The decision to inject billions of shillings in Uganda Clays Limited-(UCL) is a regrettable management decision taken by the National Social Security Fund (NSSF), the funds Deputy Managing Director Geraldine Ssali has said.
Ssali told parliament’s committee on Commissions, Statutory Authorities and State Enterprises (COSASE) this afternoon that the current NSSF management is struggling to make good of a problem it inherited.
She was responding to questions by Oyam North MP Crispus Ayena, who challenged NSSF to explain its decision to take over payment of a Ugx 19 billion loan by Uganda clays. The company borrowed the money from various commercial banks to build the Mbale-based Kamonkoli tiles factory.
Ssali explains that NSSF offset the loans in a quest to save its own investment and changed its equity into shares increasing its shareholding in the struggling clay products manufacturing company from 32 to 66 percent.
Ssali however told the committee that this was a blunder because Uganda Clays is more in the hands of the debtors than shareholders.
“There was no demonstration by the management to turn around the business and that’s why we invested to make sure we are the majority shareholders so as to recover our money. We thought that in order to influence management we needed to change our loan into equity,” the NSSF boss said.
The takeover has however been blocked temporarily by the high Court in Kampala following an application to court by one of the minority shareholders Habib Sembatya.
The committee disagreed with the argument saying there were other options like putting Uganda Clays under receivership.
She said currently Uganda Clays is valued at Ugx18 billion yet it has debts standing at a tune of Ugx29 billion. The board would have to take a drastic decision and place the company under receivership and sell all the assets to recover the money.
The committee ordered NSSF boss to show evidence that individuals owning Ugx204billion placed on the suspense account were identified. While assuring the committee that they would bring documentary evidence, Ssali said the money had reduced to Ugx 24 billion.