Govt pays Basajja sh24b for city markets
THE Government has paid sh24b to Haba Group of companies owned by businessman Hassan Basajjabalaba as compensation after the termination of the city markets contracts, the latest Auditor General’s report to Parliament has stated.
By Mary Karugaba
THE Government has paid sh24b to Haba Group of companies owned by businessman Hassan Basajjabalaba as compensation after the termination of the city markets contracts, the latest Auditor General’s report to Parliament has stated.
The Auditor General, John Muwanga, said Bassajjabalaba was still claiming a balance of sh118b.
Nakesero, Owino markets
Basajjabalaba’s Haba Group of Companies, through four of its subsidiary companies; Sheila Investments, Yudaya International, Victoria International and First Merchant International Trading company, entered into lease agreements and management contracts with the Government for four properties namely; Nakasero market, Shauriyako market, Constitutional Square and Owino market during the year. All the agreements were later terminated by the Government after the market vendors opposed the move.
“Government initially offered sh54b as compensation for the loss suffered but the figure was subsequently revised to sh96b following an appeal by Haba. At the time of audit, the claimable amount had been raised to sh142b,†the report read.
The Auditor General said the money was paid in disregard of a notice by Uganda Revenue Authority to pay taxes.
The report was handed over to the Speaker of Parliament, Edward Ssekandi, last week.
Kisekka Market
The report also revealed that the Government was to pay sh15b to Rhino Investments owned by retired Col. John Mugyenyi for loss of Kisekka Market. Government entered into partnership with Rhino Investments to develop Kisekka market into a modern market.
Violent protests ensued, forcing the Government to terminate the partnership. Rhino demanded sh23b for the loss but the Government valuer assessed the loss at only sh6.8b.
“This figure was objected and after several interventions, an additional sh8.1b was agreed upon, bringing the total compensation to sh14.9b. At the time of writing this report, no taxes had been assessed by URA,†the report revealed.
Old Taxi Park
In the Old Taxi Park plot deal, the report revealed that Government agreed to pay sh17.2b as compensation to a number of individuals and companies that had entered into agreement with KCC to develop the area.
Later, KCC altered the policies and offered the plots to tenants. The group sued the Government for compensation.
Losses by Government ministries and departments
During the year, the auditors discovered that government losses in relation to cash and property by ministries and departments increased by 25.8 % from sh1.3b to sh1.7b.
The Ministry of Works reported the biggest loss of sh932m followed by National Agriculture Research Organisation with sh193m.
The Auditor General said the losses should be investigated to their logical conclusion and properly dealt with in accordance with the Public finance and Accounting Act, 2003 and the attendant regulations.
Loans by BOU to Government
The Auditor General also noted that advances and loans to Government by the Bank of Uganda (BOU) increased during the 2009/2010 financial year by 25.8% from sh2.5 trillion to sh3.1 trillion.
Advances totalling to sh449b was advanced to government under classified items without Parliament’s approval.
“However, these loans had not been approved by Parliament by the time of issue of this report as required by the regulations, nor were they recognised in the GoU consolidated financial statements, hence understating the liabilities and cash or expenditure for the year,†Muwanga reported.
While meeting NRM MPs at State House, it was revealed that the Government this financial year borrowed sh1.7 trillion from BOU to purchase fighter jets and tanks without Parliament’s approval.
The Minister of Finance, Syda Bbumba, is yet to present the budget to Parliament for retrospective authority.
The report indicated that despite numerous complaints raised over the recovery of sh422b Government loan to private enterprises, little has been done.
“There is still uncertainty on the recoverability of On- Lent Loans to Private Enterprises totalling to sh422b. Efforts by the Treasury to effect recovery have been futile,†the Auditor General said.
It was also revealed that delays by government to correct an error in the Exercise Tariff Amendment Act resulted into a total of sh50b collected in taxes by URA refundable to the tax payers. However, URA has been given the authority to retain the money and refund it to the respective individuals.
The report revealed that during the year, the Government signed 13 new foreign loans worth US$. 664m before Parliament’s approval. The auditors feared that this could result into committing the Government to ventures which may eventually be rejected by Parliament.
According to Article 159 of the Constitution, Government shall not borrow, guarantee, or raise a loan, except as authorised by or under an Act of Parliament.
The auditor also noted that sh97b is still lying idle on Escrow Accounts maintained by Ministry of Energy in Bank of Uganda and that the amount was not recognised in the government’s financial statements.
The report indicates that Uganda National Roads Authority (UNRA) overpaid sh33.5b to contractors due to erroneous computation of variation of price (VOP) under the Price Adjustment Clause in the various road construction contracts.
The over payment were also due to wrong measurements and inclusion of unexecuted works in the interim payment certificates by the supervising consultants.
Jinja-Bugiri road
The Government has also paid sh36b to Basil Engineering for loss suffered in the Bugiri-Jinja road deal
According to the report, in 2004, the Government signed an agreement with Basil Engineering for the rehabilitation of Jinja-Bugiri road (72.8 km). The contract was financed through a grant from the European Development Fund.
Ten months later, in December, 2004, the contractor sued Government for delay to pay VAT amounts that were due, failing to make timely decision regarding modification of material specifications and failing to provide compensation for change in the VAT law, among others. Government later reached a negotiated settlement of Euro13m. A total of sh36b was paid.
Dura Cement
It was also revealed that out of sh38b that Government is scheduled to pay Dura Cement for termination of the contract to mine minerals in Kamwenge district, a total of sh18b has already been paid.
The deal was terminated and the contract given to Hima Cement.
THE Government has paid sh24b to Haba Group of companies owned by businessman Hassan Basajjabalaba as compensation after the termination of the city markets contracts, the latest Auditor General’s report to Parliament has stated.
The Auditor General, John Muwanga, said Bassajjabalaba was still claiming a balance of sh118b.
Nakesero, Owino markets
Basajjabalaba’s Haba Group of Companies, through four of its subsidiary companies; Sheila Investments, Yudaya International, Victoria International and First Merchant International Trading company, entered into lease agreements and management contracts with the Government for four properties namely; Nakasero market, Shauriyako market, Constitutional Square and Owino market during the year. All the agreements were later terminated by the Government after the market vendors opposed the move.
“Government initially offered sh54b as compensation for the loss suffered but the figure was subsequently revised to sh96b following an appeal by Haba. At the time of audit, the claimable amount had been raised to sh142b,†the report read.
The Auditor General said the money was paid in disregard of a notice by Uganda Revenue Authority to pay taxes.
The report was handed over to the Speaker of Parliament, Edward Ssekandi, last week.
Kisekka Market
The report also revealed that the Government was to pay sh15b to Rhino Investments owned by retired Col. John Mugyenyi for loss of Kisekka Market. Government entered into partnership with Rhino Investments to develop Kisekka market into a modern market.
Violent protests ensued, forcing the Government to terminate the partnership. Rhino demanded sh23b for the loss but the Government valuer assessed the loss at only sh6.8b.
“This figure was objected and after several interventions, an additional sh8.1b was agreed upon, bringing the total compensation to sh14.9b. At the time of writing this report, no taxes had been assessed by URA,†the report revealed.
Old Taxi Park
In the Old Taxi Park plot deal, the report revealed that Government agreed to pay sh17.2b as compensation to a number of individuals and companies that had entered into agreement with KCC to develop the area.
Later, KCC altered the policies and offered the plots to tenants. The group sued the Government for compensation.
Losses by Government ministries and departments
During the year, the auditors discovered that government losses in relation to cash and property by ministries and departments increased by 25.8 % from sh1.3b to sh1.7b.
The Ministry of Works reported the biggest loss of sh932m followed by National Agriculture Research Organisation with sh193m.
The Auditor General said the losses should be investigated to their logical conclusion and properly dealt with in accordance with the Public finance and Accounting Act, 2003 and the attendant regulations.
Loans by BOU to Government
The Auditor General also noted that advances and loans to Government by the Bank of Uganda (BOU) increased during the 2009/2010 financial year by 25.8% from sh2.5 trillion to sh3.1 trillion.
Advances totalling to sh449b was advanced to government under classified items without Parliament’s approval.
“However, these loans had not been approved by Parliament by the time of issue of this report as required by the regulations, nor were they recognised in the GoU consolidated financial statements, hence understating the liabilities and cash or expenditure for the year,†Muwanga reported.
While meeting NRM MPs at State House, it was revealed that the Government this financial year borrowed sh1.7 trillion from BOU to purchase fighter jets and tanks without Parliament’s approval.
The Minister of Finance, Syda Bbumba, is yet to present the budget to Parliament for retrospective authority.
The report indicated that despite numerous complaints raised over the recovery of sh422b Government loan to private enterprises, little has been done.
“There is still uncertainty on the recoverability of On- Lent Loans to Private Enterprises totalling to sh422b. Efforts by the Treasury to effect recovery have been futile,†the Auditor General said.
It was also revealed that delays by government to correct an error in the Exercise Tariff Amendment Act resulted into a total of sh50b collected in taxes by URA refundable to the tax payers. However, URA has been given the authority to retain the money and refund it to the respective individuals.
The report revealed that during the year, the Government signed 13 new foreign loans worth US$. 664m before Parliament’s approval. The auditors feared that this could result into committing the Government to ventures which may eventually be rejected by Parliament.
According to Article 159 of the Constitution, Government shall not borrow, guarantee, or raise a loan, except as authorised by or under an Act of Parliament.
The auditor also noted that sh97b is still lying idle on Escrow Accounts maintained by Ministry of Energy in Bank of Uganda and that the amount was not recognised in the government’s financial statements.
The report indicates that Uganda National Roads Authority (UNRA) overpaid sh33.5b to contractors due to erroneous computation of variation of price (VOP) under the Price Adjustment Clause in the various road construction contracts.
The over payment were also due to wrong measurements and inclusion of unexecuted works in the interim payment certificates by the supervising consultants.
Jinja-Bugiri road
The Government has also paid sh36b to Basil Engineering for loss suffered in the Bugiri-Jinja road deal
According to the report, in 2004, the Government signed an agreement with Basil Engineering for the rehabilitation of Jinja-Bugiri road (72.8 km). The contract was financed through a grant from the European Development Fund.
Ten months later, in December, 2004, the contractor sued Government for delay to pay VAT amounts that were due, failing to make timely decision regarding modification of material specifications and failing to provide compensation for change in the VAT law, among others. Government later reached a negotiated settlement of Euro13m. A total of sh36b was paid.
Dura Cement
It was also revealed that out of sh38b that Government is scheduled to pay Dura Cement for termination of the contract to mine minerals in Kamwenge district, a total of sh18b has already been paid.
The deal was terminated and the contract given to Hima Cement.