Mbale Sports Club loses sh100m, grapples with mismanagement

A three-man report has recommended that tenants of Mbale Sports Club should pay over sh100m that is due to the club from their use of their facilities over time.

This follows a reconciliation of payments from the tenancy agreement and leases report that discovered gross mismanagement of the club's resources and facilities from 2001 to-date.

Unless otherwise, the club might take years to recover from misuse of the club's resources.

From botched tenant agreements, lack of accountability to poor record-keeping, the club is counting losses of more than sh100m in a period of close to 20 years. This is in addition to selling part of the club and encroachment thereof.

The club owns land ranging from the Mbale Cricket Ground, the Golf Course, the Rugby grounds, and the Club House, which has all been encroached on.

The report was compiled by Paul Agaba Muhire, James Okoboi, and Uthman Mugoya, and submitted to the club's Special Annual General Meeting as appointed by the Annual General Meeting-2019, in mid-March this year before the lockdown, discovered a lot of inconsistencies in the financial transactions of the club between 2001 to-date.

The year 2001 was chosen as the baseline year given that it was then that Mbale sports Club started outsourcing the management of the different services at the club.

The three-man report followed inconsistencies in the figures presented by an auditor on April 27, 2019, regarding rent, lease payment, and depreciation regarding land as stated in the balance sheet which raised concern among members.

According to a source, the then chairman of the club Dominic Waburoko is faltered for having fraudulently sold the land but never deposited the money on the club's account.

The general assembly considered this as a serious issue and resolved to appoint a committee to investigate and report to it with the mandate to redress the lacuna in the audit report.

In their brief, they reviewed the existing tenancy agreement, reviewed the memorandum of understanding, and also reviewed the records regarding land and some documents relating to the club.

They also engaged neighbours and local administrators surrounding the club properties and the technical team of land valuers and surveyors to open up the boundaries and the valuation of the land belonging to Mbale sports Club to find out how much land was leased out and the one encroached on.

According to some of their findings, there was no evidence or record to show some of the money agreed in more than one tenancy agreement was received by the club.

For example, out of the sh22.8m that was expected between 2003-2008 from the management of the Swimming pool, 2 Tennis courts, Snooker room, Squash room, Volley pitch Badminton pitch 2 parking lots for vehicle and facilities around the clubhouse, there was a deficit of sh19m for that period according to the findings.

Different other contracts and memorandum of understandings entered with the other different tenants were not signed and there was no evidence on record to show those payments were made to the club in some instances according to the findings, leading to the loss of an accounted-for revenue.

"There was another draft MOU (Memorandum of Understanding) slated to commence on October 2008 to December 2009), however, it was not signed and not binding thereof. That means the period November 1, 2008, to January 1, 2010, the tenant was illegally occupying the premises,"  

"There is no evidence on record to show that payments were made to the club for 14 months from 1st November 2008 to 1st January 2010.

"Another tenancy agreement dated March 30, 2010, for a period of 7 (Seven) years, from January 1, 2010, to December 31, 2016, was signed at an agreed rent of sh800, 000/- per month. It was subject to renewal at the discretion of the parties. The area included a swimming pool, gardens, bar, kitchen, and parking area. The total expected revenue for this period was sh67.2m.

"The second contract for the tenant was for 7 (Seven) years which we found a long period for a tenancy agreement -There is no evidence on record that for the 7 years (1st January 2010 to 31st December 2016) the rent of sh36,872,500 was paid," the report states in part.

Regarding the contracts to manage part of the cricket ground for maintenance and repair for five years (July 1, 2012-June 30, 2017), the report states that there were no records to show that the tenant (Umar Ngobi) requested for the facility, nor that the executive committee or the AGM approved the award to him. Neither was valuation done before the property was given to the tenant by a competent person or authority.

In another contract with Bamakwa Investments that ran from August 1, 2015-to July 31, 2019, it was found that the tenant only paid sh1.4m leaving a deficit of sh10.6m though the tenant acknowledges that the latter was received by former club president Simon Watti.

Transactions relating to the sale of part of the clubland was also found wanting with no clear records to show that the board approved of the transactions.

The purported owner of an area measuring 4.59 acres of land that has been encroached on at the golf course revealed that he bought this land from Mbale sports Club to a tune of sh200m in 2001 and this money was received by the President Dr. Dominic Waburoko on behalf of the Executive Committee of the Club but there is no documentation to show the sale of the land.

He then added a tractor which was valued then at sh85m to top up. However, records show that the tractor was bought by the Mbale Sports Club as per the agreement available to us on cash.

Regarding the sale of land, there was no documentation to show transactions regarding the sale to one Abdu Salimo Musiwe indicate that on January 8, 2015, Mbale Sports Club represented by the President, Secretary, and the treasure signed an outright sale agreement of Land measuring 0.142 hectares at sh30m referring to a board resolution of November 15, 2014, and on signing the contract sh10m was received by the same representative.

Letting out part of the cricket ground for 20 years to M/s Courts View Hotel effective February 26, 2018, was again found to have been done without authorization or valuation to ascertain whether sh30m was the deserved value for the for 20 years each year implying each month the rent is sh125,000.

There is no consent on record from the tenant about the development on the land as provided in the contract to the club the land was purposely for parking and making of a garden, however, there is a swimming pool being built on the land. The tenant was supposed to construct a latrine with bathrooms to be identified by the landlord, however, this is not done, neither the balance on the agreed rent was paid to the club -Before this tenancy agreement.

When the new executive committee took over administration they expressed ignorance of the sh20m received by President Dr. Dominic Waburoko and requested the tenant to pay this amount and which was paid on February 27, 2018.

The investing committee found encroachment on the cricket ground while there is no record of payment or approval for a memorandum of understanding signed between Mbale Sports Club and Bamakwa Investments to manage the rugby ground on behalf of the club for 5 years at a sum of sh300, 000/- per month.

An area measuring 4.59 acres of land on the golf course has been encroached on. On interaction with the purported owner of the said land said he bought this land from Mbale sports Club to a tune of sh200m and this money was received by the President Dr. Dominic Waburoko on behalf of the Executive Committee of the Club.

He then added a tractor which was valued then at sh85m to top-up. However, records show that the tractor was bought by the Mbale Sports Club as per the agreement available to the investigators.

Following the investigations, the committee recommended that the contract duration be a maximum of 3 years and that no contract should be extended before the expiry of a running one.

They also believe no contract renewal should be done before an appraisal is done which should be annually by the executive and a report submitted to the trustees. A minute extract should support the contract renewal.

They also recommended an urgent review of the rent for all the tenants to match the prevailing economic situation (market rates) with the input of technical and competent persons to be approved by the Board of Trustees.

 According to them, the rent should be paid annually in advance and that if the tenant is in arrears of 90 calendars days, the tenancy should be automatically terminated.

They also want land let out to M/s Courts View Hotel Ltd and the one on plot no 2B be sold at the ongoing market rate as for the Valuation report so that this money helps the Club to renovate and make necessary developments at Sh266m.

They want the Club to renovate and make necessary developments at sh30m, and to take possession of all the properties and land belonging to the Sports Club without any further delay. They also want the club to take legal means to evict trespassers from its land and take immediate possession.

They also believe no alteration of the infrastructure or development should be done by the tenant without written approval by the executive committee and trustees, among other recommendations.