MPs pin Makubuya, Mugume over sh20b payments to CHOGM hotels

Nov 18, 2009

MPS on the public accounts committee yesterday warned that the Attorney General and the permanent secretary in the Ministry of Foreign Affairs must answer for the loss of over $4.5m (sh8b) in advance payments to CHOGM hotels.

By Joyce Namutebi
and Cyprian Musoke

MPS on the public accounts committee yesterday warned that the Attorney General and the permanent secretary in the Ministry of Foreign Affairs must answer for the loss of over $4.5m (sh8b) in advance payments to CHOGM hotels.

According to the Auditor General’s report, over sh20b was paid to private hotels in advance bookings for the guests for the 2007 Commonwealth summit without any guarantees.

Of the $4.5m losses, the report said, $2.2m was as a result of guests not showing up or staying for only one day.
Another $2.3m was for guests who paid their bills but the hotels did not return the money advanced by the Government.

The report queried why the Government did not include a provision in the contract that the hotels could only charge for one day when the guests did not show up.

According to the Auditor General’s office, advance payments are against Government regulations and are only permitted when a performance bond is produced.

The MPs accused the Attorney General, Khiddu Makubuya, and the Solicitor General of clearing the contracts without such provisions or guarantees. Makubuya was not present but the MPs vowed to summon him.

PS James Mugume, who was appearing before the committee for the fourth time, was quizzed for hours over the loss.
In the meeting, attended by CID director Edward Ochom, the MPs questioned Mugume as to why he paid for the delegates for all the five days of CHOGM.

They also questioned why Imperial Royale Hotel, owned by city tycoon Karim Hirji, which was still under construction, was fully booked and paid for the event.

Mugume said the Cabinet sub-committee on CHOGM waived the guarantee.
Referring to minutes of the sub-committee meeting, which took place at State House on July 25, 2007, Mugume said: “The sub-committee directed that the legal requirements for guarantees should be waived.”
However, Oduman Okello (FDC) pointed out that accountability is the responsibility of the accounting officer.
“Let us not allow the accounting officer to deflect responsibility to somebody else. We should hold him responsible.”

Committee chairman Nandala Mafabi (FDC) wondered how the Attorney General could approve the contracts without clauses that would have allowed the Government to recover the money in case the guests did not book into the hotels.

“You will be held responsible for the loss of the money. The Attorney General will be held responsible for misguiding the Government. We shall investigate the Attorney General for clearing contracts with glaring loopholes,” Mafabi warned.

He observed that in such major conferences, delegates book for their own accommodation, yet in this case, the Government decided to pay 100% for all delegates for the five days, even in hotels that were not complete.

He noted that accommodation at the Imperial Royale Hotel cost sh900m, meaning the Government paid sh500,000 for each room, yet they were not used.

Referring to the CHOGM Blue Book, Mugume said the hotels had to be booked in advance and the only way to do it was to give them advance payment.

He said money was released after Karim Hirji assured the inspection committee that the venue would be ready on time.

Mugume noted that Nyende and Johnson, the company contracted to follow up the payments, had not fully recovered all the money and that the matter was in court.

But the MPs were not convinced. Abdu Katuntu (FDC) said Cabinet decisions ought to comply with the law.

“You did not understand your role and we will continue to hold you responsible,” said David Bahati (NRM).
He observed that after losing money carelessly advanced to hotels, the ministry went ahead and hired a private firm to collect the money, which did not help.

According to the audit report, Munyonyo Commonwealth and Speke Resort was advanced sh8b. Serena received sh1.8b, Imperial Royale sh7b, Imperial Botanical in Entebbe sh1.2b and Hotel Africana sh2b.

The report also noted that the rates of rooms and conference facilities were inflated, with some more than double the normal rates.

The MPs concurred that the hotels rates were abnormally high. The inflated rates, according to Mugume, were due to the “big event syndrome”.

Tom Kazibwe (NRM) remarked that since hotel owners and ministry officials knew that that there was no provision for refunding the money, hotel owners argued that the guests did not turn up.

Theodore Ssekikubo (NRM) called all those who negotiated the contracts a “clique of people who mortgaged their country”.

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