Illicit Looting; President Museveni Aiding Robbery of Public Funds and Resources

By Valerian Kkonde

PEARL NEWS SERVICE

Kampala International University is just one of the many properties with Hassan Basajjabalaba's tag who continues to receive public funds and properties under dubious circumstances. The university today has branches in Kenya and Tanzania.

To many Ugandans, the rampart robbery of public funds and resources is possible because the institutions mandated to check the vice are ill equipped. Even the staff of these white elephants is demoralized by the peanut-salaries and remunerations.

Pearl News Service investigations into these illicit lootings of the country reveal that it is actually president Yoweri Museveni stoking this fraud, thus explaining the blatant disregard for established regulation and the intensity with which the robberies are occurring.

The Inspector General of Government (IGG)… the Criminal Investigations and Intelligence Directorate (CIID)… the parliamentary Public Accounts Committee (PAC)… anti-corruption Non-Governmental Organisations (NGOs)…the Judiciary… a relatively free press and a tough-talking president vowing to leave no stone unturned when it comes to fighting corruption, form part of Uganda’s wobbling strategy to eliminate corruption.

To these add the donor community which keeps cutting off aid over diversion of its tax-payers’ funds by government officials. But as if Uganda is cursed, instances of robbing public funds and resources are not only becoming a daily occurrence but are taking on completely new dimensions, often employing well crafted fraud and corrupt schemes at the highest level of administration. It is a statement that leading government officials are leaving no stone unturned in their bid to acquire obscene wealth; and they have succeeded at this.  

According to World Bank, Uganda looses Ushs 750 billion annually to such robberies. To further shed light on these robberies, the Black Monday Movement says that at least Ushs 3.695 trillion has been stolen between 2000 and 2013. President Museveni has been in power since 1986.

The Black Monday Movement is a coalition of anti corruption organisations and individuals who came together at the end of 2012 to up the effort to combat these robberies. Members wear black on Mondays as a sign of mourning for the stolen funds, resources and opportunities. Members are bent on giving out information on the continued robberies of public funds and resources.

One such fleecing of Ugandans is crafted in dubious donations to a one Hassan Basajjabalaba who, under president Museveni’s regime, has risen from rags to riches in a manner deficient in logic, justice and accountability.

A senior four drop out at Ishaka Adventist College in Western Uganda, Basajjabalaba took to trading in hides and skins, a business his father engaged in at a very local level.

On November 29, 2002 Kampala City Council (KCC) which is today known as Kampala Capital City Authority (KCCA) entered into a management contract with Sheila Investments Limited (SIL) to manage, control and maintain Nakasero market for three years. This is one of the four companies that feature prominently in the widely spread out scam to fleece Ugandans of billions of shillings.

The other companies are First Merchant International Trading Company Limited, Yudaya International Limited and Victoria International Trading Company Limited. They operate under the Haba Group Uganda Limited umbrella, fronting Hassan Basajjabalaba as their representative. At other times Basajjabalaba presents himself as the Managing Director of Haba Uganda.

According to this contract, SIL was to pay KCC in advance, an annual contract

 Fee of Ushs. 256, 410, 252. SIL had to make similar payments on 15 November 2003 and 15 November 2004 unless KCC advised otherwise.

KCC and SIL further entered into a Joint Venture agreement on September 2, 2005 for the development of the market. KCC was to provide the land while SIL provided the funds. This was never implemented.

Another lucrative deal was struck on December 23, 2006 when the Executive committee approved a sub-lease of Nakasero market to SIL for a period of 49 years. SIL was to pay a premium of Ushs 2,000,000,000 and annual ground rent of Ushs 104,000,000.

In February 2, 2007 KCC terminated the contract on grounds that SIL had failed to honour the obligations under the contract.

When SIL was forced out of the market by vendors’ demonstrations, Haba Group put in a claim, on behalf of SIL, of Ushs 47,838,134,213.

Shauriyako market was also donated to Basajjabalaba’s company called First Merchant International Trading Company Limited (FMITCL) using fronts and associates. On March 8, 2006 the acting Town Clerk Seggane, fraudulently appointed Nakivubo Shauriyako Market Vendors Association (NSMVA) to redevelop plot 35A Nakivubo road- Shauriyako market.

Although NSMVA never applied for the sublease, the Town Clerk’s letter of July 5, 2006 spelt out terms, among which, that NSMVA was to pay a premium of Ushs 500,000,000 and ground rent of Ushs 10,000,000 per annum and that the sub-lease was for an initial term of five years renewable for a period not exceeding 49 years.

Seven days later, on July 12, in what was termed as a memorandum of understanding; FMITCL paid 750,000,000 to the NSMVA Executive so that they lobby vendors to assign their interest in the market to it. The so called memorandum of understanding indicated that FMITCL was to pay NSMVA another Ushs 810,000,000.

The objective was finally achieved on July 14, 2006 in a memorandum of understanding indicating that NSMVA had transferred all its interests in Nakivubo Shauriyako market to another Basajjabalaba- associated company.

While there is no evidence to show that KCC was such an incompetent, dense and confused institution, the dealings with Basajjabalaba suggest so.

After receiving Ushs 500,000,000 through cheque No. 10413, dated July 14, 2006 and Ushs 10,000,000 through cheque No. 10414 dated July 20, 2006 from FMITCL being payments for ground rent, KCC went ahead and signed another sub lease agreement with Nakivubo Shauriyako Market Company Limited! This is different from Nakivubo Shauriyako Market Vendors Association.

Information obtained by PNS reveals that as usual, on March 31, 2009 Haba Group lodged a claim for compensation on behalf of FMITCL for Ushs 19,739,187,500. This was later revised to Ushs 20,748,762,500.   

The Constitutional Square was also subjected to the same drama as it was being prepared for hand over to the lucky Basajjabalaba’s other associate company: Yudaya International Limited (YIL). The company was offered a sub lease initially for 2 years which could be extended to 49 years.

Before the sub lease agreement would be signed, the minister for Local Government intervened, stopped the process and instituted a commission of inquiry into the leasing of the Constitutional Square. The Commission recommended that the Constitutional Square should not be leased to a private developer.

Haba Group’s claim for compensation on behalf of YIL stood at Ushs 55,438,420,250.

There is all the evidence to prove that president Yoweri Museveni knew of this fraud early enough to avert it but to reasons best known to him, he did not.

On February 20, 2006 the president made a directive to the effect that “KCC’s plans of awarding tenders for markets in the city, imposing illegal taxes and disposing off properties in the city be stopped.”

The president reasoned that “the administration of the city was reverting to the central government, yet parliament was yet to make the law detailing how Kampala shall be administered and developed.”

The February 20 directive gives the impression of a president who follows the law to the letter. It was also timely and if there were no ulterior motives, the billions donated to Basajjabalaba would have been put to use in a manner that benefited the tax payer.

The fraudulent and corrupt scheme was given a lease of life by the president’s directive of July 31, 2006 lifting the one of February.

“…it was in the view, the February 20 directive, of the fact that the old administration was awarding tenders in haste, as that regime was coming to an end. I am now made to understand that some tenders have expired and need to have their licenses renewed for them to operate.”

Where the tenders were cancelled or resisted by the vendors, Hassan Basajjabalaba, using the Haba Group tag, applied to government for compensation on behalf of the associated companies. Basajjabalaba sought the assistance of the Attorney General and president Museveni so as to get hold of the booty. And they did render him the much needed assistance.

First Merchant Trading Company Limited was awarded Ushs 5,652,231,004. Victoria International Trade Company Limited got Ushs 2,801,585,133 while Sheila Investment Limited shared Ushs 70,589,528,007 of the public funds. Yudaya Investment Limited took Ushs 63,654,752,244. That is how a whooping Ushs 142,698,096,388 was swindled with the help of the highest administration!

This haste, concern and total disregard for established public financial accounting procedure is testimony enough to the vested selfish interests of all those involved including the president.

“If the law permitted we would have directly sued the president because it is evident he was behind all these robberies,” says Isaac Kimaze Ssemakadde the Executive Director Legal Brains Trust (LBT) Limited.

Legal Brains Trust Limited is an independent nonprofit organisation that seeks to establish rule of law, ensure equal and equitable access to justice and tackle the root cause of exclusion, vulnerability and poverty in Africa.

Article 119 (5) of the Constitution of Uganda states that: “No agreement, contract, treaty, convention of document by whatever name called to which the government is a party or in respect of which the government has an interest, shall be concluded without legal advice from the Attorney General, except in such cases and subject to such conditions as Parliament may by law prescribe.”

In a series of letters dated: March 15, 2009, March 5, 2010, July 30, 2010, September 28, 2010 and November 29, 2010 arising from the Attorney General’s, the Solicitor General wrote to the Permanent Secretary (PS)/ Secretary to the Treasury to ensure that a supplementary budget to the tune of 142,697,752,244 is obtained for the payment of the Haba Group of Companies.

In his letter to the Auditor General of December 2, 2010 the permanent secretary/secretary to the treasury Keith Muhakanizi queried the outrageous compensation claims to Haba group, and moved to authenticate them.

 “Before the effecting of the compensation claims to Haba group of companies, I would like to kindly request your office to establish the value for money in respect of the claims, so that payment can then be effected.”

The favours, protection and privileges Basajjabalaba receives from government, more so president Museveni, speak volumes of vested selfish interests at the centre of these outrageous fleecing of the tax payers.

Uganda government is renting properties belonging to the Buganda Kingdom. These include the official residence of the Katikkiro (the Prime Minister) which is today housing the Joint Clinical research Centre (JCRC). It is here that research and treatment of HIV/ AIDS is being carried out. The Military barracks in Makindye is one of the many other properties the central government is hiring from Buganda Kingdom.

In spite of the repeated reminders, demands and numerous meetings with the president, government has refused to pay rent arrears now amounting to at least twenty billion shillings.

Keith Muhakanizi’s letter to the Auditor General sparked off yet another dubious and evil scheme by the leeches. This is the plot that dexterously exposed the custodians of public funds and properties to be the very robbers. It took the connivance of President Museveni, the Governor of Bank of Uganda and four other banks.

The two letters from the Minister of Finance, Planning and Economic Development, Syda N.M. Bbumba, which PNS accessed, dispel any doubts about the president’s influence in these shameful so called compensations to Haba Group, belonging to his henchman Hassan Basajjabalaba.

The February 24, 2011 letter to the Governor Bank of Uganda, and copied to the Secretary to the Treasury as well as the Chairman Haba Group of Companies, states as follows:

“Refer to my earlier letter Ref: MEP/83/207/02 dated December 3, 2010 and to other correspondences on the subject (Compensation to Haba Group of Companies), echoing H.E the President’s directives.

“Haba Group has written to state that they were duly assisted with a small portion of their claim by various financial institutions, and that repayment is now due.

“In accordance with their correspondence this is to request you to sort out repayment with the said financial institutions.”

In the March 22, 2011 letter to the Governor Bank of Uganda and copied to the Secretary to the treasury, Syda Bbumba again evoked the president’s order to give Basajjabalaba public funds for his private businesses.

“Refer to my earlier letter Ref: MEP/83/207/02 dated December 3, 2010 and to other correspondences on the above subject (Compensation to Haba Group of Companies), echoing H.E the President’s directives.

“Further to my letters, this is to confirm that you can repay the proceeds of the earlier programmes with the Banks. As soon as the budgetary arrangements allow, I will authorize repayments to the Haba Group through the Bank of Uganda from which payments you can deduct the extra money to pay to the Banks the extra loans you will have arranged for Haba Group.”

In the July 29, 2010 to the Acting Solicitor General, the AG also made some crucial revelations about the role of president Museveni in the plot to rob Ugandans when he wrote that the president had chaired a meeting with Haba Group in State House about the compensations on March 26, 2009. It was in this meeting that the president actually the other players to ensure that Basajjabalaba gets the billions.

After the president gave a green light to Basajjabalaba to receive the billions of public funds in the guise of refunds, which refunds were fictitious right from the beginning, a mafia-like scheme was devised to effect payments.

The plot was that Haba Group gets loans from Bank of Baroda Uganda Limited (BOB), Orient Bank Limited (OB), Tropical Bank Uganda Limited (TB) and United Bank of Africa Uganda Limited (UBA) with Bank of Uganda offering guarantee to the loans. It is rather baffling but that is how it is according to President Museveni’s Public Finances Directives.

The Communications officer at Action Aid Uganda told PNS that while her organisation reserves the comments on Basajjabalaba’s compensations and other donations from government, questions keep lingering why him all the time. Samanya emphasized that there is completely nothing special with Basajjabalaba compared to those in the Public Service whose needs are never given due attention.

“When I walked into Action Aid and told that I would be receiving two million and seven hundred thousand shillings as my salary, I went back home and celebrated. But at the end of the month I was heart-broken!

“I had remained with only one and a half million shillings. The rest had gone to taxes! I would not mind if that money was used to construct roads, schools and hospitals but it does not even get there.”

Between October 2010 and November 2011 Haba Group went on a borrowing spree from the four banks earlier listed.

For all borrowings, Haba Group received unequivocal support from the Bank Of Uganda governor Emmanuel Tumusiime Mutebile, who went to the extent of deceiving the banks from which loans were being sought that the money to pay Haba group had already been cleared by all the relevant authorities. The Governor assured the lending banks that they would receive their money, including the interest and other charges even before they would send reminders for payment.

On November 25, 2010 Bank of Uganda Governor Emmanuel Tumusiime Mutebile wrote to Tropical Bank (U) Ltd unequivocally supporting Haba Group to receive a USD Ten million loan from the Bank and undertaking to pay promptly.

“Reference is made to the application of Haba Group Ltd for a facility of USD 10,000,000 (United Stated Dollars Ten Million only) from your Bank.

“I am writing to confirm that Haba Group Limited of P.O.Box 20000 Kampala, Uganda has receivables from the Government of Uganda to the tune of Shs. 96 billion which shall be paid to HABA Group within the next twelve (12) months. The Minister of Finance, Planning and Economic Development has confirmed that these funds will be paid to the HABA Group through the Bank of Uganda. The Bank of Uganda therefore, unequivocally confirms that the payment has been approved by the authorized officers and that there is no contingent conditions to the payment now or hereafter that can deter the release of funds.

“In the above premises, we hereby with or without demand undertake to remit the monies due and owing to you from HABA Group (U) Ltd. Under the credit facility including interest thereon and other incidental charges within the said period of twelve months.

“Please do rely on this undertaking to grant the $(US) 10million to the company.”   

It is worth noting that while the Bank of Uganda Governor wrote referring to Haba group’s application for the said loan, documents from the Tropical Bank indicate that the application was made on November 26, 2010. Bank of Uganda Governor was acting ahead of Haba Group.

Tumusiime Mutebile even went to the extent of telling lies that the payments had been approved by the authorized officers, well knowing that neither Parliament, the Auditor General nor the Commissioner General of Uganda Revenue Authority had consented let alone been notified about these mafia-style transactions.

Worse still, the loot was affected at an extra cost to the tax-payer as the banks that became complicit in the crime had their shares in form of bank charges and profits. The taxes that would have been paid into the national coffers were also never paid. Talk of double robbery!

Fleecing of the Ugandan tax-payer came to fruition on November 26, 2010 when Haba Group Uganda Limited applied for Ten million US $ from Tropical Bank. Vague as the application may be, as evidenced by the reason for the loan being “completion of ongoing projects in Real Estates in Haba Group,” it was granted.

UBA offered Haba a short term loan, 90 days, of US $ 9,500,000 as “Bridge finance to meet urgent funding needs.” The processing fee was 2% of the facility and payable upfront upon acceptance of the facility. The interest rate stood at 10.5% per annum.

On April 1, 2011 Haba sent out applications for loans to UBA and Orient Bank.

Haba wanted to get US $ 20,000,000 from UBA but Bank Of Uganda Governor Emmanuel Tumusiime Mutebile wrote to the Managing Director, in reference to the US $ 20 million loan, ordering that “the facility must be reduced to US $ 10,000,000 for prudential reasons.”

The same Fools day saw Maxwell Ibeanusi- Orient Bank MD- write to Emmanuel Mutebile requesting for clarification and a letter for comfort. Mutebile sent a reply on April 6, 2011 and committed the Bank of Uganda to pay.

“The Bank Of Uganda hereby promises to pay to the account of Orient Bank from the above mentioned receivables to the tune of US $ 10 million as a repayment into HABA GROUP Ltd’s account with Orient Bank before the end of six months as a repayment of the facilities extended to Haba Group Ltd. by Orient Bank (U) Ltd.”

And so six months later, it was time for OB to reap its fruits for allowing the execution of these criminal transactions. In a letter: Ref OBL/ BOU/ 45/ 11 on October 31, 2011 the MD wrote to the BOU Governor demanding for the loan facility and interest.

“We wish to advise that the facilities equivalent of US $ 10 million OB Ltd extended to Haba Group Ltd against your irrevocable understanding has matured for payment. Interest accrued to date amounts to equivalent of US $ 988,090 (Nine hundred eighty eight thousand, ninety dollars).”

The OB MD concluded his demand note with a warning of more payment for interest unless the payment is made immediately, as earlier promised.

The MD made more revelations about these mafia dealings and rewarding of accomplices when on November 10, 2011 wrote confirming that the Bank had received Ushs 13, 427, 026, 522 the equivalent of US $ 5 million.

“We hereby request  for the final payment of the balance US $ 5 million, plus interest on the facility up to 31.10.2011 amounting to US $ 988, 090 as indicated in our above referenced letter and additional interest of US $ 71, 200 that has accrued from 1^st November to date.”

On December 3, 2010 Haba Group applied for another loan from Bank of Baroda Uganda Limited through the Senior Branch Manager, Kansanga Branch. A short term loan of US $ 1,000,000 was sought “to finance the Tea processing factory near Bushenyi.”

Promising to pay Haba’s loan BOU Governor wrote on the same day: “Please refer to our telephone conversation this afternoon and the application from Haba Group Ltd. Please do rely on this undertaking to grant the US $ 1,000,000 facility to the company.”

On March 31, 2011 the Senior Branch Manager BOB,  Kansanga Branch, wrote to Hassan Basajjabalaba reminding him of the expiry of the short term loan which was to be “adjusted by a bullet remittance from Bank of Uganda within a period of three months.

“We therefore call upon you to follow up that payment with the Central Bank to clear the Bank’s dues currently at Shs. 2,455,992,869 an on 31/03/2011.

“That amount is subject to further interest from January 1, 2011 till the date of full and final settlement.”

Bank of Baroda MD Pramod Kumar Gupta reminded BOU Governor, on August 11, 2011, to live up to his promise “to remit the monies due and owing to our Bank from Haba Group (U) Ltd under the credit facility including interest thereon and incidental charges within a period of 3 months.

On August 26, 2011 Bank of Baroda MD could no longer hide his worries as the BOU Governor was not helping them recover their money. Haba Group itself was not “giving a firm commitment regarding the adjustment of the loan.”

The MD went on to reveal that Uganda Revenue Authority was also demanding for the taxes that Haba Group was evading.

“Further, we had also received an Agency Notice from Uganda Revenue Authority for an amount of Ugx 20 billion from Haba Group (U) Ltd., in July 2011,” Pramod Kumar Gupta pleaded.

“These people did all this to avoid effective scrutiny by the Auditor General, Parliament and other agencies of government, and to also assist Haba Group avoid prompt payment of taxes,” reasons Isaac Kimaze.

That BOU decided not to carry out independent due diligence inquiries and investigations is proof enough that the Governor was a key player in this grand theft. And given the protection accorded to the governor by the Constitution of Uganda, his arrogance, defiance and confidence in executing these criminal transactions confirms the revelations of the ministers and Attorney General that the president had Okayed the robberies.

Again, the involvement of the Attorney General in these dubious payments yet he was not involved in the securing of the contracts is further proof of the role played by the highest office in the country.

According to the Auditor General, John F. S. Muwanga, there is no genuine reason as to why the Ministry of Finance and BOU entered into a settlement agreement with the Haba Group before the conclusion of a verification exercise.

“Instead of an amount of Shs. 142,698,096,288 claimable by the Haba Group, Haba owes government a net amount of Shs. 994,039,186.

In his report on the verification of the claims submitted by Haba Group, there was general lack of substantive support to the claims, lack of legal basis for some of the aspects and areas raised in the claims, and general lack of reasonability for the amounts used in the preparation of the claims.

The Auditor General further revealed that BOU issued guarantees to commercial banks totaling US $ 65.35 million. This was in addition to Shs. 24.5 billion paid to BOU and Uganda Development Bank by the Ministry of Finance, Planning and Economic Development in 2010/11 Financial Year to settle the indebtedness of Haba Group to the two Banks.

In his July 26, 2011 letter to the Finance Minister, Referenced DAP. 151/ 298/01 the Auditor General strongly recommended that all funds paid- and payable by guarantee- to the Haba Group in relation to the claim through loans, advances and guarantees be determined and immediate and appropriate arrangements made for the full recovery.

The Office of the Auditor General is an independent Authority appointed under Article 163 of the Uganda Constitution. The Constitution specifically mandates the Auditor General to audit and report on the public accounts of Uganda and to further conduct financial and Value for Money audits in respect of any project involving public funds.

According to the Legal Department of the Office of the Auditor General, “failure to procure legal advice of the Auditor General before concluding the Management Contract rendered the contract null and void in law. This means that no claims under the law are enforceable.”

The Auditor General further recommended that the report be studied with a view of having the recommendations implemented, and that Investigations or 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.   

Augustine Ruzindana is a member of the Forum for Democratic Change (FDC). This is the biggest Opposition party in Uganda and was founded by people who actively participated in the bloody five-year guerrilla was that catapulted president Museveni to state house. It is a statement in its own right that the tenets of good governance, rule of law and accountability that Museveni promised turned out to be a still birth and is time to bring about regime change.

While still in bed with Museveni, Ruzindana served as Inspector General of Government (IGG). He was also Member of Parliament for Ruhama. Maintaining that public funds are supposed to be used for public purposes, he adds that “Museveni cannot stop the robbery of public funds because that is the only way he can survive at the top.”

“Museveni’s regime is based on patronage and nepotism. Museveni is the big patron at the top who patronizes everybody and all others are patrons of other people; the ministers, the Local Council Chairmen are all patronizing other people.

“This is the regime that is based on nepotism, unfair trade practices and all forms of injustices you can think of.”

On why institutions have ceased to be relevant, Ruzindana explained that “all these institutions including Bank of Uganda are part of the robberies. There is no way money could have been paid or requisitioned without Bank of Uganda being part of the robbery.

“Everyone in the regime has to help oil the robberies otherwise they cannot stay there.”

For emphasis of the involvement of leaders at the highest level of administration in these robberies, Ruzindana referred to the torture and arrest of members of the Civil Society who have come up to fight these robberies as the living example.

Not a coin has been recovered and Tumusiime Mutebile is still Governor Bank of Uganda. Even Basajjabalaba remains the Chairman of the National Resistance Movement (NRM) Entrepreneurs League and continues to enjoy government protection and donations of public assets and funds. The NRM is president Museveni’s ruling party.

 In an interview with The Daily Monitor newspaper, president Museveni intimated that when he finally sees logic in retiring from the presidency he will engage in real estate business.

While this statement has raised a number of questions, it is a great pointer to the happenings in the country: Are these robberies of public funds meant to kick starting this venture? Are the so called financial bail outs and other donations of public funds to private businesses a cover up for the true ownership while the recipients are fronts and partners?

The Black Monday Movement is urging Ugandans to isolate everyone implicated in a theft scandal. The Movement further urges the people not to buy goods or services from businesses owned by thieves. It is also calling for the support of Ugandans working honestly to make a living.

Every Monday, Black Monday Movement wear black clothes and urge the public to do the same “to show you are tired of theft.”

Whereas the Black Monday Movement is calling upon the public to demand political action from the president, Dr. Kiiza Besigye- the former President General of Forum for Democratic Change- maintains that regime change is the only viable solution to these grand robberies.