The Observer, Uganda

By Hussein Bogere

April 22, 2012

When MPs this week release their report on the troubled national identity cards project, one name that will feature prominently is that of President Yoweri Museveni.

The report, by Parliament’s committee on Defence and Internal Affairs, will include claims by government officials that Mr Museveni instructed them to award the IDs contract to a German company, Muhlbauer High Tech, without following standard procedures. The project, worth about Shs 219bn, has since stalled amid accusations that some government officials are frustrating Muhlbauer.

This is the latest government procurement contract to degenerate into a scandal about management of taxpayers’ money. It all begs the question why the government can hardly execute major contracts without flouting procedures, corruption and loss of public funds.

In his latest report, the Auditor General (AG), John Muwanga, reveals that taxpayers have lost more than Shs 1,000 billion in just 12 months to fraud in various forms and at various levels.

While many people blame this on the culture of greed, our analysis shows that State House regularly comes up in cases of massive loss of public funds. In fact, President Museveni stands accused not just of handling high-level fraud with kid gloves, but also of giving directives that tend to torpedo financial oversight mechanisms.

Botched Deals

Only recently, businessman Hassan Basajjabalaba was in the news for receiving Shs 142bn in compensation after his Haba group lost contracts to operate some city markets and the Constitution Square. Both directives – to cancel the contracts and to compensate Basajjabalaba – came from State House. While the President has since dissociated himself from the figure of Shs 142bn, and two of his ministers resigned over the saga, this matter has left State House’s reputation in tatters.

Early this year, Parliament’s Public Accounts Committee (PAC) heard that government lost Shs 40bn to a ghost company, Dura Cement, after President Museveni cancelled its contract to produce cement at Dura in Kamwenge district. While meeting PAC, Museveni said he could not recall the person who advised him to cancel the contract.

But following that advice from that forgettable individual, Museveni wrote a letter to the then minister of Energy and Mineral Development Daudi Migereko, instructing him to terminate the lease after considering mutually agreed terms. But the history of troubled contracts has not just started.

In 2001, the Ugandan government got excited after signing the Africa Growth and Opportunities Act (AGOA) that would see it export to the United States market, among other products, fabrics, tax free. The government guaranteed bank loans for the hand-picked Sri-Lankan-owned company Apparels Tri-Star in the hope that it would lead to increased revenue from garment exports, create jobs, and revive Uganda’s cotton industry. It didn’t take long for the textile machines to go silent, and government to lose nearly Shs 33bn after dfcu and Uganda Development Bank seized securities that had been guaranteed through bank of UgandaRead more.