Jamwa convicted over NSSF money

By ANNE MUGISA,
HILLARY NSAMBU
and EDWARD ANYOLI

THE Anti-Corruption Court has convicted the former NSSF managing director, David Chandi Jamwa, of causing loss of over sh3b to the social security fund.

Jamwa’s bail was promptly cancelled by the court, which sent him to Luzira Prison from where he will be brought on Wednesday for sentencing.

Justice J.B. Katutsi said Jamwa, a well-schooled man in treasury bond investments, had no reason to sell NSSF bonds at a loss less than a month to their maturity. He said the firm was not in dire need of liquidity to warrant such a sale.

Delivering the judgment, Katutsi said: “A nosy but intelligent onlooker seeing what was going on would have been justified in posing the following questions: “Mr. MD, is NSSF in dire need of liquidity?”

“The accused, if he was a man of conscience, would have replied, ‘not at all’. The onlooker then would have wondered aloud. ‘Then why on earth are you selling these bonds below their maturity price when they are left with just a month to mature?’.

Katutsi said claims that Jamwa did not know that his actions would cause NSSF loss would be to underestimate his intelligence.

“I find the accused guilty as charged,” Katutsi said.

Jamwa’s lawyer, David Mpanga, asked for an adjournment so he could prepare his submission to lessen the sentence.

The judge granted the request but told him: “Unfortunately, you are not going back with your client. He should be taken to Luzira and be brought back on March 9 for sentencing.”

Jamwa repeatedly wiped his face of sweat. He stood next to his lawyers as the judge read out the ruling.

By the end of the judgment, Jamwa looked crestfallen. After the ruling, he was led away by the Police to the detention room.

The penalty for causing financial loss is imprisonment not exceeding 14 years, a fine of 366 currency points (about sh7m) or both.

The courtroom was jammed with members of the public who had come to listen to the judgment. Many of them were Jamwa’s relatives who included his parents. His mother broke down and wept after the ruling.

The court acquitted Jamwa of the charges of abuse of office. Jamwa had been indicted on two counts of abuse of office and causing financial loss of sh3b, which NSSF would have earned if the Treasury Bills had been allowed to mature.

Jamwa joins a line of NSSF bosses who have left the organisation unceremoniously.

The others are former managing director Leonard Mpuuma, whom court ordered to refund sh100m; Onegi Obel, whose case is still on and former labour minister Bakoko Bakoru, who is a fugitive abroad over the NSSF funds. Bakoko’s charges were dropped in 2009 by the Inspector General of Government after the Police failed to arrest her.

In recent times, NSSF has made headlines for various scandals, including the Temangalo deal in which the fund was accused of buying land at above the market value.

The fund, which has assets worth over a trillion shillings, was also involved in the multi-billion shilling Nsimbe housing estate project in which it risked public funds, according to the constitutional court which handled the matter in 2007.

Reactions to Jamwa’s conviction

Sam Lyomoki: Workers’ MP
The ruling will boost workers’ confidence in the law and efforts by the Government to fight corruption. I sympathise with him because he has to go to jail, but this will instil confidence in the workers that justice will be done. For a long time, officials alleged to have stolen public funds have been arrested and taken to courts but later left to go scot-free.

Tanga Odoi: Chairperson of the Makerere University Teaching Staff Association
I am disappointed that the whole mess has focused on one person. Although what he did was wrong, I think the punishment is too personal. When he was handling the transactions, there was a board and other people he must have consulted. By focusing on one person, they are sweeping others under the carpet.

James Nsaba Buturo: Ethics and integrity minister
The public needs to be reassured that no one is above the law, and that public institutions are working and credible. This case sends a message that the Government is more committed to dealing with corruption.

Reagan Okumu, the chairman committee on statutory authorities and state enterprises in Parliament
If it is in the wisdom of the court that Jamwa is guilty, then the court has helped us (committee) to carry out our complimentary duty.

Jamwa’s conviction will encourage those saving with NSSF to feel comfortable that their money is safe. It serves as a warning to all public officials and CEOs who do wrong things with the hope that someone in government will bail them out.

Simon Ojok, a saver with NSSF
Prosecuting Jamwa will not end the woes of NSSF. We pay a lot of money with a small interest, yet we have no control over where it goes.

I appreciate the ruling of the court, but we should focus on the long-term issues surrounding the fund, to ensure that such a mess does not happen again. The Government should also look into the conditions set for people to access their money from the fund.

FULL COVERAGE OF COURT SESSION

By ANNE MUGISA,
HILLARY NSAMBU
AND EDWARD ANYOLI

JUSTICE J.B Katutsi. the head of the Anti-Corruption Court gave his judgement against former National Social Security Fund (NSSF) chief David Chandi Jamwa.

Judge: On April 20, NSSF through Standard Chartered Bank, its primary dealer, placed a bid application with Bank of Uganda in an auction of Treasury bond FXD2/2005/3.

Summary: On July 26, 2005, NSSF decided to invest sh16b in treasury bonds, but managed to invest sh12b in three-year bonds.

On December 3, 2007, Jamwa wrote to Crane Bank, giving them mandate to sell three-year bonds with a face value of sh39b. A day later, NSSF investment analyst Stephen William Kizito wrote to Jamwa, requesting authority to sell the bonds of sh34b at an agreed sh36b to Crane Bank. Jamwa approved.

Jamwa then wrote to Crane Bank on November 2, 2007, mandating them to sell two-year bonds at sh19b.

Prosecution said Jamwa did not consult the NSSF management investment committee (MIC) over the transactions causing loss of sh3b.

The judge said the burden of proof lay with prosecution, which said one of the witnesses in the case, Grace Isabirye, was chief investment officer with NSSF at the time. He noted that during Isabirye’s cross examination by Mpanga, Jamwa’s lawyer, he said:

Mpanga: “So to the extent that there was a sale of Treasury Bonds in 2007, it was not something which Mr. Jamwa woke up and did one morning. The decision was discussed by the board, it was not something that came out of the blue. Am I correct?”

Isabirye: That is correct. He was approving something that had gone through a process.

Mpanga: Can you confirm that this process was approved by the Minister of Finance, that we are going to start selling Bonds in order to work on this new proposal. Is that true?”

Isabirye: Correct my Lord”

Mpanga: Confirm to this court that the sale of Bonds was not an exercise that was actually acknowledged in the decision making process of the fund…?”

Isabirye: Correct your Lordship.

Another witness was William Kizito, the former NSSF investment analyst. This is what he said under cross-examination by Mpanga:

Mpanga: Did you become aware as a member of the investment department that there was an agreed programme of re-aligning the investment port-folio of the fund to create a higher yield?”

Kizito: Yes I was aware of that

Mpanga: Would I be correct to say that the sale of these bonds was the beginning of the implementation of the new agreed and approved re-alignment of the investment port-folio of the Fund?”

Kizito: Correct.

Mpanga: When you were asked to analyse these investments to give your input on the sale of these bonds, there wasn’t a situation of the managing director acting on his own or acting for the purpose of causing a loss to the fund. In fact, he was acting as apart of a process and he was trying to increase the yield to the fund... correct?”

Kizito: Correct my Lord.

Judge: These were two key witnesses for the prosecution. From their evidence for one to turn round and say the accused acted arbitrarily would be a terrible assault on common sense. I hasten to say that this is in respect of bonds in general. I would with respect and in agreement with the assessors find the accused not guilty on this count and acquit him.

Turning to count 2, it is trite to say that when one deals with other people’s money, one has to be especially careful and forthright.

Be that as it may, a man must be judged on the facts as he believes them to be when the state of a man’s mind and his knowledge like here are ingredients of the offence with which he is charge.
Below is the testimony of another witness, Stephen Kaboyo, from Bank of Uganda. The judge described Kaboyo as a limpid and articulate witness.

Asubo: Is it possible to return your investment or if you want your money back before the Bond matures to get it? Is it possible?”

Kaboyo: Yes, it is possible and that is why we have the primary dealer network and yes, you can sell the Bonds to any other Treasury Bond Investor...”

Judge: Under cross-examination this is what he had to say.

Mpanga: An investor has a very legitimate option to sell before maturity. correct?

Kaboyo: Yes.

Mpanga: There was nothing
sinister about disposing of bonds before maturity dates?

Kaboyo: No.

Isabirye made the following observations during cross-examination.

Mpanga: You indicated that the problem of these transactions was not the making of the MD Mr. Jamwa. In fact that it was the Investment analyst who gave Mr. Jamwa inaccurate analysis, correct?”

Isabirye: Correct your Lordship.

Mpanga: Will I be correct in saying the inaccurate analysis that was given to the MD was to the effect that the sale of government Bonds at a certain price was advantageous to the Fund and therefore should proceed?

Isabirye: Correct your Lordship.

Mpanga: Would it be correct to say that this was a process that now we are getting to an execution in terms of getting the Bonds out bond by bond and identifying 13 or 26 which will be sold for the purpose of meeting the rations it was really the investment analyst who had to tell these are the ones going to sell...correct?

Isabirye: Correct your Lordship.

Judge: Mr. William Kizito was the Investment Analyst with NSSF at the material time. I here below reproduce some of his observations under cross-examination.

Mpanga: Kindly confirm that the sale of Bonds before maturity is nothing unusual?”

Kizito: Correct my Lord.

Mpanga: The sale of bonds before maturity occurs not only in this country but in all those other advanced countries in fact much more in the bigger countries. correct?

Kizito: Correct.

Mpanga: Is it also correct that a bond can be sold even a day prior to maturity?

Kizito: Correct.

Mpanga: When you look at exhibit P12 we gave a memorandum there that you are writing to the Managing Director. Is that correct?

Kizito: Correct.

Mpanga: You were writing through your boss the chief finance officer?

Kizito: Yes.

Mpanga: Was he also the chief investment officer?

Kizito: Yes.

Mpanga: You were asked and you confirmed that the number you were using in relation to the price, the benchmark for analysis was the same number as the number given by Crane Bank. Is that correct?

Kizito: Correct my Lord. The sale price was the same.

Mpanga: Can you just confirm that in exhibit P12 that there was an overall profit in relation to the sale of bonds?

Kizito: There was a profit.

Mpanga: No where in your detailed report (handover report) did you indicate that there had been a problem with the sale of bonds. Is this correct?

Kizito: Correct.

Mpanga: You did not say amongst other things that there were Bonds that were sold irregularly?

Kizito: Yes.

Judge: I have decided to use this style purposely so as to let prosecution as it were, write their own judgement. As I said herein above, a man must be judged on the facts as he believes them to be — when the state of a man’s mind and his knowledge as is indicated on section 20 of the Act are ingredients of the offence with which he is charged.
Here we have a man well schooled in the area of investment in treasury bonds. We have treasury bonds left with not more than 24 days to mature.
The evidence on record does not show that NSSF was in dire need of liquidity. Treasury bonds are the most risk-free.

The advice if it can be called advice from the investment analyst comes a day after he has mandated the sale of these risk-free bonds left with not more than a month to mature.

A nosy but intelligent onlooker seeing what was going on would have been justified in posing the following questions; “Mr. MD is NSSF in dire need of liquidity?” The accused, if he was a man of conscience, would have replied, “Not at all.”

The onlooker then would have wondered aloud. “Then why on earth are you selling these bonds below their maturity price when they are left with just a month to mature?”

The devil himself would have applauded this inquisitive interjection.
To say that the accused did not know that he was aware that what he was doing would result into loss to NSSF would be to underestimate his intelligence.

I must regret my inability to accept the opinion of the assessors have painstakingly taken. Justice must be done though heavens fall. I find the accused guilty on count 2 and convict him as charged.