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MP Nandala tables ‘sinking’ UTL report

By Vision Reporter

Added 17th November 2016 04:03 PM

UTL top managers James Wilde, David Nambale, Moses Mwase and Stephen Kaboyo are barred from travel as investigations go.

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UTL top managers James Wilde, David Nambale, Moses Mwase and Stephen Kaboyo are barred from travel as investigations go.

 

Budadiri West MP, Nathan Nandala Mafabi, has tabled before Parliament a report on the ‘mismanagement’ of Uganda Telecom Ltd (UTL).

The report titled the predicament at the sinking Uganda Telecom was tabled in accordance to rule 25 (4) of rules of procedures of Parliament.

Parliament Speaker,Rebecca Kadaga, said that those named in the report on the mismanagement of UTL are banned from traveling.

Below is the full report

BRIEF STATEMENT ON THE MISMANAGEMENT OF UGANDA TELECOM CO. LTD MADE IN ACCORDANCE TO RULE 25(4) OF THE RULES OF PROCEDURE OF PARLIAMENT

NATHAN NANDALA MAFABI (MP) BUDADIRI WEST

 November 17, 2016


THE PREDICAMENTS AT THE SINKING UGANDA TELECOM LIMITED

0.0        Introduction

 

In 1998 the Government of Uganda (GoU) used the 1997 Communications Act in 1997 to split Uganda Posts and Telecommunications Corporation (UPTC) intoUganda Telecom Limited (UTL), Pasta Uganda, Post Bank and Uganda Communications Commission (UCC). UTL was privatized in 1998: UCOM/Telecel (51%) and the Government of Uganda (49%) shares. In 2005/2006, Telecel sold its shares to Libya African Portfolio Green Networks (LAP Green N)of Libya; and shares later rearranged into 69% for LAP Green N and Gou 31%.

At takeover by LAP GreenN, UTL was a leading company with a very strong and widespread fixed, mobile and data infrastructure and servicescovering most parts of the country. Government ministries and Departments, organizations and individuals chose it to be their preferred service provider.

No Audit done for the last 4 years.

Over the past few years, this company has continuously been on a freefall that has now reached alarming levels. If nothing is done to save it, itcould soon cease to exist. The freefall is mainly due to:-

Frequent Changes of Top Managementand Poor Management

After the Libyan crisis (2011) UTL has had frequent changes in Top Management: Six (6) Managing Directors (MDs) to date (an MD per year); eight (8) Chief Technical Officers (CTOs) or one CTO in nine (9) months. For instance current MD, Mark Jude Shoebridge resignedin July 2015 as Chief Fixed Services Officer,only to return in February 2016 (six months later) as MD. The current Chief Finance Officer, James Wilde took over in August 2016, after Nigel Williams left unannounced in May 2016 after working for two weeks pocketing full salary for the month and allowances totaling Shs 130 million. This scenario is reminiscent of poor and unstable management.

2                    High Levels of Indebtedness

UTL is bleeding with overwhelmingLocal and foreign debts that it has now failed to service.

2.1               Uganda Communications Commission (UCC)

Debt demand letter of 1st September 2016 from the Executive Director of UCC shows a debt of U. Shs 22.244 billion with UCC, the Regulator arising from unpaid spectrum fees. The regulator is threatening to withdraw the frequencies which would in effect shut out all the services of the company.

2.2               Overdue Interconnection Fees owed to MTN

A debt of U. Shs 8 bn in interconnection fees (see letter of 8th April 2016 from MD MTN to CEO of UTL). Even with agreed instalment payment, UTL has failed to service this debt.

2.3               Uganda Revenue Authority (URA) Accumulated Tax Debt

U. Shs 58.424 billion in Pay as You Earn (PAYE), Withholding Tax (WHT}, Value Added Tax (VAT) and Excise Duty taxes owed to URA for the period May 2015 - Dec 2015. This debt is increasing.

2.4          Huawei Technologies Limited

Supplied equipment, spares and services to UTL under LAP Group totaling US $ 7.06 million (U. Shs. 24.244 billion). The Commercial Court in a specially endorsed plaint drawn by M/S ENSafrica Advocates on gth May 2015 under Civil suit 311 of 2015 (Huawei Technologies Co. Ltd Vs Uganda Telecom Limited) ruled that UTL settles this case with interest from the date of judgement.  UTL has failed to pay.

2.5          Unremitted NSSF and UCECPS Payments

Since July 2013 to date, UTL has not remitted on behalf of its employees the 5% by employees and 10% by employer to both NSSF and UCECPS provident fund schemes to which some of its staff belongdespite these monies being deducted from the workers'  salaries. This has now accumulated to Ug. Shs 16    billion.

3.1          Sale of Properties/Asset Stripping

On privatization, UTL inherited a lot of assets (buildings, land and equipment). About two years ago,most of these assets are being identified, prepared for sale and sold off at supersonic speeds. This exercise is going on unabated.

3.2          Assets Sold

3.2.1            Plot 41-47 5th  Street  Industrial Area

In an agreement of 1st February 2016, Plot 41-47 5th Street Industrial Area under Lease Hold Register 718, Folio 16 measuring 5.537 acres was  sold to  Magnet  Construction Company  Limited  at  US $ 4.9  (U. Shs  17.15  billion). A

deposit of US $ 3.94 million was paid; the balance is to be paid over four 3-monthly equal instalments from May 2016 to Feb. 2017. This agreement was signed by Stephen Kaboyo and David Nambale on behalf of UTL and Shimon Halfon and Sam Ahamya on behalf of Magnet.

3.2.2            Plot 1-7 Nsambya Yard

In an agreement of 3th July 2015 signed by David Nambale and Mark Shoebridge for UTL, and Bob Kabonero and Margaret Mirembe Gureme for lntercar (U) Ltd, this land which is under FRV 309, Folio 3 was sold to lntercar (U) Ltd at US $ 1.567 million (Ug, Shs 5.484 billion).

3.3          Assets Evaluated and lined up for Sale

With Associated Consulting Surveyors valuation reports of Aug.29th, 2016 assets fast tracked for sale are:

3.2.1     Plots 125, 128, 130, 131, 132, 133, 142, 143 and 273 Kibuga Block 38 Makerere, Wandegeya (With Building and Working Communication  Equipment/Infrastructure)

»  Current Open Market Value (OMV)  - Ug Shs. 5.0 billion

»  Forced Sale Mortgage Value - Ug. Shs 3.0 billion

»   Insurance Value - Ug. Shs 1.5 billion

3.2.2       Plot 41-43 Kyambogo (With Buildings and working Communication  Equipment/Infrastructure)

»  Current Open Market Value (OMV)  - Ug Shs. 900 million

»  Forced Sale Mortgage Value (FSMV) - Ug. Shs 540 million

»  Insurance Value(IV) - Ug. Shs 300 million


3.2.3       Plot 2 Siad Barre Avenue Nakasero opposite Rwenzori Courts and currently used for Parking)

>- Current  Open Market Value  (OMV)   -  Ug Shs. 10.5 billion

>-  Forced Sale Mortgage Value (FSMV) - Ug. Shs 6.3 billion

4.1          Fleecing the Company using Bad Agreements, Collusion and Fraud

While the above has continued, the Top Managers of UTL do not have any shame, but have also continued fast tracking the journey  of UTL to its death bed through bad agreements and  fraud.

4.2          BCS Group (UTL's Band Width Partner)

With an unsigned agreement of 2012 with UTL to share infrastructure from Kampala-Masaka-Mbarara-Gatuna,  there is afraudulent claimdemandi ng that UTL pays BCS US $ 471,682 after offset of co-location charges, yetit's  BCS that owes UTL. MD is personally pursuing this despite some of the Managers within UTL refusing to sign or querying some documents on this deal(Attachments: docs of 16/07/2015, Vouchers Serial; Nos. 703336 (US $ 19,714), 716980 (US $ 199, 360), 720039 {US $ 21, 436), 720041 {US $ 59, 136).These payments are being done without any contract or purchase order for a period of more than one year. Even then, the amounts  keep on varying each month.

Payments of US $ 25, 760 and US $b21, 850 have just been made in November 2016 to BCS through Stanbic Bank (Payment Batch id 27097857 and 27064570 and Voucher Ser. No 722256).

4.3          Procuring a Lease Certificate of Title

In 2014 UTL applied to Uganda Land Commission for transfer of lease hold interest for Plot 41-47 5thstreet Industrial Area from ULC to itself. This was done internally by UTL's Legal Department and Ug. Shs 1,500,000 was paid (vide Voucher Serial No 708023} in the names of Mr. Latif Wamusango. It is surprisingthat an agreement dated 19th November 2014 was later drawn by M/s Kyazze, Kanka and Company Advocates purporting that it was them that processed this lease hold transfer. Shs 160 million was fleeced from UTL (Ug Shs 110 million on hNov 2014 and Ug. Shs 50 million on 1th March 2015). MD and DavidNambale approved this deal of outright robbery of the company that is already in a crisis.

4.4          Payment to DISC Africa Ltd

For no services rendered a fraudulent payment ofUg. Shs 34 million was made in cash to DISC Africa in two instalments. The first {Shs 25.944 m) was paid to Ayub Mulumba (UTL's Chief Internal Auditor) on Voucher serial No. 724655 on 22ndAugust.The last payment is being followed. This is even against the company policy that requires that such amounts owed to Suppliers must be paid by cheque not cash.

5.0       Conflict of Interest

5.3    Sub-Sahara Group (Owned 99.9 % by UTLs current CFO - James Wilde)

Has been awarded contracts to audit 472 sites atShs 100 m (Voucher 020089)and to tow UTL vehicles to/from Garages (voucher 724690 and Stanbic payment batch ID 26986746).Thi s is a very clear case of conflict of interest.

6.0        Grossly un equitable Remuneration

Despite the UTLfinancially bleeding, Top Managers arepaying themselves huge salaries and allowances on top of other benefits. In Standard Chartered Bank Payment instructions, the Chairman Board of Directors allowance was increased from a net of US$ 1,500 (Shs 5,175, 000) to a net of US$ 5,000 (Shs 17,250,000)/month wef Sept. 2016. A fellow Board member (Mwase Moses) remained at US$ 1000 (Shs 3,450,000)/month. This is on top of other allowances. The Top Four; MD, CFO, Chief Legal Officer and Chief Human Resource Officer earn a total salary of Shs 420 m/month. The lowest gets Shs 60 m/month and the highest Shs 150 m/month. This is 1/3 of the salary bill for the about 500 UTL workers. These salaries are indeed the highest for such staff in any company in Uganda.

Field mileage allowance for operational staff was recently removed purporting cost cutting, yet Management is adding on their payments. Staffshave low morale; no longer go an extra mile to achievedue to lack of facilitation (transport, etc). There are very few vehicles, mostlyshared and DMCsthat are often impounded by Police. This has affected network maintenance, yet top Managers driveposhcars giving a wrong picture that UTL is doing very well. Cost cutting strategies are only at lower levels. There is a threat to retrench some staff all in the name of cost cutting. While low cadre staffs are being squeezed, Top Management is busy looting from the ailing UTL.

It is shocking Shs SOm was paid to Stan Chart Bank through Stanbic (batch Id 26658328) to offset a loan for Chief HR before he came to work in UTL (Voucher Ser. No. 724631)! Also US$ 6,000 (Voucher 722203) has been paid.

7.0       Dubai/Malta Board Meetings

Despite talk that LAP Green HQ closed in Dubai, UTL Management has continued flying out purportedly for meetings in Dubai and Malta. No capital is being injected into the company. One such trip is when money was requisitioned in May 2016, signed for and received by Ms Stephen Kaboyo, Moses Mwase, Hon. Aston Kajara then Minister of Privatization, and David Nambale on the 5th of May 2016 for travel, per diem, and other allowances for meetings in Malta and Dubai (8th - 10th May 2016). The current ownership of UTL is not clear as the biggest shareholders (LAP Green) does not seem to have any representative on the Board of Directors.

The press reported the former ambassador to Libya saying "people coming here to Uganda as Ministers are just masqueraders posing for photos in Uganda yet they cannot do the same in Libya to confirm their genuineness". Available information confirms the closure of LAP Green Offices in Dubai in 2014. It seems there is a Cartel that is masquerading as LAP Green and busy siphoning money from UTL.

8.0        Multiple Court Cases/Connivance to Steal Workers NSSF Savings

Of the many Court cases against UTL, one of the prominent ones is of UTL former and current Workers and the Uganda Communications Employees Union (UCEU) against UTL and NSSF. In 2014 championed by David Nambale UTL initiated a scheme with the Deputy MD/NSSF (Geraldine Ssali) to stealtheworkers NSSF Savings. The claiming was that; the workers cannot have two provident schemes (NSSF and UCECPS) running at the same time. It convinced NSSF to refund all the monies UTLhad paid to NSSF from 1992 during the UPTC when the workers started saving with NSSF to date. Before, this case was at Industrial Court; before UTL sued NSSF and Attorney General before High Court to have NSSF refund this money to UTL. One against NSSF was ruled by Justice Lydia Mugambe in UTL's favor in Sept. 2015. Had it not been for the vigilance of the Workers Lawyerthat immediately put a notice to appeal this erroneous ruling, the workers would have lost all their savings (over Shs 30 billion). Moreover, most of this money has already been claimed from NSSF by the qualifying beneficiaries, some of whom have long died. This would mean NSSF entering into other workers savings to pay UTL.This case is still waiting for typed court proceedings for it to be filed for hearing at Court of Appeal.

9.0   Stealing, Vandalism and the Shrinking Network and Poor Services

At takeover there were about six hundred sites providing mobile, fixed line and data services. The network is now vandalized, poorly maintained and has shrunk.Sites are being closed and or cannibalized for spares, fuel and equipment is being stolen/vandalised; the company cannot afford any spares and hasfailed to provide fuel regularly. Closing sites is going on even in areas ofhigh demand where other providers (MTN, Airtel, etc.) are expanding and improving their services/networks. Another 46 sites (attached) are lined up for shut down or no­ refueling w.e.f Oct. 2016. This will further reduce the already diminished network coverage.

10.0  Lack of Investment

Despite the network now being very old requiring and overhaul/replacement; the investors have not put in any money to the company. The last investment was done in the network around 2008. For the old network and lack of proper maintenance that has resulted intopoor services,many customers have abandoned using the company's services. The customer base has diminished to appalling levels.

11.0 Non-Auditing of Company Accounts

For many years, no auditing has been done on the company accounts/assets and more or so cash. This is why it took long to detect a fraud that went on for years  where  petty cash was siphoned to the tune of more than  Ug.  Shs 1.5 billion. This case was widely reported in the news print media in May this year.

12.0   Threats of Sacking and Unfair Termination of Employment Contracts

Coming about a month ago, the new Chief HR Officer is going round threatening to sack staff. Some staffs have been suspended and others their contracts terminated under unclear circumstances.

MD recently requested for passwords for all the Info systems and has blocked some staff from accessing some systems. Normally, these passwords are only accessed by Heads of Department and IT Office.

13.1          Conclusion

Government owns 31% shares in UTL that was once a giant and that still provides services to, government institutions institutions, other organizations and the public. It still has a major role to play in the in the Economy. It should not therefore be allowed to be killed. It is therefore, my recommendation that:-

(i)                  The acts going on in UTL are stopped with immediate effect.

(ii)                 Carry out both Financial Audit and Forensic Audit for the 4 years.

(iii)                (iii) Parliament urgently sets up a select Committee to fully investigate activities going on in UTL.

(iv)               (iv) The culprits that are responsible for the state of affairs in UTL should be prosecuted once found to have abated or aided acts of defrauding the company.

For God and My Country

Nathan Nandala-Mafabi

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