Ministers named in Naguru estate fraud
THE Nakawa-Naguru estate redevelopment project worth $300m (about sh600b) was fraudulently allocated to Opec Prime Properties Ltd by the Ministry of Local Government, the Inspector General of Government (IGG) has disclosed.
By Barbara Among
THE Nakawa-Naguru estate redevelopment project worth $300m (about sh600b) was fraudulently allocated to Opec Prime Properties Ltd by the Ministry of Local Government, the Inspector General of Government (IGG) has disclosed.
In a damning report to President Yoweri Museveni, the IGG wants the UK-based company and its directors blacklisted in Uganda for the next five years for fraudulent practice.
Justice Faith Mwondha also wants disciplinary action against local government minister Kahinda Otafiire, his predecessor Prof. Tarsis Kabwegyere and former state minister for local government Richard Nduhura, who is now minister of state for health.
The IGG said the trio lied and misled, not only the President but also the entire Cabinet and Government.
“Otafiire lied to Your Excellency and to this office that mortgage facilities would be made available by the developer to assist the tenants acquire the flats and that the developer had been subjected to rigorous and strict procurement procedures whereas not,†Mwondha said in the report.
Kabwegyere, she said, should be disciplined for disrespecting and disregarding the President’s directive that no sitting tenant should be evicted before the low-income flats are completed.
She said Nduhura lied to the President that there was no free open space within the 160-acre housing estate to accommodate the tenants and therefore, they had to vacate to allow the redevelopment to commence.
The project has seen Otafiire and Mwondha lock horns as to when and whether the tenants should be evicted from the dilapidated flats.
The project involves the construction of 1,700 flats and related amenities for low-income earners.
The IGG investigation followed a petition by the 900 families in Nakawa and 700 in Naguru estates that the local government ministry had mismanaged the tendering process and that the Government should provide alternative accommodation before they could leave.
The IGG subsequently halted the redevelopment. The investigation found that the procurement process was flawed in all aspects.
“The bid for Opec Prime Properties Ltd was dubiously smuggled in the process because of the massive collusion, gross illegalities and irregularities, corruption and abuse of authority of public office which characterised the process,†read the report.
“The contracts committee from the onset should have thrown out the bid.â€
Commenting on the report, President Museveni said government officials and investors could have colluded in the process.
“Both made a mistake, that is what she (IGG) said,†President Museveni said at State House during a press conference on December 21.
The President was, however, quick to say the investors should not pay for the mistakes of government officials.
“What I was trying to understand from the IGG’s position is to distinguish between the mistakes of government officials and (those of) bonafide investors. Why should an investor suffer for the mistakes of your (government) official?†asked Museveni.
The IGG now wants the deal cancelled and the project re-tendered.
Mwondha also advised that the investment licence issued to Opec be revoked.
The report urged the Government to cancel the agreement signed with Opec, saying it did not only result from misprocurement but was also unconstitutional as it supersedes the supremacy of the Constitution, which makes it null and void.
The Government must also review its resettlement strategy for the tenants in addition to making sure that no tenant is evicted before the flats are completed and a reasonable compensation is made.
It calls for disciplinary action against the head of Public Service, John Mitala, for having lied and misled the President that there was no ground which warranted the tender bids to be reviewed.
Mwondha also recommended that members of the contracts, evaluation and negotiating committees be disciplined.
It said the procurement officer of local government ministry (MolG) smuggled in the bid document attributed to Opec Prime Properties Ltd.
“The Bid attributed to Opec Prime Properties Ltd was illegally and irregularly smuggled in the process by Mr. Olyet, the procurement officer of MoLG,†it reads.
The IGG report said the Uganda Investment Authority official applied for processed and issued an investment licence for Opec in June 2008, five years into its participation in the procurement process.
The case of four companies acting as one
The Investigation found that Opec never purchased the bid document but it was Comer Uganda Ltd which did so.
However, Opec was never in joint venture with Comer Uganda Ltd and neither was Comer an agent in law for Opec.
Although Opec Prime Properties UK was the bidder, on whose behalf Comer Uganda Ltd picked the documents, the detail bid papers eventually submitted were in the names of Comer Group International.
“The inclusion of Opec prime properties UK Ltd, who was a stranger because it never participate in the procurement process and was not evaluated, was fraudulent and not in good faith,†the IGG said.
The Statutory Deceleration submitted with the Bid showed the bidder as comer Group, while the power of attorney submitted was for Opec Prime Properties Ltd. The power of attorney was not notarised, meaning that it was not authentic.
Comer Group international is own by two brothers, Brian Comer and Luke Comer, who are Irish nationals.
Under the deal, the Galway brothers would build bungalows, residential houses and commercial buildings, which would be sold to the public.
However, upon being awarded the tender to re-develop the estate, the companies formed a fourth company, Opec Prime Properties Uganda Ltd, thus introducing a new company in the bid process, which was illegal.
Comer-Uganda Ltd and Opec Prime Properties-Uganda Ltd has interlinking directorship. The directors for Comer-Uganda are Hassan Kimbugwe, Muhammad Mulindwa, Brian Comer and Luke Comer.
Opec Prime Properties-Uganda Ltd managers are Hassan Kimbugwe, Muhammad Mulindwa, Brian Comer and Gerald Porter.
No previous experience
Investigation found that the local government ministry transferred the title of the project land with a 99-year lease within 30 days to the company. This, the IGG said, tantamount to a disposal, as per the Procurement Act.
The rule for allocating land for development in Kampala City provides that a five-year lease initially be granted, which would be extended subject to compliance with any development requirements.
Opec Prime Properties Ltd, however, failed the test of eligibility to participate in a public procurement as it lacked legal capacity to enter into any contract in Uganda. The company was not registered in Uganda as required by the companies Act.
The IGG found out that the company had no fixed assets between 2001 to 2005 and its average debt ratio during the period was 130%. “A clear indication that the company had no technical and financial capacity,†the report read.
In addition, the company’s average turnover 2001 to 2005 was about $6m but the expected annual turnover from Nakawa-Naguru Housing Estate re-development project was $15m, showing that the company had never handled a project of such magnitude and lacked the required experience.
What is worrying the IGG is that the bid documents were in the names of Comer group international, but no documents were submitted to show proof of legal agreement between Opec Prime Properties and Comer Group.
“The possibility of these companies selling away the land is high. Opec Prime Properties-UK did not summit a single document, Comer-Uganda and Opec Prime Properties-Uganda Ltd have no physical address or properties in Uganda and can easily wind up. So what is government’s guarantee,†asked a source.
No clear source of funds
Opec Prime Properties Ltd submitted incomplete bids and did not provide all information. For instance, it did not provide Audited Financial Statements for the last five years as required.
“The evaluation committee under the pretext of seeking clarification received additional or new details from Opec Prime Properties, including its financial statement,†the IGG said.
Investigations found that the team lowered the percentage paid for bid and performance securities. The security asked for was only $600,000 instead of $1,5000,000 and a performance security of only $4,000,000 instead of $15,000,000.
Bidders such as National Housing and Construction Company Ltd, whose bid was rejected because it proposed partly to raise funds through advance payment from prospective buyers, had tendered to construct the flats at $30.88m. This was $12.76m less the amount Opec tendered.
Another requirement was for the bidders to show sources of funding. However, neither Opec Prime Properties-UK nor Comer Group International had this. The only document available to the evaluation committee was a bank guarantee to shareholders of Comer Group International and not the company.
Ghost tenants
The IGG wants the registration exercise for tenants repeated as the exercise conducted in October 2006 left out genuine tenants and ghosts and ineligible persons registered as tenants.
However, due to rumours circulated to tenants that the President had directed Otafiire to evict them, 160 tenants sold their goodwill at a giveaway price, some going for as low as sh1.2m, the highest so far being at sh5m. Those buying the goodwill were wealthy and people in Kampala.
“Hon Otafire takes political responsibility for the ‘goodwill bonanza’ that was marred with the tenants being intimated and coerced into selling their interests as his ministry was fully aware of the bonanza and did nothing to prevent it,†read the report.
The IGG wants Geoffrey Kaganda, the imposter chairperson of the Tenants’ Association, to refund sh45.2m, through the IGG, which was paid to him as ‘transfer fees’ within 30 days from the date of issuing of the report,â€
Kaganda risks being rrested and prosecuted for various criminal offenses such as theft, obtaining goods by false pretences and obtaining of a security by false pretences. The 160 goodwill sold would translate into a total of 20 houses. It means that the low-cost flats meant to benefit low-income earners would go to the rich.
The redevelopment of the estates was initiated by Kampala City Council in 1997 but the Government took over the project in 2005 when a row ensued between council and tenants over rights.
Under the terms of the deal, the government is handing more than 160 acres on the outskirts of the city to the development company for free.
The 160 acres are estimated to be worth more than $20m (about 40b), a significant amount given the price of property in Uganda.
It is the largest housing construction projects ever to be undertaken by the Ugandan government through a public private partnership agreement. The aim of the scheme is to redevelop housing estates in Naguru and Nakawa into a modern satellite town.
THE Nakawa-Naguru estate redevelopment project worth $300m (about sh600b) was fraudulently allocated to Opec Prime Properties Ltd by the Ministry of Local Government, the Inspector General of Government (IGG) has disclosed.
In a damning report to President Yoweri Museveni, the IGG wants the UK-based company and its directors blacklisted in Uganda for the next five years for fraudulent practice.
Justice Faith Mwondha also wants disciplinary action against local government minister Kahinda Otafiire, his predecessor Prof. Tarsis Kabwegyere and former state minister for local government Richard Nduhura, who is now minister of state for health.
The IGG said the trio lied and misled, not only the President but also the entire Cabinet and Government.
“Otafiire lied to Your Excellency and to this office that mortgage facilities would be made available by the developer to assist the tenants acquire the flats and that the developer had been subjected to rigorous and strict procurement procedures whereas not,†Mwondha said in the report.
Kabwegyere, she said, should be disciplined for disrespecting and disregarding the President’s directive that no sitting tenant should be evicted before the low-income flats are completed.
She said Nduhura lied to the President that there was no free open space within the 160-acre housing estate to accommodate the tenants and therefore, they had to vacate to allow the redevelopment to commence.
The project has seen Otafiire and Mwondha lock horns as to when and whether the tenants should be evicted from the dilapidated flats.
The project involves the construction of 1,700 flats and related amenities for low-income earners.
The IGG investigation followed a petition by the 900 families in Nakawa and 700 in Naguru estates that the local government ministry had mismanaged the tendering process and that the Government should provide alternative accommodation before they could leave.
The IGG subsequently halted the redevelopment. The investigation found that the procurement process was flawed in all aspects.
“The bid for Opec Prime Properties Ltd was dubiously smuggled in the process because of the massive collusion, gross illegalities and irregularities, corruption and abuse of authority of public office which characterised the process,†read the report.
“The contracts committee from the onset should have thrown out the bid.â€
Commenting on the report, President Museveni said government officials and investors could have colluded in the process.
“Both made a mistake, that is what she (IGG) said,†President Museveni said at State House during a press conference on December 21.
The President was, however, quick to say the investors should not pay for the mistakes of government officials.
“What I was trying to understand from the IGG’s position is to distinguish between the mistakes of government officials and (those of) bonafide investors. Why should an investor suffer for the mistakes of your (government) official?†asked Museveni.
The IGG now wants the deal cancelled and the project re-tendered.
Mwondha also advised that the investment licence issued to Opec be revoked.
The report urged the Government to cancel the agreement signed with Opec, saying it did not only result from misprocurement but was also unconstitutional as it supersedes the supremacy of the Constitution, which makes it null and void.
The Government must also review its resettlement strategy for the tenants in addition to making sure that no tenant is evicted before the flats are completed and a reasonable compensation is made.
It calls for disciplinary action against the head of Public Service, John Mitala, for having lied and misled the President that there was no ground which warranted the tender bids to be reviewed.
Mwondha also recommended that members of the contracts, evaluation and negotiating committees be disciplined.
It said the procurement officer of local government ministry (MolG) smuggled in the bid document attributed to Opec Prime Properties Ltd.
“The Bid attributed to Opec Prime Properties Ltd was illegally and irregularly smuggled in the process by Mr. Olyet, the procurement officer of MoLG,†it reads.
The IGG report said the Uganda Investment Authority official applied for processed and issued an investment licence for Opec in June 2008, five years into its participation in the procurement process.
The case of four companies acting as one
The Investigation found that Opec never purchased the bid document but it was Comer Uganda Ltd which did so.
However, Opec was never in joint venture with Comer Uganda Ltd and neither was Comer an agent in law for Opec.
Although Opec Prime Properties UK was the bidder, on whose behalf Comer Uganda Ltd picked the documents, the detail bid papers eventually submitted were in the names of Comer Group International.
“The inclusion of Opec prime properties UK Ltd, who was a stranger because it never participate in the procurement process and was not evaluated, was fraudulent and not in good faith,†the IGG said.
The Statutory Deceleration submitted with the Bid showed the bidder as comer Group, while the power of attorney submitted was for Opec Prime Properties Ltd. The power of attorney was not notarised, meaning that it was not authentic.
Comer Group international is own by two brothers, Brian Comer and Luke Comer, who are Irish nationals.
Under the deal, the Galway brothers would build bungalows, residential houses and commercial buildings, which would be sold to the public.
However, upon being awarded the tender to re-develop the estate, the companies formed a fourth company, Opec Prime Properties Uganda Ltd, thus introducing a new company in the bid process, which was illegal.
Comer-Uganda Ltd and Opec Prime Properties-Uganda Ltd has interlinking directorship. The directors for Comer-Uganda are Hassan Kimbugwe, Muhammad Mulindwa, Brian Comer and Luke Comer.
Opec Prime Properties-Uganda Ltd managers are Hassan Kimbugwe, Muhammad Mulindwa, Brian Comer and Gerald Porter.
No previous experience
Investigation found that the local government ministry transferred the title of the project land with a 99-year lease within 30 days to the company. This, the IGG said, tantamount to a disposal, as per the Procurement Act.
The rule for allocating land for development in Kampala City provides that a five-year lease initially be granted, which would be extended subject to compliance with any development requirements.
Opec Prime Properties Ltd, however, failed the test of eligibility to participate in a public procurement as it lacked legal capacity to enter into any contract in Uganda. The company was not registered in Uganda as required by the companies Act.
The IGG found out that the company had no fixed assets between 2001 to 2005 and its average debt ratio during the period was 130%. “A clear indication that the company had no technical and financial capacity,†the report read.
In addition, the company’s average turnover 2001 to 2005 was about $6m but the expected annual turnover from Nakawa-Naguru Housing Estate re-development project was $15m, showing that the company had never handled a project of such magnitude and lacked the required experience.
What is worrying the IGG is that the bid documents were in the names of Comer group international, but no documents were submitted to show proof of legal agreement between Opec Prime Properties and Comer Group.
“The possibility of these companies selling away the land is high. Opec Prime Properties-UK did not summit a single document, Comer-Uganda and Opec Prime Properties-Uganda Ltd have no physical address or properties in Uganda and can easily wind up. So what is government’s guarantee,†asked a source.
No clear source of funds
Opec Prime Properties Ltd submitted incomplete bids and did not provide all information. For instance, it did not provide Audited Financial Statements for the last five years as required.
“The evaluation committee under the pretext of seeking clarification received additional or new details from Opec Prime Properties, including its financial statement,†the IGG said.
Investigations found that the team lowered the percentage paid for bid and performance securities. The security asked for was only $600,000 instead of $1,5000,000 and a performance security of only $4,000,000 instead of $15,000,000.
Bidders such as National Housing and Construction Company Ltd, whose bid was rejected because it proposed partly to raise funds through advance payment from prospective buyers, had tendered to construct the flats at $30.88m. This was $12.76m less the amount Opec tendered.
Another requirement was for the bidders to show sources of funding. However, neither Opec Prime Properties-UK nor Comer Group International had this. The only document available to the evaluation committee was a bank guarantee to shareholders of Comer Group International and not the company.
Ghost tenants
The IGG wants the registration exercise for tenants repeated as the exercise conducted in October 2006 left out genuine tenants and ghosts and ineligible persons registered as tenants.
However, due to rumours circulated to tenants that the President had directed Otafiire to evict them, 160 tenants sold their goodwill at a giveaway price, some going for as low as sh1.2m, the highest so far being at sh5m. Those buying the goodwill were wealthy and people in Kampala.
“Hon Otafire takes political responsibility for the ‘goodwill bonanza’ that was marred with the tenants being intimated and coerced into selling their interests as his ministry was fully aware of the bonanza and did nothing to prevent it,†read the report.
The IGG wants Geoffrey Kaganda, the imposter chairperson of the Tenants’ Association, to refund sh45.2m, through the IGG, which was paid to him as ‘transfer fees’ within 30 days from the date of issuing of the report,â€
Kaganda risks being rrested and prosecuted for various criminal offenses such as theft, obtaining goods by false pretences and obtaining of a security by false pretences. The 160 goodwill sold would translate into a total of 20 houses. It means that the low-cost flats meant to benefit low-income earners would go to the rich.
The redevelopment of the estates was initiated by Kampala City Council in 1997 but the Government took over the project in 2005 when a row ensued between council and tenants over rights.
Under the terms of the deal, the government is handing more than 160 acres on the outskirts of the city to the development company for free.
The 160 acres are estimated to be worth more than $20m (about 40b), a significant amount given the price of property in Uganda.
It is the largest housing construction projects ever to be undertaken by the Ugandan government through a public private partnership agreement. The aim of the scheme is to redevelop housing estates in Naguru and Nakawa into a modern satellite town.