Basajjabalaba's woes deepen

By Steven Candia and Simon Masaba

NOT once, but twice has city businessman Hassan Basajjabalaba snubbed police summons issued more than a fortnight ago after the Director of Public Prosecution (DPP) sanctioned forgery and other charges against him.

On both occasions, the embattled businessman has either sent a team comprising of his brother Nasser Basajjabalaba, Igara East MP Michael Mawanda and his lawyer Geoffrey Nangumya or Nangumya alone to plead his inability to present himself.

New Vision has learnt that the persistent failure by the businessman to appear is now causing unease within the higher Police echelon, now contemplating their next course of action, which does not exclude seeking the help of the DPP to secure an arrest warrant.

At his last appearance at the criminal intelligence and investigations directorate (CIID) headquarters to plead, Nangumya met the fury of Grace Akullo, the CIID boss, who could have nothing short of Basajja appearing in person. 

“Talk to me when Basajjabalaba is here,” Akullo said. 

The businessman’s woes stem from a sh142b market compensation scam, at the centre of which lies an alleged forged consent judgment.

Basajja, who is also the chairman of the NRM entrepreneurs league, through his Haba Group of companies, entered into different contracts with KCC in 2002 to manage, control and maintain three city markets, St Balikuddembe, Nakasero, Shauriyako and the Constitutional Square, a city green park

However, in 2006, hundreds of angry market vendors rejected the extension of the lease to Basajjabalaba and demonstrated, leading to riots and vandalism, which compelled the Government to intervene.

The Cabinet in 2007 discussed the matter and decided that vendors, under their associations should be given first priority to manage and develop the markets. 

The decision was communicated to KCC by the then minister of Local Government Maj. Gen. Kahinda Otafiire, in a letter dated September 11, 2007.

In 2009, Bassajjabalaba filed a case in court against the Government, claiming compensation for the losses incurred as a result of the Government and KCC cancelling the lease offers and management contracts granted to Haba Group. 

However, the Government preferred to settle the matter out of court. Basajjabalaba demanded sh146b as compensation.

Forged consent judgment

When his contracts were cancelled, Basajjabalaba petitioned President Yoweri Museveni, demanding compesation. Basajja’s claims were made by his HABA Group, on behalf of his companies, First Merchant Trading Company (FMTC), which was running Shauriyako Market; Victoria International Trade Company (VITC), which was in charge of St. Balikuddembe Market (Owino); Sheila Investments Ltd (SIL), which was managing Nakasero Market and Yudaya Investments Ltd (YIL) which was supposed to redevelop the Constitution Square.

HABA Group initially hired an accounting consultancy firm, D. Craven & Associates, to prepare the official claim for the sh146 b.

In 2008, through a consent judgment, the Attorney General agreed to clear the claims. However, in a surprising twist of events, the High Court denied the document, calling it a forgery, prompting investigations by the Parliament and the Police. 

The judgement exempted Haba Group from paying taxes on the sh142b.

How figures changed

Basajjabalaba rejected the figures provided by the evaluation committee and again petitioned the President. 

The President on November, 24 2009, wrote to the Attorney General, reminding him of the resolutions of the State House meeting. Again, the officials refused to pay. 

Basajjabalaba again complained to the President, who directed that the money be reviewed. 

The committee, according to KPMG, reviewed the figures to 68.9b and on November 13, 2009, Museveni wrote another letter to the Attorney General, saying the matter should be resolved expeditiously.

The Solicitor General Harriet Lwabi then requested for a supplementary budget of sh96b from finance, triggering protests from Basajjabalaba and another petition to Makubuya.

Makubuya in an internal memo in November 2010 said a total of sh46b be added to the company, bringing the total claim to sh142b.

The new position was communicated to finance, but the ministry reportedly questioned the figure and instructed the Auditor General to carry out an audit.

Central bank guarantees Basajja loans

On January 2011, after receiving a petition from Basajjabalaba, the President wrote to the Governor, asking him to assist Haba to access funding without suffering interest.

Auditing firm KMPG’s report revealed that before the assessment exercise could be concluded, finance minister on February 24, 2011, acting on President Yoweri Museveni’s directive, wrote to Bank of Uganda Governor Emmanuel Mutebile, requesting him to pay Basajjabalaba.

Finally after lots of consultations the central bank agreed to guarantee Basajjabalaba’s loans. But that was not the end. 

Early last year, the Basajjabalaba scam bounced back with fury, claiming ministers Syda Bbumba and Khiddu Makubuya as its first scalp. 

The two resigned from Cabinet after they were accused of authorising an inflated payment of Sh169b to Basajjabalaba as compensation for losing the tenders. The businessman was subsequently paid Sh142.6b.

Weaknesses in the contract

The report by auditing firm KPMG questioned the circumstances under which the contracts were awarded. The report says the then Town Clerk James Ssegane extended the operations of the contracts ‘illegally’.

The report also revealed that there were no documents indicating that the contracts were approved by the Office of the Attorney General prior to the signing.

According to the Attorney General’s guidelines issued in 1999, every contract exceeding sh50m has to be vetted by the Attorney General and that no contract exceeding sh50m shall be executed without clearance from him.

They were not provided with any evidence that the management contracts and the sublease agreements were cleared by the Attorney General, prior to the mayor and town clerk appending their signatures.

“Failure to have the contracts cleared prior to their signing had the effect of rendering them void and no claims under the agreements are enforceable,” the report says.

Appearing before parliamentary committee then, Ssegane said KCC did not sign the contract because Basajjabalaba had defaulted on the deal.

Museveni intervenes 

In a meeting of March 25, 2009 attended by Minister of Finance, Attorney General and Local Government, at State House, Museveni and his ministry officials agreed that an inter-ministerial committee chaired by the Attorney General be set up to look into the issues.

The Attorney General was asked to resolve the matter within 60 days and Basajja would withdraw a case he had filed against the government.

The Inter-ministerial committee was instituted but never included key ministries, which the President wanted on it. It left out KCC, the main party, the Auditor General, and was not chaired by the Attorney General as demanded.

Despite the Government valuer John Bwiragura resigning from the Committee, It recommended sh22.7b.