CAA on spot over sh5b payment to law firm

By Moses Walubiri

The top management of Civil Aviation Authority (CAA) on Thursday survived interrogation by parliamentary detectives after MPs labeled their sh5.4b payment to Kampala Associated Advocates (KAA) to collect a sh54b debt from government “a gift.”

The ‘contentious’ payment to one of Kampala’s elite law firms, according to MPs on the committee of Commissions Statutory Authorities and State Enterprises and the Auditor General report,  breached a string of provisions in the Public Procurement and Disposal Act (PPDA).

CAA’s Managing Director, Rama Makuza, and Director Finance, Samalie Kisekka told MPs that contracting KAA to collect money owed to it by government was informed by crippling financial constraints.

“The main factor for enlisting KAA’s services was the nature of the emergency at the time. We had pressure from the bank, Uganda Revenue Authority had raided our accounts over outstanding tax assessment and the Authority was on the brink of grounding to a halt,” Makuza said.

Documents adduced by CAA top brass indicate that CAA acquired sh72b loan from Stanbic Bank to give Entebbe International Airport a facelift ahead of the Commonwealth summit in 2007.

However, this was on the condition that Ministry of Finance (MoF) pays CAA government’s outstanding sh54b debt owed to it by different ministries and agencies for use of airport facilities in four tranches of sh13b, beginning with 2007/08 financial year.

It was after MoF failed to honor numerous reminders about its obligation to the loan that, according to Kisekka, KAA was contracted.

MPs Angelina Osege and Mawanda Maranga, however, tasked CAA top brass to explain why payment to KAA was varied from the initial 2.5% to 10% of the debt, which is over 70% of the initial payout.

This was in contravention of PPDA guidelines which limit such variations beyond 25% of the original contract.

MPs heard that the rationale for revising KAA’s payment was due to unforeseen arduous nature of debt collection which “entails extensive lobbying and negotiations.”

MPs John Simbwa (Makindye East) and Osege questioned the rationale of CAA continuing to lobby MoF to clear the debt even after contracting KAA for the services at a cost they deemed exorbitant.

Among the documents adduced to the committee, there is no paper trail to show KAA’s “arduous lobbying and negotiations” to recover the debt.

“Is it not possible that MoF cleared this debt based on your earlier initiative rather than KAA’s lobbying?” committee chairperson, Amuriat Oboi asked, demanding that CAA produces evidence of its role in recovering the money.

Already, KAA is in the eye of the storm with the Public Accounts Committee recommending it’s blacklisting over its role in Dura Cement compensation which saw government lose over sh40b.