Friday, July 29, 2011


It is unfortunate the mess in which Uganda is. Some of us are fortunate to have been brought up when Governments then were paying reasonable money to workers. You cannot believe that a person works for Government for a whole month only to get shs 250,000. What can this money pay? Yet, you find people who have made billions during NRMs time like Bassajjabalaba. The unexplained source of money which some of these people own could partly be the reason why the economy is in terrible shape.
William Kituuka

Mr. Basajjabalaba
By Yasiin Mugerwa
Posted Friday, July 29 2011 at 00:00
In Summary
What city businessman wants
Victoria International Trade Company Ltd wants Shs23.5b for losing Owino Market contract
Sheila Investment Ltd seeks Shs47.8b for the terminated Nakasero Market deal
First Merchant Trading Co. Ltd has billed the government Shs19.7b for the cancelled Shauriyako Market contract
Yudaya Investments Ltd wants Shs55.4b for breach of the Constitution Square deal
The Auditor General has stopped payment of more than Shs142 billion in compensation to city businessman, Hassan Basajjabalaba, for lack of reasonability, legal basis and supporting documents to the claims.
Instead of Shs142.6 billion the city businessman says is due to him from government, the Auditor General in a new verification report issued on Tuesday, July 26, recommends that Mr Basajjabalaba’s Haba Group of Companies actually owes the government a net amount of Shs994m.
The debt arises from money transferred to Haba in payment of what has turned out to be false claims and breach of contract.
“The assessment has determined that instead of an amount of Shs142.6 billion claimable by Haba Group, Haba owes government a net amount of Shs994 million,” a report arising from a forensic audit done by KPMG Kenya, an international auditing firm and signed by the Auditor General, Mr John Muwanga, reads in part.
It adds: “Investigations/inquiries be immediately instituted to establish those responsible for any loss so far suffered and any contingent loss that is likely to arise and appropriate and necessary action undertaken.”

Call for probe
But even as the Auditor General moves to block the payment to Mr Basajjabalaba, it emerged that before the verification exercise was concluded Bank of Uganda, upon a request from Ministry of Finance, issued guarantees to various commercial banks to enable him access credit facilities totalling to $65.35 million (about Shs160 billion) in anticipation of government settlement of the claims by Haba Group.
This is in addition to Shs24.5 billion paid to Bank of Uganda and Uganda Development Bank by the Ministry in 2010/11 financial year to settle the indebtedness of Haba Group to the two banks.

No clarity
According to Bank of Uganda, by June 2011, two of the credit facilities offered to Haba Group by two of the said commercial banks had fallen due before government had paid the amounts claimed by Haba. Bank of Uganda, as the guarantor, had as a result paid $34.35 million to the two banks.
But in his report the Auditor General said: “There is lack of clarity as to why (officials in Finance) and Bank of Uganda entered in this settlement arrangement with Haba Group before the conclusion of the verification exercise. Based on the assessment undertaken through this exercise which determined that the Haba Group instead owes government a net amount of Shs994m, there is a potential risk of loss of all the funds already paid to the Haba Group and the associated companies.”
Mr Basajjabalaba’s Haba Group of Companies, through four of its subsidiary companies; Sheila Investments, Yudaya International, Victoria International and First Merchant International Trading company, entered into lease agreements and management contracts with the government for four properties namely; Nakasero market, Shauriyako market, Constitutional Square and St Balikuddembe market (formerly Owino market) during the 2009/10 financial year.
However, all the agreements were later terminated by the government after the market vendors and Parliament opposed the move.
For claimed loss of business in the St Balikuddembe market contract given to him at Shs1 billion, Mr Basajjabalaba is asking for Shs23.5b while for Nakasero’s annual management contract valued at Shs299.9m, he is now asking for Shs47.8b.

The markets
Information on the file indicates that in 2006, KCC officials leased Nakasero market to Mr Basajjabalaba for 49 years. For Shauriyako market, Mr Basajjabalaba is demanding Shs19.7 billion and an extra Shs55.4 billion for the Constitutional Square redevelopment venture which fell through.
In a letter dated March 31, 2009, signed by Mr Basajjabalaba as Chairman of Haba Group and addressed to Ministry of Justice, he demanded compensation for losses incurred as a result of the decision of government together with the defunct Kampala City Council to cancel the lease offers and management contracts granted to his companies.

Management queries
But KPMG said in its report it could not trace a common management for the four companies at the Registrar of Companies.
During the auditing, KPMG obtained various board resolutions dated from March 10, 2010 to March 15, 2010 authorising Haba Group to receive proceeds of the claims against KCC and the government in respect of markets.
However, the Auditor General said in his report that, Mr Basajjabalaba confirmed to auditors that the shareholders are all associated to him through kinship.
For failure to submit necessary documents, the Auditor General said in his findings, this “would not only corroborate the claims but provide a substantial basis for the quantification of amounts claimed. The companies that entered into contracts with KCC are all required by law to maintain accounting records…”
Mr Basajjabalaba’s Haba has to-date maintained that they have a valid claim as they incurred losses from expenses incurred in execution of their contracts as well as the lost business opportunities that they would have gained had the contracts over the markets been implemented.

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