MPs query diversion of UDB sh3.7b capital
Jul 24, 2007
MPs have queried circumstances under which sh3.7b was given to the Uganda Development Bank (UDB) as capitalisation without their approval. The MPs also demanded to know why the sh3.7b was later given out as loans to Phenix Logistics and Apparel Tri-Star.
By Mary Karugaba
MPs have queried circumstances under which sh3.7b was given to the Uganda Development Bank (UDB) as capitalisation without their approval. The MPs also demanded to know why the sh3.7b was later given out as loans to Phenix Logistics and Apparel Tri-Star.
In 2002, the finance ministry gave the bank sh3.7b as capitalisation funds, but later gave instructions that the money be given as loans to Phenix Logistics and Apparel Tri-Star.
The deputy secretary to the Treasury, Keith Muhakanizi, directed the bank’s director, A.K. Appiah: “The funds received from this ministry this week are to be allocated as follows; Apparels Tri-Star $1.5m and the balance to Phenix Logistics. The ministry has no objection to the disbursement of the funds after appraisal.â€
The committee wondered why the ministry had to give instructions to the bank on how to use the funds yet it was a capitalisation grant.
“We suspect that the ministry was using the bank as conduit for transferring the money to private companies. You wanted to dodge Parliament. Secondly, if the money was to capitalise the bank, why then instruct on how to use it?†the committee chairman, Nandala Mafabi, asked.
Suruma said it was his first time to see the letter and promised to investigate the matter.
Suruma and officials from the ministry were appearing before the committee to answer queries raised by the Auditor General in the 2004/2005 financial year.
Later, the MPs asked Muhakanizi to explain.
Muhakanizi said: “The Government was supposed to loan $1.5m to Tri-Star. However this was not a directive since the bank was asked to give out the money after appraisal.â€
The MPs rejected the explanation, saying that according to the law, the Government is not supposed to capitalise the bank and direct how the money should be used.
MPs have queried circumstances under which sh3.7b was given to the Uganda Development Bank (UDB) as capitalisation without their approval. The MPs also demanded to know why the sh3.7b was later given out as loans to Phenix Logistics and Apparel Tri-Star.
In 2002, the finance ministry gave the bank sh3.7b as capitalisation funds, but later gave instructions that the money be given as loans to Phenix Logistics and Apparel Tri-Star.
The deputy secretary to the Treasury, Keith Muhakanizi, directed the bank’s director, A.K. Appiah: “The funds received from this ministry this week are to be allocated as follows; Apparels Tri-Star $1.5m and the balance to Phenix Logistics. The ministry has no objection to the disbursement of the funds after appraisal.â€
The committee wondered why the ministry had to give instructions to the bank on how to use the funds yet it was a capitalisation grant.
“We suspect that the ministry was using the bank as conduit for transferring the money to private companies. You wanted to dodge Parliament. Secondly, if the money was to capitalise the bank, why then instruct on how to use it?†the committee chairman, Nandala Mafabi, asked.
Suruma said it was his first time to see the letter and promised to investigate the matter.
Suruma and officials from the ministry were appearing before the committee to answer queries raised by the Auditor General in the 2004/2005 financial year.
Later, the MPs asked Muhakanizi to explain.
Muhakanizi said: “The Government was supposed to loan $1.5m to Tri-Star. However this was not a directive since the bank was asked to give out the money after appraisal.â€
The MPs rejected the explanation, saying that according to the law, the Government is not supposed to capitalise the bank and direct how the money should be used.