By Vision Reporter

President Yoweri Museveni has given the oil company, Tullow Uganda Limited, three days to explain reports that it considered  paying him $50m (about sh130b) to meet  his “short term needs and demands.”

The President said the false statements had greatly injured his reputation. Museveni communicated his demands to Tullow Uganda Ltd through his lawyers, Kiwanuka and Karugire Advocates, in a letter dated March 19, 2013 addressed to the company’s chief executive officer.

Titled “Re: Allegations of Corrupt Practices in the Monitor Newspaper”, the letter in full said: We act for the President of the
Republic of Uganda, His Excellency Yoweri K. Museveni.

Our client’s attention has been drawn to an article that appeared in the Sunday Monitor newspaper on the 17th of March 2013. In the said article, it was reported interalia as follows:-

“Top Tullow officials toyed with the idea of making an “undocumented” $50m (sh130b) payment to President Museveni before switching to consider financing his re-election campaign, UK media reported on Thursday…”
“The company’s exploration director, Angus McCross, reportedly told fellow executives in a group email in August 2010, that the firm should pay for an oil licence to ‘meet the short term needs and demands’ of President Museveni, referred to in the
correspondences by the acronym M7.”

“The Irish Times reported that Tullow executives considered paying the President of Uganda to ‘help settle a tax dispute against a rival firm’,”

“During the Thursday hearing, Heritage lawyer Kwahar Quereshi argued that Tullow chose to pay the tax, his client disputed, for their selfish economic interest.”

“’(Tullow Exploration Director) Mr. McCross is saying (in the email) it is worth thinking about, meeting M7’s short-term needs and demands, and he has already indicated the things he is addressing in his election campaign,’ he said.”
“’This can only mean one thing: The provision of assistance and funds to Mr Museveni in his election campaign demands,’ the Irish Times quoted the defence lawyer as having argued…”
 

Museveni’s lawyers further add: Our client is astounded by the above grave allegations. Our client’s reputation has been greatly injured by these false statements that are attributed to your Mr McCross. You are no doubt aware that your operations in Uganda are governed by laws and covenants that prohibit your involvement in corrupt practices. We are therefore instructed to establish the following from you:-

1. Whether indeed your Mr Angus McCross made the statements attributed to him by email or otherwise.
 

2. If so, what was the basis for his assertion that a payment would be necessary to “meet the short term needs and demands” of our client.
 

3. Who communicated these “short term needs and demands” to Mr McCross.
 

4. Whether any payment was made by you to meet the said “short term needs and demands” and if so, to whom such payment was made.
 

5. If, on the other hand, the report is completely false, what steps have been taken by you to ensure that the record is corrected and that those responsible for the fabrication, if indeed it is a fabrication, are brought to book.
 

The lawyers further stated: “We expect a response by close of business on Friday the 22nd of March. We trust that you shall
oblige.”

Background of the case:

President Museveni’s name came up in a tax dispute suit filed in London by Tullow seeking to recover $404m from Heritage. The problem began in 2009 when Heritage, which was Tullow’s partner, opted to exit the Ugandan market but chose to sell its shares to Italian oil giant, Eni Spa.

Tullow invoked a clause in its agreement with Heritage that restricted each of the parties to be the first to buy the stake if one chose to sell out. Subsequently, Tullow sealed a $1.45b buy-out of Heritage.
 

Following the deal, Uganda Revenue Authority demanded tax on the transaction on grounds that what Heritage earned was hugely in excess of what it invested, and the Government was entitled to share in the gains. Heritage refused to pay the tax.
President Museveni insisted the tax money be paid lest his government would severe further business with Tullow.
 

Subsequently, Tullow paid the bill to Uganda and then sued Heritage to recover the money. In its defence, Heritage argues that Tullow paid the tax to Uganda to protect its business interests in the country.