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$18m bid hits snag

By Vision Reporter

Added 24th November 2002 03:00 AM

A hefty $18m World Bank-funded deal may slip from the hands of Kenyan and Ugandan business people who had entered a joint venture due to internal wrangles.

A hefty $18m World Bank-funded deal may slip from the hands of Kenyan and Ugandan business people who had entered a joint venture due to internal wrangles.

By Yunusu Abbey
A hefty $18m World Bank-funded deal may slip from the hands of Kenyan and Ugandan business people who had entered a joint venture due to internal wrangles.
LANTech Uganda Limited (LTU) was formed by a consortium of companies to tender for the supply, installation and implementation of an Integrated Financial Management System (IFMS) for the finance ministry in Kampala.
The consortium comprises of Elgon Communication Limited, which belongs to Elly Karuhanga, Ezra Bunyenyezi and Patrick Malungu. Also LANTech International Limited (LTI) which has a 50% stake in LTU and also acts as management consultants. Computer systems giant Hewlett Packard (South Africa) are the other major partners.
LANTech International is the holding company for LanTech Kenya (LTK) and LANTech Tanzania (LTT).
But last week Sebalu & Lule Advocates, who said they were acting on behalf of the Kenyans-Aquinas Wasike and Musili Nzambu-directors of LTI and LTK, wrote to the finance ministry and the World Bank informing them about the split and problems in LTU.
Dated November 18, Sebalu & Lule's letter states that LTU had collapsed after the Ugandans, Karuhanga, Bunyenyezi and Malungu had kicked out their Kenyan partners, Wasike and Nzambu, the technical partners of the consortium.
The lawyers cautioned the finance ministry, World Bank and HP against any further dealings with the three Ugandans who had taken over LTU, saying if they did so, they would have contravened tender regulations because the joint venture no longer existed.
"After realising that the World Bank was about to issue a no-objection letter for the contract award to our company (LTU), since we were the lowest bidder at US$18m, the three then decided to kick us out of the company," Nzambu said. He said the incident took place in Kampala on July 20,2002.
"Surprisingly, they even went to the extent of throwing us out of the company offices at Nakasero and confiscated our persoanl computers with all the information," he told The New Vision.
But Karuhanga last week dismissed the allegations as baseless and unfounded. "We had normal business differences with our Kenyan partners and we are now in arbitration," he said.
Karuhanga said the problem stemmed from a private company which Nzambu floated and was illegally operating from LTU offices using its facilities.
"He formed a company known as African Technology, which was doing the same business like ours. We were unknowingly paying for his telephone, fax and electricity expenses yet that was his private business," Karuhanga said.
Karuhanga criticised his Kenyan partners for going to the press contrary to a consent order they signed before the arbitrator, Dr. Joseph Ssempasa.The order restrained the two warring parties from discussing the matter since it was already in court.
Nzambu countered that, “But we shall not accept this kind of behaviour which discourages foreign investors and is intended to scare us away. We shall use all possible legal means to fight for our rights, because we injected about $200,000 in the joint venture," he said.
On the finance ministry contract, Karuhanga said the Kenyans were not informed, because HP is a big multi-national company and had remained in the tender alone.
"At the time of the final bids, LTU was no longer there. There were instructions that the company which had less than 20% shares in a consortium, would not be mentioined," Karuhanga said.
"But since HP have been our long time friends with Ezra(Bunyenyezi) if they win the tender, we might ask them to work with them. It should be noted that it was LANTech Uganda which knew HP and requested to team up with them," Karuhanga added.
Bunyenyezi said since the matter was under arbitration, he was not ready to discuss it with the press. “Since they took us to court, I will just wait for the judgement. I have even been asked to go for the arbitration on November 28 and 29, 2002," he said. Ends

$18m bid hits snag

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