Local govt officials admit paying $1.7m irregularly
Sep 12, 2011
LOCAL government ministry officials on Thursday admitted paying about $1.7m to an Indian firm contracted to supply bicycles without verifying whether the goods had been shipped to Uganda.
By Mary Karugaba
LOCAL government ministry officials on Thursday admitted paying about $1.7m to an Indian firm contracted to supply bicycles without verifying whether the goods had been shipped to Uganda.
The bicycles were meant for local council chairpersons countrywide to ease their movement.
The officials led by the permanent secretary, Muhanguzi Kashaka, told MPs the payments of 40% ($1.7m) was based on documents that were sent by the company.
“The company sent us documents indicating that part of the goods had left the factory and they were on their way to Mombasa port. The contract demanded that we pay 40% upon receiving documents and then 60% when the goods arrive,†Kashaka said.
It was also discovered during the meeting that the ministry paid in spite of a warning from Bank of Uganda that the documents sent by the company; such as the original delivery note was missing, final destination had changed to Kampala instead of villages and parishes and that also the original certificate was altered.
Kashaka told MPs that the issues raised by Bank of Uganda were immaterial. He said the ministry had paid Bank of Uganda sh100m to advise them on the deal.
It was also discovered that Kashaka authorised Bank of Uganda to pay, saying the ministry had verified the quality and quantity of the goods.
The MPs probing the botched deliveries were stunned to discover that the ministry awarded the company the contract two days after the registrar of companies registered it.
The members wondered how the ministry could pay a company huge amounts of money without due diligence and without confirming whether the goods had actually left India.
Last year, the Government signed an agreement with a local firm, Amman Industrial Tools and Equipment, to supply 70,000 bicycles for local council chairpersons.
The company is said to have been working on behalf of Amman Impex, another firm based in India. It was scheduled to supply the bicycles by March 25 but to this date, the bicycles have not been delivered and the company managers cannot be traced.
LOCAL government ministry officials on Thursday admitted paying about $1.7m to an Indian firm contracted to supply bicycles without verifying whether the goods had been shipped to Uganda.
The bicycles were meant for local council chairpersons countrywide to ease their movement.
The officials led by the permanent secretary, Muhanguzi Kashaka, told MPs the payments of 40% ($1.7m) was based on documents that were sent by the company.
“The company sent us documents indicating that part of the goods had left the factory and they were on their way to Mombasa port. The contract demanded that we pay 40% upon receiving documents and then 60% when the goods arrive,†Kashaka said.
It was also discovered during the meeting that the ministry paid in spite of a warning from Bank of Uganda that the documents sent by the company; such as the original delivery note was missing, final destination had changed to Kampala instead of villages and parishes and that also the original certificate was altered.
Kashaka told MPs that the issues raised by Bank of Uganda were immaterial. He said the ministry had paid Bank of Uganda sh100m to advise them on the deal.
It was also discovered that Kashaka authorised Bank of Uganda to pay, saying the ministry had verified the quality and quantity of the goods.
The MPs probing the botched deliveries were stunned to discover that the ministry awarded the company the contract two days after the registrar of companies registered it.
The members wondered how the ministry could pay a company huge amounts of money without due diligence and without confirming whether the goods had actually left India.
Last year, the Government signed an agreement with a local firm, Amman Industrial Tools and Equipment, to supply 70,000 bicycles for local council chairpersons.
The company is said to have been working on behalf of Amman Impex, another firm based in India. It was scheduled to supply the bicycles by March 25 but to this date, the bicycles have not been delivered and the company managers cannot be traced.