MPs debate NSSF-Temangalo report
PARLIAMENT on Tuesday started debating the majority and minority reports of the committee that probed NSSF’s Temangalo land purchase from businessman Amos Nzeyi and security minister Amama Mbabazi.
PARLIAMENT on Tuesday started debating the majority and minority reports of the committee that probed NSSF’s Temangalo land purchase from businessman Amos Nzeyi and security minister Amama Mbabazi. Cyprian Musoke and Mary Karugaba bring you a continuation of the proceedings.
DAY ONE CONTINUED
Adolph Mwesige (State minister for general duties, PM’s Office)
Thank you very much Mr. Speaker. Mr. Speaker, I would like to thank the committee, both the majority and minority for their reports which have created the basis for this debate this afternoon. Mr Speaker I will address myself to the issues I consider fundamental in this debate. The first issue is the one of the majority group, that there was conflict of interest on the part on Mr. Mbabazi and hon. dr. suruma. The leadership code defines conflict on interest; therefore one does not need recourse to the dictionaries, or personal definitions to define conflict of interest.
Mr Speaker conflict of interest is a situation where a leader finds himself in a situation where he has got to choose between a situation which benefits him or her as an individual and an interest of a public body in which he serves. In other words, the leader must practically and physically be in a situation, in which his or her interest conflicts with that of a public body. In normal circumstances, and this is provided for in section 9 of the Leadership Code, a leader would excuse himself from a meeting in which his own interest is likely to be discussed.
First of all, he declares the interest, excuses himself, and the matter is discussed in his absence. Let’s say in this Parliament if a motion concerning any member’s interest is introduced, it would be logical for that member to declare his interest and withdraw from the House, so that the House takes a decision in his absence. Now, the question is: was Hon Mbabazi a member of the board of NSSF?
Members:
No.
Mwesige
And if he was not a member of the NSSF board, could he have been in situation where his personal interest conflicted with the interest of the NSSF.
Members
No.
Mwesige
Members have answered the question. On the question of Hon. Dr. Ezra Suruma, he of course participated in this decision making because he was consulted. But the question is did he benefit from the proceeds of the sale?
Members
No.
Mwesige
And I will stop at that Mr. Speaker. The second issue for us to address, I do recall that when the committee commenced its investigation, the major issue that was raised in the committee, in the public, media was that Hon. Mbabazi was alleged to have sold at an inflated price. It is interesting that this issue got lost along the investigation. The issue then became value for money. The agreement of sale says Hon. Mbabazi sold at sh24m per acre. There is Hon. Muhwezi in the neighborhood who sold at sh26m. There is Akright who had bought the same land at sh28m one years ago. There is also the endorsement of the government valuer who estimated it at sh26.9m. Hon. Mbabazi, if I were you the price of sh24m was clearly very inadequate judging from the sh26m of Hon Muhwezi, sh28m of Akright and sh 26.9m of the government valuer which he stamped on the transfer, NSSF indeed had a good deal. Having answered the question the price was not inflated, then what could have been the motivation or influence peddling if the price was inadequate, far below the markets price? then what could have been the motivation for peddling influence? Can you peddle influence to sell your land at a price lower than the market price? What could have been the motivation?
Prof. Ogenga Latigo
(Leader of the Oppositopn)
You did make reference to the question as to whether Hon. Mbabazi faced the issue of conflict of interest. If you look at the minutes of the 58th meeting of the NSSF board item 5 says to manage conflict of interest, Arma Ltd be advised to transfer their power of attorney to Nzeeyi to manage conflict of interest.
That Mr. Amos Nzeyi be instructed to issue this authority that he had been authorized to transact on behalf of Arma Ltd. A short while ago hon. Mbabazi stood up to inform hon. Nandala that he and Amos Nzeeyi received the money in full.
It is the same transaction through which the board advised and the advice was taken and the money was taken. If that is not conflict of interest, I would like you to advise.
Mwesige
The honourable leader of the opposition has answered himself, because he has talked of somewhere where the board talked of managing conflict of interest. You manage conflict of interest by first declaring it, then you withdraw from that position where your decision would have conflicted the public interest. The second instance, in which you can manage it, which was applied in this case, is by donating the powers of attorney so that Mr. Mbabazi in this case divorced himself from taking a position which would give rise to a conflict of interest.
But my own view is that even if Hon. Mbabazi had not given a power of Attorney, provided he was not a decision maker in NSSF, as long as he was not a board member of NSSF, there is no way he could have been in a conflict of interest. I was addressing myself to the issue of influence peddling.
First of all I am surprised that the committee which had access to the service of lawyers not only in the committee but even in Parliament could charge the two ministers under section 15b of the leadership code, because section 15b has nothing to do with influence peddling.
It says: “Without derogating from other law, a leader shall not practice favouritism, nepotism, by giving preferential treatment to any personal advantage to himself, family, friend or agent.†The operative words here are favouritism and nepotism. Mr Speaker I would not want to believe that nepotism and favouritism are one and the same thing. If they were, then I plead guilty. Even the evidence which was laid before the committee, Mr. Olweny, the board member who rightly expressed his opinion, expressed caution about the possibility of conflict of interest, pressure when he was called to the committee for the second time, he said the context in which he gave the caution was misconstrued by the committee. and he did say at no point did Hon. Mbabazi or any person put political pressure on him to buy this land. As far as Hon. Suruma is concerned, the only political pressure he is said to have exerted on Mr. Jamwa in Munyonyo was not corroborated by a third witness.
When evidence of one person is corroborated against that of another, it is only logical to commit it to a third person and I would like to think that this Munyonyo concert was attended by many people including Dr. Suruma’s wife. I don’t think it was beyond the powers of the committee to summon Suruma’s wife.
For you to conclude that Hon. Suruma could not remember what they discussed with Jamwa is enough to conclude that he was not truthful. Really, how many of us have attended conferences, we sit with people at the same tables, and can’t remember what their names or faces were? How do you expect a minister of finance who is sometimes in Washington, sometimes in Kampala, other times where, to remember the nitty gritty of the conversation he had with Jamwa in Munyonyo?
If Dr. Suruma wanted to exert pressure on Jamwa, did he have to wait to meet him in Munyonyo? Would it have been difficult for him to summon him in his office and exert pressure we are talking about?
On the Question of Procurement, in future when we are confronted with technical issues of a legal nature, the office we should consult is the attorney general. The question is whether this purchase was a procurement or not and the answer is in the interpretation of the law.
The solicitor General wrote an opinion under his signature saying that this was not a procurement within the meaning of the PPDA Act. He went further to propose an amendment to the Uganda PPDA Act, to take the version of the Kenya PPDA in which real property is procurable. In Kenya, the law is wide enough to cover real estate as procurable property, but in Ugandan law procurable property includes only works, services and supplies. Works meaning roads, services meaning legal, and supplies meaning things like sugar, tea and small things. If Parliament had wanted land to be a procurable property in our law they would have said so. And I am glad both reports have recommended amendment of the PPDA law for avoidance of doubt.
In conclusion, I would like to say that no wrong doing was committed by Hon. Mbabazi and Suruma, we need reforms in our laws and strengthen NSSF by looking at reforms in the pensions sector. I am happy that the ministry of finance has already brought a law to reform the pension sector. I am also happy that the workers will finally be represented on the board of NSSF.
Okello Okello (UPC)
Thank you Mr. Speaker. I have been operating in the property market in this country for the last 37 years, so I know what goes on. But before I go there, let me say just two things. I would like to congratulate the government chief whip for the level of efficiency she has shown today.
Two, I think we need to know the NSSF we are talking about. In 1952, ILO passed a convention 102, requiring all UN members to make provision for social security for workers.
In fulfillment of this in 1967, the Uganda government, by an Act of Parliament, enacted a law setting up NSSF under the ministry of labour and it was operated as a department for 16 years, until 1985, when again a government of vision came and transformed it by setting up a board of directors making autonomous, with very little supervision from the line ministry of labour.
Today, the fund has no home, it can be moved from place to place at the stroke of a pen or a statement by somebody. So the savings of the workers of Uganda are in danger because their fund is being looked at as a petty cash for some people. It is very unfortunate that it is being treated as an offshore fund where people come and withdraw any time.
Coming to the property market; I am not going to accept any point of information, I am knowledgeable in this area, so I don’t want my knowledge to be reduced.
Mr. Speaker when I am selling my land, I don’t need to give power of attorney to anybody. This is the first case in 37 years, when I am hearing of this powers of Attorney. Normally, the practice is that the vendor would hire a land agent or valuer, somebody with more knowledge, to sell his land at the best price for a fee. But the title will remain with the vendor, and all papers will be signed by the vendor.
But Mr. Speaker, the fact that in this transaction from the word go they were thinking about powers of attorney, it means all the parties in the deal saw the potential crime.
You will never manage conflict of interest by powers of attorney - it is attached to the interest in the land. The interest in the land remained with the owner-the vendor. So the conflict was never managed. For me in this report where you find Mr. Nzeyi, you just put Hon. Amama Mbabazi because Mr. Nzeeyi was just a contract killer -he was contracted to do the killing.
It’s good, Mr speaker, that we have the penal code. If I hire somebody to kill, we hang together with the killer. It is very clear. The question of conflict of interest was recognised from the word go and it was never managed; it is still there now.
So Hon. Mwesige, the only way is to avoid it completely. Don’t go into it whether by proxy or not; don’t try at all to give somebody powers of attorney to go and do it on your behalf. In transactions where you are selling land, you never pay full price until the title is transferred. A minimum of 10-25% is retained until all the titles are transferred, but here, like people whose house was burning, about 10 to 20 things were done on the same day.
The whole system was glued to this transaction the whole day. it means the normal land transaction was not there. what happened was an arrangement to use some land titles, plunder this money and make an agreement. You cannot sell your land and retain some of what you have sold. The entire country is finished and gone if these are the leaders we have.
On whether it was investment or procurement, I am a student of investment. The definition is, Honourable members can take their pens and papers and write…..
Speaker
They can use Michael West…
Okello Okello
“Investment is using a capital sum, other than for purposes of trade, to create or acquire an asset which will, hopefully, produce an acceptable flow of income and appreciate in capital valueâ€. Any money you invest that will not give money outflow is not an investment. the Temangalo land was bought several months ago, how much money has flown from it since? Zero! If you buy crested towers today, next month you will start getting rent in your pocket. So investment must produce acceptable flow on income. Land is just one item in the capital chain. You have to put value of land firsts. To get the idea of this being an investment is not. We shall need more money to build, labour, materials. In land transaction, fraudulent misrepresentation can render the transaction void. The land sold to the fund has a lot of encumbrances which were not declared at the time of purchase. In my view, this land should be returned, and the money refunded. we should not continue to deal with people who are not doing things the right way.
About 3,000 acres is swamp. Why should we spend time saying they should bring the remaining titles? We don’t want your land, we want our money.
Speaker
Lets adjourn the meeting to tomorrow.
WEDNESDAY, DAY TWO
Ben Wacha (Independent)
Thank you Mr. Speaker, I will try to be very, very brief. Let me start with the following observations. When the debates on this transaction started in the press, I was not here but I was informed that there was a group of MPS who were very vocal as far as this matter was concerned. Since this debate started, that vocalness, that loudness has been replaced by a big silence (laughter).
I am hopping Sir, that by the time we end today, those Honourable Members have changed their mind or they are still pursuing the matter. (More laughter).
Secondly Mr. Speaker, yesterday we were treated to a very elaborate presentation by my Honourable friend and partner Adolf Mwesige. I was not surprised because I know the depth of his ability. But what trapped me is not so much what he presented but what he did not about how Arma limited, a company, in which Hon. Amama has interest, is a director and shareholder, gives powers of authority (attorney) to businessman Amos Nzeyi. Nzeyi therefore has powers to sale.
That would not have caused any problem at all. the problem is caused by the fact that Amama did not remove himself from the picture. For example, the owner of Arma is Mbabazi, who is also the Secretary General of NRM. In the minutes, the board advised that to manage the issue of conflict of interest, the powers of attorney be transferred to Nzeyi for the purposes of transacting with the firm. But we have already noticed that actually the board knew the land belonged to Mbabazi. Next, I want you to look at another evidence of authority to transfer the money to Amama and Nzeyi’s account.
Therefore, the board of directors knew that in dealing with Nzeyi, they were actually dealing with Amama Mbabazi. Therefore, whatever Nzeyi stated, in pursuit of this transaction, was actually being stated by Amama Mbabazi.
There are records showing that Nzeyi intimidated Jamwa. He went around saying that he was in touch with the First Lady, that the president slept in his house, that he knew the house of the president for the purposes of showing how close he was to the president.
The minister of security was already in touch with the the president. If that is not undue influence, then I don’t know English (laughter).
Fred Mbagadhi (NRM)
Thank you Mr. Speaker, I humbly stand before this House for a noble course, representing the people of Kagoma and add my voice to the voices of reason that have honestly, objectively, emotionlessly debated this contagious issue.
Mr. Speaker sir, and colleagues, allow me at this juncture to commend the authors of the two reports but at the same time allow me recognise and recommend the efforts of our colleague, Hon. John Odit, who was unfortunately deprived of his mandatory right to chair.
Hon. Speaker, I would like to comment on the minority report. When you look at Jamwa’s testimony, you outrightly realise that the initiator of the deal was NSSF and not Mbabazi. In this case, let us look at the core issues that sparked off this saga. Of course this is where we have Arma being condemned for selling land.
In this case, the pertinent issue would have been on two things: whether the sale reflects the value for money and whether the price was inflated. I remember when this saga came up, the issue that was in print media was the issue of Mbabazi selling his 400 acres of land at sh11b. Hon Speaker, in that circumstance, I would even have expected in this majority report to have a reflection in respect of the issue of inflating the price as one of the key terms of reference as the report came up.
Unfortunately, as we moved along the way, that issue was thrown off-board. Honourable speaker, fellow colleagues, allow me give you a little testimony about my constituency. I had an opportunity of interacting with a cross section of my constituency. They told me they have been following the debate and they feel some of us are raising our voices just because a squirrel has been caught in a land trap.
They feel that their cause has been hijacked. For long, the workers have been having concerns, which they feel should have been the issues in this saga. The workers of my constituency say that having a sh1.3 trillion asset base is a good thing, but they would really love to see that we legislators look into how best we should enable them access their funds. They are talking about issues of representation, eligibility to access their money, should it be 55 or 45, how do they access loans when they hear colossal amounts being advanced to corporate bodies, issues of pension reforms, insensitive bureaucracy, that has been their focus.
In the interest of time, the other issue is valuation, whether we talk of independent or government valuers, in a liberal economy like that of Uganda, the parameters of demand and supply will definitely determine the price in the market. so in this case of Amama selling his property, he is presumed to enjoy all his rights and freedoms as enshrined in the Constitution of Uganda. As long as he lives within the confines of the law, he has the right to own and sell property.
Peter Nyombi (Independent)
Thank you very much Mr. Speaker. In the minority report, preliminary objections were raised which are very fundamental to the credibility of the majority report. One of them is with respect to the terms of reference and I just want to read the first two terms of reference. It says, whether there was conflict of interest, in the parties involved in the Temangalo land transaction.
The second one is whether there was influence peddling in the transaction. Mr. Speaker, terms of reference are very important if you are going to carry out an investigation. I worked in the office of the IGG for 15 years. At the end of the report, you are supposed to answer the terms of reference. In neither one of the first two terms of reference is Hon. Amama Mbabazi mentioned, or Hon. Dr Ezra Suruma. so neither of them was mentioned as a suspect being investigated.
The assumption is that this was a general investigation. unfortunately, the general investigation meandered and got mixed up into some sort of trial. In the majority report, it is mentioned very clearly that the two ministers were summoned as witnesses, not as suspects. And so they appeared before the committee as witnesses.
Thererfore whatever exercise this committee got involved in was some general investigation but along the way, they got lost.
However, Hon. Suruma and Mbabazi were found by the committee as having contravened sections 8 and 12 of the Leadership Code Act and these offences are criminal in nature. But here are these two very senior officials, they are invited, but at the end of this investigation, which turned into some trail, they are found to have contravened sections of the Leadership Code Act.
In other words, Hon. Amama Mbabazi and Dr. Suruma, were being convicted of criminal offences for whichg they were not tried. Although they went to the committee as witnesses, at the end of the day, having given evidence, having assisted the committee, they are put in the dock as convicts.
The committee recommended sanctions and this is a very serious mater because if you are to recommend sanctions, Honourable Amama Mbabazi, Hon. Dr. Suruma should have been warned at the beginning the “we suspect you to have committed an offence of criminal nature,†and it is very clear in the constitution, that in the conduct of business, committee exercise the powers of the High Court.
Inevitably, they must follow the rules of natural justice. The committee did not follow these rules, if they had observed these rules, they should have put honourable Amama Mbabazi and Dr. Suruma in the dock and told them what they are accused of, they should have allowed Hon. Amama and Dr. suruma to be represented either by himself or by a lawyer. The two should have been allowed to cross examine every witness who appeared before this committee. They should have been allowed to testify and call witnesses.
Dr. Sam Lyomoki
(Workers/NRM)
Mr. Speaker, I thank all members to have found it necessary to handle a matter that is in the interest of the workers. Mr. Speaker, in the main report, when they were looking at the background, they saw that there was an urgent need to restore workers trust and to streamline the operations of the fund.
That means that the spirit behind the whole investigation was that this thing was going to be in the interest of workers. Workers became happy because they also wanted to find out whether their money was being invested well and whether they had been defrauded in this deal. They have been following the arguments, particularly in the area of investment.
The monies that go for investment are the balance after workers’ interests have been handled. Workers have been having a long standing grievance where NSSF has become as if it is for investment, workers don’t get their benefits, we are having a portfolio noW coming to sh1.3trillion but workers don’t get their money.
Many of the benefits that are supposed to be under NSSF like unemployment benefits, like medical insurance are not within the benefit of the workers. Therefore Mr. Speaker, the workers knew that this investigation would address issues in their interest. The workers realised the viability of this project; we have all documentation to show that this project is in the interest of the workers. When you look at the viability for the planed investment the workers are going to have houses sold to them, returns…..
Speaker
There is a point of order let me listen to it.
Erias Lukwago (DP)
Mr Speaker I have a petition here which was filed to our office by workers and the petitioners are complaining about how this transaction was done, the influence peddling by Hon Amama Mbabazi and Dr. Ezra Suruma. The question is, is Hon. Lyomoki in order to say the workers are satisfied and their interests are catered for when there is a petition still pending in the House here?
Speaker
I have always told you that when the issue is to do with facts, it cannot provoke a point of order because it will be a question of accepting your version or his. I have no ability to do that without further investigation.
Charles Bakkabulindi
(State minister for sports)
Hon members, let’s stay calm and understand these issues. We are the representatives of the workers and our workers are those with formal identification of investment in NSSF.
Those people you are referring to, who were staged and demonstrated then handed a petition to the Speaker, we got some of them and asked them to produce their NSSF numbers to know they are part of us and they had nothing. The next day they withdrew the petition.
Lyomoki
Thank you very much for your wise ruling. Mr. Speaker, I remember when I was young, there was story where a chicken felt a nut falling on its head. Chicken licken called fellow birds, because she thought the sky was falling. So they agreed to warn the king. They found cunning foxy loxy, who tricked them that his den was a short cut to the palace.
When the chicken entered the den he ate all of them. Mr. Speaker, workers know their issues. No one will lie to us that by handling the machinations in the report, we will have the interests of the workers. There will be no foxy loxy to come and claim that they are petitioning for workers when they are not workers. We are speaking for workers, we have met workers groups, studied the investment reports, what is the problem?
Rosemary Tunde
(Workers/NRM)
I would like to give information that Temangalo is just a trigger of a long awaiting reform in NSSF. We have seen other saga in NSSF like Nsimbe estates, Alcon contract, Udyam House, so we thought if there are conflicts, we must look for an everlasting solution that’s why workers came out with a firm resolution like having representatives on the board, now we have achieved it.
for reforms, the Bill is already in cabinet, we are also looking at it because what has been happening is that workers have been going to banks and borrowing money at exorbitant interest rates, so that one is very hard. Lastly, we thought that the board should go, but its term is expiring next month. I think we have achieved 99%.
Lyomoki
You can see that we are unanimous as workers that we need reforms in NSSF, that we need workers to be represented on the board and we have agreed with cabinet to handle this. So as workers are concerned, we are satisfied. The issues of censure and others will not assist workers.
Henry Banyenzaki (NRM)
Thank you Mr. Speaker and I thank the committee for this kind of rigorous investigation they did. and more so, I salute those members from my party the NRM who appended their signatures on the majority report.
They are brave, they are nationalists, they speak for a cause. Today when I was watching the speech of McCain when he was conceding defeat said, “I could have made mistakes within these campaigns, I am sorry for any mistakes that were made.†It’s a serious matter that we leaders need to acknowledge mistakes when we make them and concede that we have erred here and there (booing).
Whether you yell, this is a fact. Mr. Speaker I am a Catholic and in our faith, if you are a big sinner, you go to hell. If you a mild one, you go to purgatory, if you area saint, you go direct to heaven.
There are observations in the main report that Amama Mbabazi, committed some sins and has been in purgatory. And while in purgatory, our big father prayed a big prayer; it is that prayer that has lifted him from that purgatory. For Honourable Ezra Suruma, I salute you, the way you conducted yourself during the investigations. The kind of influence peddling we saw during the investigations during the whole transactions shows there was something wrong. Up to now you cannot even deny it. And that’s why I concede because there have been prayers, I concede that we give a lesser punishment- but it doesn’t take away the fact that the procurement process was abused, Jamwa’s confession was classic. The value for money is debatable, but poor Jamwa has been trying to turn ashes into gold. But the fact remains that we leaders need to take responsibility even when we get off the hook.
James Akena (UPC)
Clearly there is a problem and those who deny that are merely burying their heads in the sand. No amount of denial can remove the fact that there is a serious problem. According to the NSSF budget plans, under investments there is no buying land. We have fixed income investments, mortgages, five NSSF branch buildings, a headquarters and apartments on Lumumba avenue, equity in Serena-Kampala hotel and to start construction on Yusuf Lule road. How this transaction came about and the rush, it seems NSSF needed this land desperately. When you follow the trend of the money, the beneficiaries……………….
Suruma
Point of order Mr. Speaker. Is the honorable member in order to say NSSF has no plans to invest in land when in fact in its five year published corporate plan, it showed three investment areas: fixed investments, real estate and equities? Is it in order for him to say something that is untrue?
Speaker
I think what is happening is that the Honourable member holding the floor resisted your point of information, and what you are now trying to do is giving him information in a point of order.
Akena
Thank you very much Mr. Speaker sir. But clearly the key activities for these projects were for 2007/08 not the five year strategic plan. Within the context of this one year budget the plan for buying land is not included. If you follow the trend of the money, who ultimately benefited?
That’s where the pressure was. The need to have money quickly to buy into National Bank of Commerce (NBC). Who is who in NBC, the very actors: Amos nzeeyi chairman, Hon. Suruma vice-chairman, Amama Mbabzi director, Dr. Ruhakana Rugunda director.
Mbabazi
I am reluctant to interrupt my colleague, but I felt compelled to do so because the information he is giving is misleading and inaccurate. What he is reading is the bank statement of 2003. It is true that was the situation at that time.
But this is 2008. For the member, like the committee, not to take the trouble to find out exactly what the status of the board of the NBC at the time the transaction took place……. Hon. Suruma ceased being a director the moment he was appointed finance minister. Dr. Rugunda and I, ceased being directors about four years ago. So is it in order for the Hon. Akena to present out of date information as if it is current?
Speaker
Hon. Akena, do you know that there are annual returns which are filed with the registrar of companies and was this the most recent return that you are reading from?
Akena; Mr. Speaker sir the money still ended up in NBC. Whether they are directors or shareholders.
Speaker
Honourable was saying you are out of order that you are intentionally misleading or you are just reading from an old return when there is an update?
Akena
I am reading from the report which received earlier this week. My point is the money still ended up in the National bank of Commerce.
Speaker
I think it is unfortunate that you are reading from an old return. your intention was not to mislead, was it? Now that you are informed.
Akena
No Sir.
Cecilia Ogwal (Independent)
Mbabazi told the committee that Mr Amos Nzeeyi persuaded him to bring funds by sale of their family land in order to buy shares in NBC. So whether you are a director or shareholder, you have full interest in the bank.
DAY ONE CONTINUED
Adolph Mwesige (State minister for general duties, PM’s Office)
Thank you very much Mr. Speaker. Mr. Speaker, I would like to thank the committee, both the majority and minority for their reports which have created the basis for this debate this afternoon. Mr Speaker I will address myself to the issues I consider fundamental in this debate. The first issue is the one of the majority group, that there was conflict of interest on the part on Mr. Mbabazi and hon. dr. suruma. The leadership code defines conflict on interest; therefore one does not need recourse to the dictionaries, or personal definitions to define conflict of interest.
Mr Speaker conflict of interest is a situation where a leader finds himself in a situation where he has got to choose between a situation which benefits him or her as an individual and an interest of a public body in which he serves. In other words, the leader must practically and physically be in a situation, in which his or her interest conflicts with that of a public body. In normal circumstances, and this is provided for in section 9 of the Leadership Code, a leader would excuse himself from a meeting in which his own interest is likely to be discussed.
First of all, he declares the interest, excuses himself, and the matter is discussed in his absence. Let’s say in this Parliament if a motion concerning any member’s interest is introduced, it would be logical for that member to declare his interest and withdraw from the House, so that the House takes a decision in his absence. Now, the question is: was Hon Mbabazi a member of the board of NSSF?
Members:
No.
Mwesige
And if he was not a member of the NSSF board, could he have been in situation where his personal interest conflicted with the interest of the NSSF.
Members
No.
Mwesige
Members have answered the question. On the question of Hon. Dr. Ezra Suruma, he of course participated in this decision making because he was consulted. But the question is did he benefit from the proceeds of the sale?
Members
No.
Mwesige
And I will stop at that Mr. Speaker. The second issue for us to address, I do recall that when the committee commenced its investigation, the major issue that was raised in the committee, in the public, media was that Hon. Mbabazi was alleged to have sold at an inflated price. It is interesting that this issue got lost along the investigation. The issue then became value for money. The agreement of sale says Hon. Mbabazi sold at sh24m per acre. There is Hon. Muhwezi in the neighborhood who sold at sh26m. There is Akright who had bought the same land at sh28m one years ago. There is also the endorsement of the government valuer who estimated it at sh26.9m. Hon. Mbabazi, if I were you the price of sh24m was clearly very inadequate judging from the sh26m of Hon Muhwezi, sh28m of Akright and sh 26.9m of the government valuer which he stamped on the transfer, NSSF indeed had a good deal. Having answered the question the price was not inflated, then what could have been the motivation or influence peddling if the price was inadequate, far below the markets price? then what could have been the motivation for peddling influence? Can you peddle influence to sell your land at a price lower than the market price? What could have been the motivation?
Prof. Ogenga Latigo
(Leader of the Oppositopn)
You did make reference to the question as to whether Hon. Mbabazi faced the issue of conflict of interest. If you look at the minutes of the 58th meeting of the NSSF board item 5 says to manage conflict of interest, Arma Ltd be advised to transfer their power of attorney to Nzeeyi to manage conflict of interest.
That Mr. Amos Nzeyi be instructed to issue this authority that he had been authorized to transact on behalf of Arma Ltd. A short while ago hon. Mbabazi stood up to inform hon. Nandala that he and Amos Nzeeyi received the money in full.
It is the same transaction through which the board advised and the advice was taken and the money was taken. If that is not conflict of interest, I would like you to advise.
Mwesige
The honourable leader of the opposition has answered himself, because he has talked of somewhere where the board talked of managing conflict of interest. You manage conflict of interest by first declaring it, then you withdraw from that position where your decision would have conflicted the public interest. The second instance, in which you can manage it, which was applied in this case, is by donating the powers of attorney so that Mr. Mbabazi in this case divorced himself from taking a position which would give rise to a conflict of interest.
But my own view is that even if Hon. Mbabazi had not given a power of Attorney, provided he was not a decision maker in NSSF, as long as he was not a board member of NSSF, there is no way he could have been in a conflict of interest. I was addressing myself to the issue of influence peddling.
First of all I am surprised that the committee which had access to the service of lawyers not only in the committee but even in Parliament could charge the two ministers under section 15b of the leadership code, because section 15b has nothing to do with influence peddling.
It says: “Without derogating from other law, a leader shall not practice favouritism, nepotism, by giving preferential treatment to any personal advantage to himself, family, friend or agent.†The operative words here are favouritism and nepotism. Mr Speaker I would not want to believe that nepotism and favouritism are one and the same thing. If they were, then I plead guilty. Even the evidence which was laid before the committee, Mr. Olweny, the board member who rightly expressed his opinion, expressed caution about the possibility of conflict of interest, pressure when he was called to the committee for the second time, he said the context in which he gave the caution was misconstrued by the committee. and he did say at no point did Hon. Mbabazi or any person put political pressure on him to buy this land. As far as Hon. Suruma is concerned, the only political pressure he is said to have exerted on Mr. Jamwa in Munyonyo was not corroborated by a third witness.
When evidence of one person is corroborated against that of another, it is only logical to commit it to a third person and I would like to think that this Munyonyo concert was attended by many people including Dr. Suruma’s wife. I don’t think it was beyond the powers of the committee to summon Suruma’s wife.
For you to conclude that Hon. Suruma could not remember what they discussed with Jamwa is enough to conclude that he was not truthful. Really, how many of us have attended conferences, we sit with people at the same tables, and can’t remember what their names or faces were? How do you expect a minister of finance who is sometimes in Washington, sometimes in Kampala, other times where, to remember the nitty gritty of the conversation he had with Jamwa in Munyonyo?
If Dr. Suruma wanted to exert pressure on Jamwa, did he have to wait to meet him in Munyonyo? Would it have been difficult for him to summon him in his office and exert pressure we are talking about?
On the Question of Procurement, in future when we are confronted with technical issues of a legal nature, the office we should consult is the attorney general. The question is whether this purchase was a procurement or not and the answer is in the interpretation of the law.
The solicitor General wrote an opinion under his signature saying that this was not a procurement within the meaning of the PPDA Act. He went further to propose an amendment to the Uganda PPDA Act, to take the version of the Kenya PPDA in which real property is procurable. In Kenya, the law is wide enough to cover real estate as procurable property, but in Ugandan law procurable property includes only works, services and supplies. Works meaning roads, services meaning legal, and supplies meaning things like sugar, tea and small things. If Parliament had wanted land to be a procurable property in our law they would have said so. And I am glad both reports have recommended amendment of the PPDA law for avoidance of doubt.
In conclusion, I would like to say that no wrong doing was committed by Hon. Mbabazi and Suruma, we need reforms in our laws and strengthen NSSF by looking at reforms in the pensions sector. I am happy that the ministry of finance has already brought a law to reform the pension sector. I am also happy that the workers will finally be represented on the board of NSSF.
Okello Okello (UPC)
Thank you Mr. Speaker. I have been operating in the property market in this country for the last 37 years, so I know what goes on. But before I go there, let me say just two things. I would like to congratulate the government chief whip for the level of efficiency she has shown today.
Two, I think we need to know the NSSF we are talking about. In 1952, ILO passed a convention 102, requiring all UN members to make provision for social security for workers.
In fulfillment of this in 1967, the Uganda government, by an Act of Parliament, enacted a law setting up NSSF under the ministry of labour and it was operated as a department for 16 years, until 1985, when again a government of vision came and transformed it by setting up a board of directors making autonomous, with very little supervision from the line ministry of labour.
Today, the fund has no home, it can be moved from place to place at the stroke of a pen or a statement by somebody. So the savings of the workers of Uganda are in danger because their fund is being looked at as a petty cash for some people. It is very unfortunate that it is being treated as an offshore fund where people come and withdraw any time.
Coming to the property market; I am not going to accept any point of information, I am knowledgeable in this area, so I don’t want my knowledge to be reduced.
Mr. Speaker when I am selling my land, I don’t need to give power of attorney to anybody. This is the first case in 37 years, when I am hearing of this powers of Attorney. Normally, the practice is that the vendor would hire a land agent or valuer, somebody with more knowledge, to sell his land at the best price for a fee. But the title will remain with the vendor, and all papers will be signed by the vendor.
But Mr. Speaker, the fact that in this transaction from the word go they were thinking about powers of attorney, it means all the parties in the deal saw the potential crime.
You will never manage conflict of interest by powers of attorney - it is attached to the interest in the land. The interest in the land remained with the owner-the vendor. So the conflict was never managed. For me in this report where you find Mr. Nzeyi, you just put Hon. Amama Mbabazi because Mr. Nzeeyi was just a contract killer -he was contracted to do the killing.
It’s good, Mr speaker, that we have the penal code. If I hire somebody to kill, we hang together with the killer. It is very clear. The question of conflict of interest was recognised from the word go and it was never managed; it is still there now.
So Hon. Mwesige, the only way is to avoid it completely. Don’t go into it whether by proxy or not; don’t try at all to give somebody powers of attorney to go and do it on your behalf. In transactions where you are selling land, you never pay full price until the title is transferred. A minimum of 10-25% is retained until all the titles are transferred, but here, like people whose house was burning, about 10 to 20 things were done on the same day.
The whole system was glued to this transaction the whole day. it means the normal land transaction was not there. what happened was an arrangement to use some land titles, plunder this money and make an agreement. You cannot sell your land and retain some of what you have sold. The entire country is finished and gone if these are the leaders we have.
On whether it was investment or procurement, I am a student of investment. The definition is, Honourable members can take their pens and papers and write…..
Speaker
They can use Michael West…
Okello Okello
“Investment is using a capital sum, other than for purposes of trade, to create or acquire an asset which will, hopefully, produce an acceptable flow of income and appreciate in capital valueâ€. Any money you invest that will not give money outflow is not an investment. the Temangalo land was bought several months ago, how much money has flown from it since? Zero! If you buy crested towers today, next month you will start getting rent in your pocket. So investment must produce acceptable flow on income. Land is just one item in the capital chain. You have to put value of land firsts. To get the idea of this being an investment is not. We shall need more money to build, labour, materials. In land transaction, fraudulent misrepresentation can render the transaction void. The land sold to the fund has a lot of encumbrances which were not declared at the time of purchase. In my view, this land should be returned, and the money refunded. we should not continue to deal with people who are not doing things the right way.
About 3,000 acres is swamp. Why should we spend time saying they should bring the remaining titles? We don’t want your land, we want our money.
Speaker
Lets adjourn the meeting to tomorrow.
WEDNESDAY, DAY TWO
Ben Wacha (Independent)
Thank you Mr. Speaker, I will try to be very, very brief. Let me start with the following observations. When the debates on this transaction started in the press, I was not here but I was informed that there was a group of MPS who were very vocal as far as this matter was concerned. Since this debate started, that vocalness, that loudness has been replaced by a big silence (laughter).
I am hopping Sir, that by the time we end today, those Honourable Members have changed their mind or they are still pursuing the matter. (More laughter).
Secondly Mr. Speaker, yesterday we were treated to a very elaborate presentation by my Honourable friend and partner Adolf Mwesige. I was not surprised because I know the depth of his ability. But what trapped me is not so much what he presented but what he did not about how Arma limited, a company, in which Hon. Amama has interest, is a director and shareholder, gives powers of authority (attorney) to businessman Amos Nzeyi. Nzeyi therefore has powers to sale.
That would not have caused any problem at all. the problem is caused by the fact that Amama did not remove himself from the picture. For example, the owner of Arma is Mbabazi, who is also the Secretary General of NRM. In the minutes, the board advised that to manage the issue of conflict of interest, the powers of attorney be transferred to Nzeyi for the purposes of transacting with the firm. But we have already noticed that actually the board knew the land belonged to Mbabazi. Next, I want you to look at another evidence of authority to transfer the money to Amama and Nzeyi’s account.
Therefore, the board of directors knew that in dealing with Nzeyi, they were actually dealing with Amama Mbabazi. Therefore, whatever Nzeyi stated, in pursuit of this transaction, was actually being stated by Amama Mbabazi.
There are records showing that Nzeyi intimidated Jamwa. He went around saying that he was in touch with the First Lady, that the president slept in his house, that he knew the house of the president for the purposes of showing how close he was to the president.
The minister of security was already in touch with the the president. If that is not undue influence, then I don’t know English (laughter).
Fred Mbagadhi (NRM)
Thank you Mr. Speaker, I humbly stand before this House for a noble course, representing the people of Kagoma and add my voice to the voices of reason that have honestly, objectively, emotionlessly debated this contagious issue.
Mr. Speaker sir, and colleagues, allow me at this juncture to commend the authors of the two reports but at the same time allow me recognise and recommend the efforts of our colleague, Hon. John Odit, who was unfortunately deprived of his mandatory right to chair.
Hon. Speaker, I would like to comment on the minority report. When you look at Jamwa’s testimony, you outrightly realise that the initiator of the deal was NSSF and not Mbabazi. In this case, let us look at the core issues that sparked off this saga. Of course this is where we have Arma being condemned for selling land.
In this case, the pertinent issue would have been on two things: whether the sale reflects the value for money and whether the price was inflated. I remember when this saga came up, the issue that was in print media was the issue of Mbabazi selling his 400 acres of land at sh11b. Hon Speaker, in that circumstance, I would even have expected in this majority report to have a reflection in respect of the issue of inflating the price as one of the key terms of reference as the report came up.
Unfortunately, as we moved along the way, that issue was thrown off-board. Honourable speaker, fellow colleagues, allow me give you a little testimony about my constituency. I had an opportunity of interacting with a cross section of my constituency. They told me they have been following the debate and they feel some of us are raising our voices just because a squirrel has been caught in a land trap.
They feel that their cause has been hijacked. For long, the workers have been having concerns, which they feel should have been the issues in this saga. The workers of my constituency say that having a sh1.3 trillion asset base is a good thing, but they would really love to see that we legislators look into how best we should enable them access their funds. They are talking about issues of representation, eligibility to access their money, should it be 55 or 45, how do they access loans when they hear colossal amounts being advanced to corporate bodies, issues of pension reforms, insensitive bureaucracy, that has been their focus.
In the interest of time, the other issue is valuation, whether we talk of independent or government valuers, in a liberal economy like that of Uganda, the parameters of demand and supply will definitely determine the price in the market. so in this case of Amama selling his property, he is presumed to enjoy all his rights and freedoms as enshrined in the Constitution of Uganda. As long as he lives within the confines of the law, he has the right to own and sell property.
Peter Nyombi (Independent)
Thank you very much Mr. Speaker. In the minority report, preliminary objections were raised which are very fundamental to the credibility of the majority report. One of them is with respect to the terms of reference and I just want to read the first two terms of reference. It says, whether there was conflict of interest, in the parties involved in the Temangalo land transaction.
The second one is whether there was influence peddling in the transaction. Mr. Speaker, terms of reference are very important if you are going to carry out an investigation. I worked in the office of the IGG for 15 years. At the end of the report, you are supposed to answer the terms of reference. In neither one of the first two terms of reference is Hon. Amama Mbabazi mentioned, or Hon. Dr Ezra Suruma. so neither of them was mentioned as a suspect being investigated.
The assumption is that this was a general investigation. unfortunately, the general investigation meandered and got mixed up into some sort of trial. In the majority report, it is mentioned very clearly that the two ministers were summoned as witnesses, not as suspects. And so they appeared before the committee as witnesses.
Thererfore whatever exercise this committee got involved in was some general investigation but along the way, they got lost.
However, Hon. Suruma and Mbabazi were found by the committee as having contravened sections 8 and 12 of the Leadership Code Act and these offences are criminal in nature. But here are these two very senior officials, they are invited, but at the end of this investigation, which turned into some trail, they are found to have contravened sections of the Leadership Code Act.
In other words, Hon. Amama Mbabazi and Dr. Suruma, were being convicted of criminal offences for whichg they were not tried. Although they went to the committee as witnesses, at the end of the day, having given evidence, having assisted the committee, they are put in the dock as convicts.
The committee recommended sanctions and this is a very serious mater because if you are to recommend sanctions, Honourable Amama Mbabazi, Hon. Dr. Suruma should have been warned at the beginning the “we suspect you to have committed an offence of criminal nature,†and it is very clear in the constitution, that in the conduct of business, committee exercise the powers of the High Court.
Inevitably, they must follow the rules of natural justice. The committee did not follow these rules, if they had observed these rules, they should have put honourable Amama Mbabazi and Dr. Suruma in the dock and told them what they are accused of, they should have allowed Hon. Amama and Dr. suruma to be represented either by himself or by a lawyer. The two should have been allowed to cross examine every witness who appeared before this committee. They should have been allowed to testify and call witnesses.
Dr. Sam Lyomoki
(Workers/NRM)
Mr. Speaker, I thank all members to have found it necessary to handle a matter that is in the interest of the workers. Mr. Speaker, in the main report, when they were looking at the background, they saw that there was an urgent need to restore workers trust and to streamline the operations of the fund.
That means that the spirit behind the whole investigation was that this thing was going to be in the interest of workers. Workers became happy because they also wanted to find out whether their money was being invested well and whether they had been defrauded in this deal. They have been following the arguments, particularly in the area of investment.
The monies that go for investment are the balance after workers’ interests have been handled. Workers have been having a long standing grievance where NSSF has become as if it is for investment, workers don’t get their benefits, we are having a portfolio noW coming to sh1.3trillion but workers don’t get their money.
Many of the benefits that are supposed to be under NSSF like unemployment benefits, like medical insurance are not within the benefit of the workers. Therefore Mr. Speaker, the workers knew that this investigation would address issues in their interest. The workers realised the viability of this project; we have all documentation to show that this project is in the interest of the workers. When you look at the viability for the planed investment the workers are going to have houses sold to them, returns…..
Speaker
There is a point of order let me listen to it.
Erias Lukwago (DP)
Mr Speaker I have a petition here which was filed to our office by workers and the petitioners are complaining about how this transaction was done, the influence peddling by Hon Amama Mbabazi and Dr. Ezra Suruma. The question is, is Hon. Lyomoki in order to say the workers are satisfied and their interests are catered for when there is a petition still pending in the House here?
Speaker
I have always told you that when the issue is to do with facts, it cannot provoke a point of order because it will be a question of accepting your version or his. I have no ability to do that without further investigation.
Charles Bakkabulindi
(State minister for sports)
Hon members, let’s stay calm and understand these issues. We are the representatives of the workers and our workers are those with formal identification of investment in NSSF.
Those people you are referring to, who were staged and demonstrated then handed a petition to the Speaker, we got some of them and asked them to produce their NSSF numbers to know they are part of us and they had nothing. The next day they withdrew the petition.
Lyomoki
Thank you very much for your wise ruling. Mr. Speaker, I remember when I was young, there was story where a chicken felt a nut falling on its head. Chicken licken called fellow birds, because she thought the sky was falling. So they agreed to warn the king. They found cunning foxy loxy, who tricked them that his den was a short cut to the palace.
When the chicken entered the den he ate all of them. Mr. Speaker, workers know their issues. No one will lie to us that by handling the machinations in the report, we will have the interests of the workers. There will be no foxy loxy to come and claim that they are petitioning for workers when they are not workers. We are speaking for workers, we have met workers groups, studied the investment reports, what is the problem?
Rosemary Tunde
(Workers/NRM)
I would like to give information that Temangalo is just a trigger of a long awaiting reform in NSSF. We have seen other saga in NSSF like Nsimbe estates, Alcon contract, Udyam House, so we thought if there are conflicts, we must look for an everlasting solution that’s why workers came out with a firm resolution like having representatives on the board, now we have achieved it.
for reforms, the Bill is already in cabinet, we are also looking at it because what has been happening is that workers have been going to banks and borrowing money at exorbitant interest rates, so that one is very hard. Lastly, we thought that the board should go, but its term is expiring next month. I think we have achieved 99%.
Lyomoki
You can see that we are unanimous as workers that we need reforms in NSSF, that we need workers to be represented on the board and we have agreed with cabinet to handle this. So as workers are concerned, we are satisfied. The issues of censure and others will not assist workers.
Henry Banyenzaki (NRM)
Thank you Mr. Speaker and I thank the committee for this kind of rigorous investigation they did. and more so, I salute those members from my party the NRM who appended their signatures on the majority report.
They are brave, they are nationalists, they speak for a cause. Today when I was watching the speech of McCain when he was conceding defeat said, “I could have made mistakes within these campaigns, I am sorry for any mistakes that were made.†It’s a serious matter that we leaders need to acknowledge mistakes when we make them and concede that we have erred here and there (booing).
Whether you yell, this is a fact. Mr. Speaker I am a Catholic and in our faith, if you are a big sinner, you go to hell. If you a mild one, you go to purgatory, if you area saint, you go direct to heaven.
There are observations in the main report that Amama Mbabazi, committed some sins and has been in purgatory. And while in purgatory, our big father prayed a big prayer; it is that prayer that has lifted him from that purgatory. For Honourable Ezra Suruma, I salute you, the way you conducted yourself during the investigations. The kind of influence peddling we saw during the investigations during the whole transactions shows there was something wrong. Up to now you cannot even deny it. And that’s why I concede because there have been prayers, I concede that we give a lesser punishment- but it doesn’t take away the fact that the procurement process was abused, Jamwa’s confession was classic. The value for money is debatable, but poor Jamwa has been trying to turn ashes into gold. But the fact remains that we leaders need to take responsibility even when we get off the hook.
James Akena (UPC)
Clearly there is a problem and those who deny that are merely burying their heads in the sand. No amount of denial can remove the fact that there is a serious problem. According to the NSSF budget plans, under investments there is no buying land. We have fixed income investments, mortgages, five NSSF branch buildings, a headquarters and apartments on Lumumba avenue, equity in Serena-Kampala hotel and to start construction on Yusuf Lule road. How this transaction came about and the rush, it seems NSSF needed this land desperately. When you follow the trend of the money, the beneficiaries……………….
Suruma
Point of order Mr. Speaker. Is the honorable member in order to say NSSF has no plans to invest in land when in fact in its five year published corporate plan, it showed three investment areas: fixed investments, real estate and equities? Is it in order for him to say something that is untrue?
Speaker
I think what is happening is that the Honourable member holding the floor resisted your point of information, and what you are now trying to do is giving him information in a point of order.
Akena
Thank you very much Mr. Speaker sir. But clearly the key activities for these projects were for 2007/08 not the five year strategic plan. Within the context of this one year budget the plan for buying land is not included. If you follow the trend of the money, who ultimately benefited?
That’s where the pressure was. The need to have money quickly to buy into National Bank of Commerce (NBC). Who is who in NBC, the very actors: Amos nzeeyi chairman, Hon. Suruma vice-chairman, Amama Mbabzi director, Dr. Ruhakana Rugunda director.
Mbabazi
I am reluctant to interrupt my colleague, but I felt compelled to do so because the information he is giving is misleading and inaccurate. What he is reading is the bank statement of 2003. It is true that was the situation at that time.
But this is 2008. For the member, like the committee, not to take the trouble to find out exactly what the status of the board of the NBC at the time the transaction took place……. Hon. Suruma ceased being a director the moment he was appointed finance minister. Dr. Rugunda and I, ceased being directors about four years ago. So is it in order for the Hon. Akena to present out of date information as if it is current?
Speaker
Hon. Akena, do you know that there are annual returns which are filed with the registrar of companies and was this the most recent return that you are reading from?
Akena; Mr. Speaker sir the money still ended up in NBC. Whether they are directors or shareholders.
Speaker
Honourable was saying you are out of order that you are intentionally misleading or you are just reading from an old return when there is an update?
Akena
I am reading from the report which received earlier this week. My point is the money still ended up in the National bank of Commerce.
Speaker
I think it is unfortunate that you are reading from an old return. your intention was not to mislead, was it? Now that you are informed.
Akena
No Sir.
Cecilia Ogwal (Independent)
Mbabazi told the committee that Mr Amos Nzeeyi persuaded him to bring funds by sale of their family land in order to buy shares in NBC. So whether you are a director or shareholder, you have full interest in the bank.