MPs insist on sh5.9b gov't owes cotton body

By Umaru Kashaka       

KAMPALA - MPs have insisted that Government must clear a sh5.9b debt it owes to Cotton Development Organization (CDO) despite calls by the latter to have the debt written off.

The cotton body’s managing director, Jolly Sabune appeared before parliament’s Commissions, Statutory Authorities and State Enterprises (COSASE) committee on Tuesday.

Her presence before the MPs was to answer more queries arising from the 2008-2011 Auditor General’s report.

She said the sh5.9b debt dates back eight years arose from accumulated borrowings from CDO by the Uganda Ginners and Cotton Exporters’ Association (UGCEA) to finance seed activities which Government was to fund for implementing the strategic intervention program.

This was between 2003 and 2005, she pointed out to the committee chaired by Kumi county MP Patrick Amuriat.

But she was quick to add that after realizing that UGCEA had borrowed money from Bank of Uganda and could not service it because it had lent money to them, they presented the matter to finance ministry in November 2006.

So they requested that the outstanding debt to UGCEA be written off against the debt that UGCEA owed BOU.

“We’re all government, there is no way the finance ministry which is even represented on our board can clear a debt owed to it by a government body [UDO],” she said.

“It is good the ministry recognized this money that it was spent on buying seeds, pesticides etc. for farmers. We should now see how finance will organize to write this money off so that it’s no long reflected on CDO balance sheet.”

‘No action’ taken

But the managing director was dismayed that the Auditor General had again raised the matter in his report of 2013, saying CDO had given the same explanation to his office during the audit exercise of 2009 when it requested BOU to carry out a special audit on the matter.

“I’m surprised that the Auditor General has again brought up this issue, and yet after the special audit and the COSASE recommendation, it was dropped from his subsequent reports on CDO’s accounts.”

 The body plans to raise the matter in their next board meeting for pursuit with finance ministry.

According to the Auditor General’s report, the financial statements reflect a total of sh7.6b as outstanding debtors as at October 31, 2012. Out of this, the report says, an amount due from Government of sh5.9b has remained uncovered.

The document goes on to read that COSASE’s report on the performance of CDO from 1999 to 2008 recommended that the finance ministry seeks parliamentary approval for the debt to be cleared before interest becomes compounded.

“No action was found to have been taken in line with the recommendation,” it reads.

The Auditor General then advised CDO’s accounting officer to continue pursuing the issue with the “responsible ministry” (finance).

MPs advised the coffee body borrow a leaf from Civil Aviation Authority (CAA) and try to use all means in order to recover the money before calling for the write-off.

CAA contracted a group of city lawyers to recover sh5.4b from Government.

“We’re worried that if this debt is not paid in time, interest will be compounded. There is no way we can write off this debt when CDO has failed to convince us that it exhausted all means of recovering the debt,” the chairman ruled.

He added: “CDO is an organization with a specific mandate and, therefore, should not blind us to have the money written off just like that.”

Bukoto South MP, Mathias Nsubuga wondered why the finance ministry cannot pay the debt Government owes to CDO.

“We shall not accept to write off this debt because it’s a debt owed by gov’t to CDO—finance ministry must then pay it, and we demand that CDO uses all means possible to recover this money,” he pressed.