Concerns are emerging over President Yoweri Museveni’s move to fight corruption as discreet investigations reveal that taxpayers have been losing huge amounts of money in underhand dealings even where court orders stopping payments exist.

During his swearing-in ceremony in May 2016, President Museveni swore to fight corruption and improve service delivery under the slogan Kisanja Hakuna Mchezo (the era of no-nonsense).

Indeed, in the recent past government officials including a junior minister have been arrested for soliciting bribes, but critics say this is just the tip of the iceberg.
Some shady deals have involved government offices like the Attorney-General and Ministry of Finance.

Dubious payments have either been disguised as loans or supplementary allocations. The monies involved were either subjected to a tribunal, arbitration or to a court trial. Some cases are still pending in court.

In one case, Godfrey Magezi Kwirigira has sued BM Steel Ltd, the Attorney-General and Kilembe Mines Ltd over an alleged $1.3 million fraudulent payment to the steel company in spite of a High Court order stopping the payment because the steel company had no claim against the government.

BM Steel is a mid-sized firm in Mbarara, western Uganda, dealing in metal. Kilembe Mines is an ailing government parastatal, which was once the country’s leading manufacturer and exporter of copper and copper products.

“These are not only acts of impunity, they show contempt of court and should be investigated to stop further plunder of public resources,” said Mr Magezi.

The matter was first adjudicated by an arbitration court where BM Steel accused Kilembe Mines of breach of contract over provision of electricity services generated by the mining company. BM sued Kilembe mines in 2005.

While the court process was ongoing, the then state minister of finance in charge of privatisation wrote a letter instructing Kilembe Mines to stop legal proceedings, but the energy minister, in whose docket Kilembe Mines falls, assured the finance officials that it had a strong case and so there was no need to settle the matter out of court.

In spite of that assurance, officials from the Ministry of Finance went ahead to pay Kilembe Mines $1.3 million while the case was still before the court and termed it first as an out-of court settlement then later directed the firm to regard the payment as a loan. The officials also included costs of the suit even before the matter was concluded.  

Documents presented in court in the current case show the board of directors of Kilembe Mines never approved the loan whose interest rate was determined by Finance Ministry officials at nine per cent; by 2010 it had mounted to $353,000 according to the Auditor-General.

This move was against the Public Enterprises Reform and Divesture Act, which stipulates that the government recognise the need for autonomy in public enterprises management.

“The manner in which this transaction was made may have led to loss of public funds by paying a private company in an out-of-court settlement without pursuing the due process of the law and without obtaining the company’s consent. The matter needs to be investigated further,” said the Auditor-General John Muwanga.
However, prior to going to court, the arbitration tribunal directed Kilembe Mines to pay BM Steel $1.3 million, which it appealed at the High Court on the grounds that the arbiter was not objective and had rejected testimony from vital witnesses.
BM Steel’s attempts to appeal the High Court decision were unsuccessful and the case was dismissed in August 2005.
However, in an Auditor-General’s report of 2011, the $1.3 million was paid out as a loan from the Ministry of Finance to Kilembe Mines even before the case was concluded by the High Court.
In his petition, Mr Magezi argues that the government breached the rule of law, good governance and accountability when it involved itself in fraudulent transactions that resulted in wastage of public resources.

Another case involves a decision to revise a $407 million tax tribunal award downwards.

In February, Jack Wabyona filed a notice of motion asking the court to inquire into the circumstances that led the Uganda Revenue Authority to opt for a lesser tax of $250 million instead of $407 million. The petitioner suspects fraud as the case was prematurely settled out of court.

The parliamentary committee on government enterprises is separately investigating what has become known as a “presidential handshake” involving $2 million paid out to 42 officials.

In 2010, the Auditor-General unearthed a dubious payment of $16.4 million to an unknown company called Dura Cement.

However, investigations by the Parliamentary Public Accounts Committee failed to unearth the company or its directors, despite the money having been paid out.