be used.
PPDA, upon being requested for a waiver, rejected and instead granted restrictive bidding with at least three providers invited to bid. New bidding documents were prepared and issued to MotorCare Uganda Limited, Toyota Uganda Ltd, Spear Motors Ltd, Victoria Motors and Cooper Motors.
Subsequently, two firms i.e. Spear Motors Ltd and MotorCare Ltd, /EuropCar/ InterCar Uganda Ltd. submitted bids on 30th March 2007. Spear Motors emerged the best and the award had been given.

Although bids were issued to MotorCare, the bid returned had a joint venture. According to procurement regulations, MotorCare as a lead company should have submitted the bids and then disclosed the names of the companies it intends to associate with.
The Committee also found that in February 2006, EuropCar Ltd. had changed its name to InterCar and it was not clear why the name EuropCar was being used. The Evaluation Committee did not consider disqualifying MotorCare at this stage.
MotorCare submitted a trading licence No. 0066761 which had expired by 31st December 2006. The evaluation Committee did not consider disqualifying MotorCare at this stage. Instead, the Evaluation Committee decided to forward the matter to the Solicitor General who advised MotorCare to submit a valid trading licence against PPDA regulations.
However, it was not clear why it took the Cabinet Sub-committee a whole year to make such a decision. It was claimed that a cheaper leasing option from BMW, of Euro 4.17 million, had been obtained. However, the Committee wrongly compared the cost of outright purchase of 204 cars at Euros 8.29 million with the option of leasing 144 BMW at Euros 4.17 million that had been obtained without the transport cost of Euros 738,000.
Had the numbers of vehicles for outright purchase been put at 144, the cost for outright purchase from Spear Motors would have been Euros 6,190,500 as indicated below:-

30 Type 1———————1,404,000
52 Type 1———————2,433,600
62 Type 2———————2,352,900
Total CIF Kampala 6,190,500

Still the option for outright purchase would have been more favourable since the lease option would have exceeded the threshold of 40% (lease/purchase ratio at 67%).
Surprisingly, a month later, the process again was halted by H.E. the Vice President, claiming that the Cabinet Sub-Committee had decided that there was no outright purchase and that the leasing option be considered. Unfortunately, this decision took over one year to be made.
Later, Hon. Sam Kutesa informed the Cabinet Sub-Committee that he had written to some companies but only one company, MotorCare had come up with a proposal to lease vehicles. On 4th December, 2006, in a meeting chaired by H.E the Vice President, he informed the meeting that the decision they had taken in the previous meeting of 20th November 2006, was “final.”
And that the Committee had decided that “since only one Company had come up with a proposal to lease/sell vehicles to be used during CHOGM, the Minister of Works and Transport and that of Foreign Affairs should work out modalities with that Company.”
This decision was upheld on 16th January 2007. Later, when other companies complained to the President about the non-transparent manner in the procurement of these cars, the Vice President directed the Ministry of Works to proceed with MotorCare and warned against further procrastination in the procurement of vehicles.
On February 12, 2007, in a meeting chaired by the President, he advised that they should use Namibia and Zimbabwe examples where over 100 Heads of State were driven in private cars. At this point, Prof. Gilbert Bukenya never informed the President that he had already taken a decision to go for BMWs from MotorCare.
On May 28, 2007, the Vice President summoned only the committee dealing with Transport and not the whole CHOGM sub-committee and under Minute 2, he was informed that Spear Motors was the best bidder for outright purchase as it had offered the best value for money.
In the same meeting, he was also informed that the number of vehicles had been reduced to 144. It is, therefore, not true as he claimed that he did not know that the number of vehicles had been reduced.
In disregard of the Evaluation Committee’s recommendation, a directive was made to the transport Committee to go ahead and negotiate with the representative of BMW in Uganda by the Vice President. Subsequently, on June 1, 2007, new bidding documents were made and issued to one firm, M/S Motorcare/InterCar Ltd. contrary to regulations.
A waiver from PPDA to use direct sourcing was also never obtained.
It was, however, observed that although the solicitation bid document specified that the bidder presents a Performance security of 10% equivalent to Euros 409,936, this was not submitted. In clause 41.2, it was stated that “failure to submit the Performance security shall constitute sufficient grounds for the annulment of the contract award and forfeiture of any Bid Security.” This again was not done.

Government of Uganda did not get value for money in the supply of these vehicles. As such, Government made a loss.
When in the process of procurement, a decision was taken to cancel international bidding for restrictive bidding, national interest was lost.
The Chairperson, CHOGM Cabinet Sub-Committee, H.E Prof. Gilbert Bukenya, by ordering for direct procurement from BMW, and warning anybody against further procrastination on the matter, infringed on PPDA regulation 265 (1), which prohibits mention of brand names and trade marks, and therefore defeating competition which would otherwise ensure value for money. This breach was echoed in the PPDA audit findings.
The procurement process was fraudulent and marred with many irregularities.
The Minister of Foreign Affairs, Hon. Sam Kutesa and the Minister of Works and Transport, Hon. John Nasasira bent procurement procedures to favour BMW. The Committee holds them liable for their actions.
The actions of the Chairperson CHOGM Sub-Committee were route with some hidden agenda. He decided to appoint a select procurement Committee and instructed it to cancel the procurement process, declaring an emergency procurement and requesting for a new quotation from only one company, i.e BMW.
This, he did, in spite of the guidelines he had issued instructing all chairpersons of sub-committees of CHOGM to ensure that procurement procedures are followed. The Committee recommends that H.E. Prof. Gilbert Bukenya be personally held liable for the loss of over Shs 6 billion and flouting PPDA law and abuse of office.
The Committee recommends that appropriate action be taken by the Appointing Authority.

The Committee found out that the Ministry of ICT had spent an extra $5m outside the budget approved by Parliament for CHOGM. This amount was reportedly spent on the TETRA Communications Systems (walkie talkies) procured by the Ministry of ICT, but for use by security.
The Committee found out that the money was diverted from an ICT loan for the National Data Transmission Backbone Infrastructure Project to the Security Ministry and yet, when the loan was being approved, the walkie talkie system was not included in the loan request.
The Minister of Security introduced the idea of $5m to the President, the first time ever, the figure surfaced in the CHOGM sub-committee meeting of September 12, 2006, documented under minute 05/06. Whereas the minister explained to the Committee that by this time, he was only communicating a result of a procurement process, and that this was at the tail-end of it, it was not true.
This was confirmed by Mr. Ochieng, Director of Internal Security, who stated that by the time of the above meeting, there had been no formal procurement process. lndeed, the Committee has seen a “technical evaluation committee” report dated August 28, 2006, where the committee chaired by one Kaliisa Ibrahim, evaluated “expressions of interest” in which Balton was evaluated with a quote of $3-4m, against Harris $4-5m; Huawei itself $4-7m; ZTE $4-7m.
In this report, there was no mention of $5m by this team at all. The Committee is concerned that the technical team had returned an evaluation of $3.2m from Balton and the Minister of Security who is not technical, raised the value to $5m. Consequently, the Minister, having brought $5m into the picture, Balton submitted a Profoma invoice for $4,986,500 dated November 14, 2006.

The [then] Minister for Information and Communication Technology, Hon. Ham Mulira and Ministry of Security, Hon. Amama Mbabazi, were involved in procuring Balton. Both should be held liable for these flaws. The Committee found hidden interest on their part on this matter and recommends that IGG should take up the matter.
The Committee found that the tripartite agreement was for $4.5m and Hauwei later claimed $500,000 as management fees. This is theft on the part of Hauwei.
Hon. Amama Mbabazi, the Chairman of the Cabinet Sub-Committee on Security, should have requested for $3.2 million which he had been advised [to]. The Committee questioned his motive of inflating the figure to $5 million and later the firm that had accepted the $3.2 million also increased its quotation to $5million.
The Chairman of the Security Sub-committee, Minister Amama Mbabazi, should be held liable for involving himself in the identification of Balton as a supplier without following PPDA laws. He pushed for Balton to be contracted at $5 million when Balton’s initial quotation was $3.2 million.
The Committee finds him to have had a conflict of interest on this matter. He should be further held liable for the loss of $1.8 million as inflated costs from the initial quotation of $3.2 million to 5 million, in addition to reduced quantities which were quoted in the $3.2 million.
Hon. Ham Mulira should be held liable for the loss of $1.8m as he was the lead person.
Balton and Susan Katono should be held responsible for the short delivery of the equipment and penalties. Legal proceedings are recommended against them.
The Committee finds the actions of Huawei to be tantamount to corruption and recommends legal proceedings against Huawei for the recovery of $500,000 and be held liable for this criminal act. Any public officer who is found involved in this transaction be held for theft and corruption.
The Accounting Officer for ICT should be reprimanded for non-disclosure of this expenditure to the Auditor General under the National Audit Act.
The appointing authority should take appropriate action.

A consortium of decorators undertook decoration work without any contract or agreement with the Ministry. This is contrary to our laws.
The Committee found that although the decoration of venues was under the Venues Sub-Committee in the Ministry of Foreign Affairs and chaired by Ms Rhoda Kaisho, the Minister Hope Mwesigye hijacked the powers of the Committee and decided to award the Contract of decoration of venues to a Consortium of decorators.
She did this contrary to the law and even the Executive Director PPDA, Mr. Edgar Agaba, in his letter dated 17th, January 2008 rejected attempts to get retrospective approval stating the following in his objection:
Those services were not procured in accordance with normal procurement procedures and Ugandan Laws.
That the procurement was irregular in law.
The Contracts Committee had rejected the procurement anyway.
Furthermore, Hon. Amama Mbabazi in his letter dated 22nd November 2007, which he signed as chairman of the inspection team, is reported to have instructed the Decoration Committee to carry out the decoration activity immediately and later seek retrospective authority.
The Minister told the Committee that he wrote the letter in his capacity as “Inspector General of CHOGM”. The Committee finds the minister to have overstepped his role of policy guidelines to direct for the flouting of PPDA regulations.

That Minister Hope Mwesigye should be held responsible for flouting PPDA regulations and the Constitution of Uganda.
Hon. Hope Mwesigye should further be held liable for abuse of office and causing financial loss to Government of Uganda of Shs 617, 652,120.
Minister Amama Mbabazi should be held liable for instructing the flouting of Procurement rules.
The Committee recommends that the appointing authority takes appropriate measures.

It was also noted that an additional amount of Shs 13,923,759,980 was paid to two contractors for the construction of a marina at Shs 5,124,524,274 and pathways/parking at Shs. 8,799,235,706.
This amount should have been treated as Government contribution to the joint venture, given that the civil works construction were made on land that is not owned by the joint venture.

The Attorney General [Kidhu Makubuya] should be held responsible for the Shs 13.9 billion at stake, the weaknesses in the joint venture agreement and the Memorandum of Understanding which was drafted and cleared by the Attorney General.
The Auditor General reported that on October 24, 2007, Government signed an agreement with J&M Airport Road Hotel which allowed preference share subscription by the Government into the hotel.
Government was to acquire one hundred and fifty (150) Preference shares of Shs 100,000 each at a premium of $1,500,000. The Committee was informed by Minister Serapio Rukundo that the proprietor of J&M invited him to inspect his hotel which he did.
After that J&M sought a loan from Barclays Bank but wanted a Government guarantee. Rukundo then wrote a letter to the Minister of Finance on August 17, 2007 requesting that the hotel be considered for a Government guarantee on the loan.

Minister Sarapio Rukundo should be held liable for influence peddling under the Anti Corruption Act.


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