Court Summons Saleh, Muhoozi

Dr Sulaiman Kiggundu, 54, managing director of the defunct Greenland Bank, is on trial for running down the bank by allegedly illegally lending out sh36b, far above the mandatory 25 percent of the share capital from the bank and causing loss of another sh75m. He allegedly run down the bank leading to its seizure by the Central Bank. Only Nasser Lumweno, one of Kiggundu’s panel of four lawyers led by Remmy Kasule is in court, but Kiggundu insists that the case must continue. The case is heard by Buganda Road Court Chief Magistrate Catherine Bamugemereire. Anne Mugisa and Juliet Nankinga recorded the proceedings. Kiggundu: I’m here to defend myself in this case.... For reasons of integrity, what I’m about to say will reveal today information which I have hitherto held as classified, after exercising great restraint and silence on these matters for the last three years. I’m forced to reveal information in my defence against charges brought by those I sought to protect in the interest of Uganda. Your worship, the evidence I’m going to give will show that the transactions in lending beyond 25 percent of share capital in count six, seven and eight of the charge sheet were done with full knowledge of and without objection by Bank of Uganda (BOU)...I believe that is why BOU is not the complainant in this case as we have been told by the evidence produced here. That is why I could not bring former bank of Uganda Governor, the late Kikonyogo, to testify as the highest authority of BOU. The evidence will further show... Bamugemereire: I don’t know how long your preamble is ...but we would rather go to the defence itself.... Kiggundu: We have waited for three years your worship...at the highest level. His excellency the President of Uganda, the Minister of Finance (privatisation), had full knowledge of the transactions with westmont and those leading to the purchase of Uganda Grain Milling Company (UGMC)...the sequence of events would indicate that it wasn’t for financial reasons that I’m being charged or that the bank was closed but for political reasons. Bank of Uganda did not prefer these charges but the executive did...Your worship, the political background that came out to influence this decisions to charge me were allegations that Greenland Bank was aiding the ADF.. We were not working with rebels and we were not working with the Sudan government against Uganda... (He quotes media reports including the New Vision, Monitor and Africa Journal magazine to support his evidence) The papers reported a parliamentary committee as expressing fear of a possible political infiltration by the Sudan through Concorp international’s economic involvement with greenland Group... (He quotes Africa journal) “The alleged Greenland connection to ADF may help explain the stormy relationship between the bank and president yoweri Museveni’s government. The Uganda government has long been wary of greenland because of its association with Sudanese interests. The bank also rankled government when it allegedly held back a consignment of medicine worth $7m destined for John garang’s Sudan Peoples’ Liberation Army. It is thought that only a court injunction may have stopped Museveni’s administration from freezing Greenland’s central bank account. The name of Museveni’s brother maj. Gen. Salim Saleh was until recently linked to greenland bank and its sister company, greenland Investments, but he and others have now distanced themselves possibly to pre-empt a concerted effort by the government to rein in the Greenland empire and cut off links with the ADF.” Kiggundu also said Ernst and Young, who audited the bank, never recommended its closure but an injection of sh7.3b capital to make up for the non-performing loans and advances. He added that BOU also approved a standby facility of $10b for the bank to help it contain deposit withdrawals arising from negative publicity the bank was experiencing as a result of the foregoing allegations. He said the bank’s customers closed their accounts following the bad publicity, specific instructions given by various parties including donor agencies after the closure of three other banks, ...). So on December 5, 1998, comes a bombshell. Maj. Gen. Salim Saleh takes blame, he was immediately forced to resign..instead of investigating if his claims were true, that evening the military police were deployed on greenland bank branches all over the country...the bank was virtually closed....Government authorities talked to their counterparts in tanzania and requested that similar action be taken against Greenland bank. On Uganda Grain Milling Company, Kiggundu said in 1996, Maj. Gen. Saleh in the names of Calebs international won a bid to purchase 51 percent of UGMC. When he could not raise the money, His Excellency the president telephoned me on December 1996 and asked me to help his brother regarding the payment of the UGMC shares. I told his excellency that we would lend if government guaranteed the loan. He asked me to get in touch with Matthew rukikaire, the then Minister of State for Finance (privatisation), for further discussions on the matter...(he said that government could not guarantee the deal and Saleh agreed to assign his calebs shares to Greenland investments provided he was given a commission and reimbursed the costs he incurred. The commission and costs was sh800m. Sh500m was in form of shares in Greenland Investments and sh300m paid to Caleb international’s account. He defended greenland Bank’s decision to take over UGMC saying it had been valued at sh17b meaning that Greenland investments had bought sh9b worth of assets for sh6.3b.... On Entebbe Resort beach, he said BOU was aware of Greenland bank’s involvement and that the Central bank extended a US$700,000 loan through the ITCRF program... He said the shareholders wanted to build a five-star hotel there and some equipment had been brought but it has now stalled. On the Greenland bank-UCB-Westmont (Asia) saga, Kiggundu said he was in Nairobi on his way to Dar-es-salaam when Saleh rang him about the deal. He testified that Saleh informed him that if greenland Investments could raise US$4m within two days, they could get 49 percent shares in UCB. “He said that Westmont were finding difficulties in raising the money... I trusted his word. After the telephone conversation, I contacted our outside friends who agreed to help”. He said he cancelled the Tanzanian trip and returned to meet Saleh. He said the meeting at Saleh’s Mbuya house was attended by Westmont representatives, Muhoozi Kainerugaba and Charles Mbiire, whom Saleh described as a special agent in the deal and a number of Greenland group employees....He said a purchase agreement was signed and Saleh sent muhoozi to take it to Museveni at Kisozi farm...He said following the meeting, he was invited to meet Minister Nkangi. He said Nkangi met him with Rukikaire, PS. Tumusiime Mutebile and Leonard Muganwa of the Privatisation Unit. He said he was with Saleh. “After our discussion, it was agreed that we could proceed with the transaction but to keep the matter confidential in order to avoid political controversy. It was further agreed that a formal consent for sale to greenland Investments would be given after three years as provided in the agreement of sale between the government and Westmont. On this understanding, we undertook to arrange for payment of the US$4m which was due from westmont on February 28, 1998. This was a welcome relief to the government officials who were getting embarrassed by Westmont’s inability to pay in accordance with the terms of the agreement of the sale between the government and Westmont. His Excellency, the President, together with top officials from the Ministry of Finance and bank of Uganda had visited Malaysia and met with Westmont before the award of the bid and after. The government was thus keen to see westmont perform to avoid being accused of having selected the wrong bidder. The government was anxious not to have to extend the payment of US$4m for a second time as it was originally supposed to have been paid in december 1997.... Given the classified nature of the arrangement, we never committed anything to writing. We had handled other issues before this matter...the proposed memorandum of understanding between BOU and Greenland bank in 1996 was resolved orally between the governor (Nyonyintono Kikonyogo) and Kiggundu...he believed that spoken word between gentlemen was as important as a written agreement and that an oral understanding was as equally valid as a written one. I strongly believed that this was the case.... There is evidence to show that the funds Westmont used to pay for the shares were sent directly to its account with greenland bank on instructions from various external sources. There is no debit entries on Westmont’s account to imply that greenland bank lent its resources to Westmont.. A careful look at westmont’s account with greenland bank clearly confirms this position. The testimony given to this court by the manager, foreign exchange in greenland bank has already confirmed this. The above arrangement with westmont was handled at the highest levels of sate and implemented very confidentially.... (refers court to an audit report of Ernst and Young auditors and says) “You will note that these payments were made to various parties including sh913.7m to Charles Mbiire, sh125m to Caleb International and sh38.1m to Mrs Jovia Akandwanaho saleh. Other payments were sh43.9m to lawyer shonubi and sh48.3 to Pricewaterhouse for the services... To clear the impression that I personally benefitted in this transaction, it can be verified from this schedule of payments that no payment was made to me. The only item recorded against my name is sh5.9m, which was paid out against my instructions by our Greenland forex bureau (Kenya), to meet air travel and other expenses for Vijayan or Westmont, who was travelling back to Malaysia.... When the secret was leaked out, all the people with whom we worked in this arrangement started distancing themselves from it. The more honourable among them was Rukikaire, who resigned as Minister without saying much on the UCB incident. My arrest and prosecution was just another way by the government to try and distance itself from the whole arrangement. I hope, however, that this honourable court will be able to judge where the truth lies and justice will prevail... Hearing continues on Thursday, August 2, 2001. Ends