Saturday, September 10, 2011


Mr Muhanguzi (L) consults with Ms Nyangoma (C) and Ms Owech before the committee
The Criminal Investigations Directorate has been asked to interrogate senior bureaucrats in the Ministry of Local Government over suspicion that they fraudulently paid $1.7m (about Shs4.7b) to a non-existent firm to supply 70,000 bicycles.
Investigations were ordered by the parliamentary committee on Local Government and Public Service yesterday when ministry officials appeared to answer queries over the matter. The officials, who could end up before the Anti-Corruption Court if CID finds incriminating evidence against them, are Local Government Permanent Secretary Kashaka Muhanguziand Principal Accountant Henry Bamutura.
Others are Principal Procurement officer Yerusa Nyangoma, Internal Auditor Helen Owech, and Procurement Officer Robert Mwebaze.
The bicycles were supposed to be distributed to chairpersons of village and parish councils but were never delivered. On November 26, 2010, the ministry purportedly entered into agreement with an Indian firm, Amman Industrial Tools and Equipment Ltd (Aitel), to supply the bicycles.
Aitel was working on behalf of another firm, Amman Impex, of India. However, documents before the committee indicate that the alleged Indian firm is non-existent.

“We are not dealing with Indians; these are Ugandans who faked an Indian-based firm to defraud taxpayers,” committee chairperson Raphael Magyezi (Igara) said.

“The ministry put an advert in the papers on September 9, 2010. This company was registered on September 13, 2010, and awarded the contract to supply bicycles on September 26, 2010. After seeing the advert these fraudsters rushed to form the company and in the end taxpayers lost billions of shillings.”

False approvals
MPs have discovered that although the alleged company proprietors Nishita Maini and Mohinder Singh presented a forged bill of lading, Mr Muhanguzi wrote to Accountant General Gustavio Bwoch, claiming that the goods had been supplied as per terms of contract. Mr Bwoch subsequently instructed Bank of Uganda to pay the firm company 40 per cent of the value, amounting to $1.7 million.
Under normal circumstances, the ministry should have ensured that there was a valid insurance bond before contracting a company they alleged to have sourced through international bidding.
While Mr Muhanguzi, who had appeared before the committee with other bureaucrats, tried to blame Bank of Uganda and the Accountant General’s office, which he said cleared the Letters of Credit, MPs led by the Shadow Local Government Minister Betty Nambooze rejected his defence.
There is also evidence that Bank of Uganda wrote to the ministry pointing out that the original delivery note was missing and that the final destination was not per the contract, and the certificate of origin was forged. Mr Muhanguzi wrote back saying the defects were immaterial. But when pressed by the committee he said: “I swear upon my grandfathers, the issues raised were authentic.”
“We tried to contact the supplier but without success. These people disappeared and we cannot trace them. We have contacted all the relevant authorities, including Interpol and terminated the contract,” he said.

By Yasiin Mugerwa, Daily Monitor

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