Makerere Bosses Face Jail Over UGX8Bn Loss

Makerere University


Uganda’s oldest and leading institution of higher learning, Makerere University

Kampala – Makerere University bosses are in trouble for allegedly negotiating a bad deal that saw the Government of Uganda lose whooping Shs8.7bn.

A section of staff and legislators now want the culpable officials interrogated and jailed for occasioning such a loss to the taxpayers’ money.

The MPs want many things inquired into by a select committee of Parliament; the spark being the Shs8.7bn the University lost as a result of the curious Consent Judgment Makerere top management entered into with Nigerian-owned National Insurance Corporation (NIC) Ltd.

GENESIS

On July 1, 1996, Makerere University established a retirement saving scheme to benefit its employees. Subsequently, the Deposit Administration Plan scheme was established and a trust deed was executed. The university signed a contract with NIC on June 28, 2004 where the insurance giant was tasked to manage the scheme.

However, when NIC was privatized and taken over by the Nigerians, the staff developed cold feet and preferred to form their own internal scheme—Makerere University Retirement benefits Scheme (MURBS).

As they processed their exit, Makerere staffers sharply disagreed with NIC management regarding the actual amount of money that was due to them.

NIC offered to pay them Shs11bn which they contested as too small. They suggested Shs16.7bn which NIC rejected as too much.

Having considered all these as not helping them enough, the staff embarked on a series of strikes that paralyzed Makerere for months prompting the government to close it down. The closure did not help either.

To end the impasse, the Auditor General in agreement with Makerere internal auditors contracted Price House Water Coopers, the leading auditing firm, to carry out an audit into the dispute.

This is something both Makerere Staff and NIC agreed upon as capable of guiding on how much money was due. In what amounted to bad news for NIC, the audit report established that actually a total of Shs26.7bn was due as opposed to mere Shs16.7bn Makerere staff were claiming.

The panicky NIC bosses paid Shs10bn promising the balance later but months after, they turned around and disputed the audit report while insisting that the Shs10bn was all Makerere staff were demanding.

This prompted Makerere staff to threaten resumption of the strike, something that rubbed the President on the wrong side.

Being one that wasn’t prepared to risk another confrontation at Makerere, Museveni offered to find money and pay Makerere staff’s remaining balance of Shs16.7bn (on behalf of Makerere management).

Much as it’s NIC that was holding onto their money, the striking staff directed their anger at management and not NIC yet for Museveni, the never ending striking at the country’s leading public University was politically very embarrassing.

Then acting through Maria Kiwanuka, who was Finance Minister, President Museveni set one condition for the government to pay Makerere staff’s Shs16.7bn debt on behalf of the defaulting NIC investors.

This is how President Museveni ended the stalemate in a letter dated 28th August, 2011 and addressed to Dr. Fred Odoi Tanga, who was then the Chairman Makerere University Staff Association (Muasa).

“This is to further our telephone conversation (President/Odoi) last night and it is in order to reiterate what I had told your delegation last year and also what I told the former minister of finance to do in respect of the issue of Makerere staff savings with NIC. Since the NIC was privatized, the Makerere staff have been apprehensive about the security of their money. When you came to see me last year, I told your delegation that if NIC did not pay your money, the Government would pay it. Recently, I directed the Hon. Minister Maria Kiwanuka to pay Shs16bn to MUASA provided you agree (and capture it in a legally binding agreement) to sue NIC, with the support of Government, in order to recover this money from the Corporation. The Government cannot do it by itself because; legally it has no stake in the matter. Conclude the legal issues quickly in conjunction with the Rt. Hon. Prime Minister and the Attorney General…,” President Museveni guided.

True to his word, the taxpayers money was released to the staff on condition it should be recovered and deposited to the consolidated fund.

Odoi had to ensure MURBS and top management sued NIC for the recovery of the Shs16.7bn whose authenticity the PWC auditors had already established through an audit consented to by both NIC and Makerere.

Indeed, Makerere and MURBS filed a case (Civil suit No 351 of 2011) against NIC in 2011 claiming their pending Shs16.7bn. The case dragged on for years.

The legal representation was as follow; NIC was represented by M/S Shonubi Musoke & Co Advocates & ENS Africa Advocates; Makerere by Crested Towers-based M/S Kateera & Kagumire Advocates and MURBS by M/S Barya, Byamugisha & Co Advocates.

OUT OF COURT SETTLEMENT

Around 2018, Makerere University bosses and NIC pondered a possibility of out of court settlement and the latter were more than willing to listen.

A draft consent judgment was formulated in which NIC offered Makerere a property comprising LRV279, Folio14, Plot2A, Kampala road (housing the current Tropical Bank Headquarters) in full and final settlement of the subject matter and all claims made.

Aware that this was government money being recovered, Makerere assured NIC that they had secured requisite consents from the Government of Uganda to enter into this consent judgment. The consent judgment also made it clear that NIC was not to be held liable for any matters or disputes that may arise.

ROW OVER SIGNING

Some members of Makerere top management and Council members pleaded caution saying Makerere was being pushed to give away too much.

Some advised vice chancellor Prof Barnabas Nawangwe to reflect on the possibility of landing into future problems in case it turns out Mak/GoU was pushed into a bad NIC deal with very exploitative terms.

For instance, on 3rd December, 2018, Charles Barugahare the then University secretary wrote to Prof Nawangwe over his displeasure on the consent judgment which they wanted him to sign as the accounting officer.

“I wish to draw your attention to the draft consent judgment and seek your clarification on how far the University has reached in securing Government approval to enter into the said consent judgment. I wish to clarify that approval by Government is required before the consent judgment is signed and further request for an update on the status of engagement with Government since you have been spearheading them with the Deputy vice chancellor finance and administration (Prof William Bazeyo),” Barugahare inquired.

On 5th December, 2018, saying that was none of his business, Nawangwe insisted on pulling through the deal. Below is the letter that was written by Prof Bazeyo on instructions of Prof Nawangwe.

“I have been requested by the Vice chancellor to respond to your letter dated 3rd December, 2018 about the consent judgment with NIC arising from civil suit no 351 of 2011. This is to confirm that the Vice chancellor and I have been in discussions with the ministry of Finance, Planning and Economic Development. We have particularly held several discussions with the Permanent/Secretary to the Treasury (PSST) who has reaffirmed government commitment to a negotiated conclusion of the said suit. Accordingly, the ministry of Finance, Planning and Economic Development has verbally consented to an out of court settlement as contained in the draft consent judgment….This is to confirm to you that Government has agreed to the contents of the consent agreement and I accordingly instruct the signing of the said consent judgment be executed between the parties without further delay. All parties to the consent judgment should go ahead and sign the consent judgment to facilitate the conclusion of this matter.”

On 7th December 2018, Makerere University legal director, Henry Mwebe succumbed to pressure and presented 6 copies of the Consent Judgment for the signature of the relevant Makerere and MURBS officials.

On that very day, Nawangwe signed up to a memo directing the University secretary to append signatures clearly stating he was tired of those dragging their feet on the deal.

“Please find attached consent judgment for your urgent action. Please SIGN promptly so that we can complete the process before close of the year,” Nawangwe asserted while categorizing the matter as “VERY URGENT.” The deal was finalized in February 2019.

Signed by a total of 6 signatories representing the different disputants, the consent Judgment has some very unpatriotic and curious provisions which the MPs say had been identified and objected to by some members of Makerere top management only to be over ruled by Nawangwe in his capacity as VC and therefore the powerful CEO for the University.

All this was happening against a government chief valuer’s report that put the NIC building at just Shs8bn as opposed to Shs16.7bn that had to be recovered from NIC!

MINISTRY OF FINANCE RAISES RED FLAG

It has now emerged that Makerere University VC Prof Nawangwe and his Deputy (Finance and Administration) William Bazeyo, are in real trouble because they rushed the signing process of the consent agreement without securing adequate approval and backing of the Finance Ministry and Parliament.

The final deal, whose unpatriotically very generous provisions (favoring NIC) have since been objected to by Deputy PSST Patrick Ocailap.

On 18th February, 2019, Ocailap wrote to VC Nawangwe complaining of lack of adequate transparency in the way the NIC consent judgment (yielding for GoU Shs8bn as opposed to Shs16.7bn) had been concluded.

Ocailap raises a red flag on the curious circumstances under which hs8.7bn was forfeited and written off enabling NIC Ltd to get away with so much of the taxpayer’s money.

He demanded that Nawangwe writes back clarifying and explaining himself on matters regarding the entire NIC transaction.

Ocailap also referred to Nawangwe’s earlier letters seeking permission of the Finance Ministry and PSST for Makerere University to commence collecting rent from Tropical Bank and other tenants on the NIC swapped building on Kampala Road. That Makerere badly needed that rental money to finance its other properties and projects.

“This is to acknowledge receipt of your letter dated December 21, 2018 regarding the court ruling [this was a consent judgment not ruling -editor] and request for the University to use the proceeds from the commercial property to fund university priorities that are not catered for in the budget. The ministry has reviewed your submission. However, given that Shs16.7billion hitherto spent by Government was charged on the consolidated fund , your submission is silent on the documentation regarding the due process which was undertaken, as part of the out of court settlement process, to write off Shs8.7billion in accordance with the prevailing procedure. The purpose of this letter, therefore, is to request for clarification on this matter. On the basis of your clarification, this ministry will take appropriate decisions.”

MPS WANT A THOROUGH PROBE

Led by Western Youth MP Mwiine Mpaka, Legislators are now demanding that Nawangwe steps aside as the Select Committee of Parliament inquires into this and many other multi-billion transactions.

They are reflecting on the Public Finance Management Act which requires written permission of the Finance Ministry and Solicitor General/Attorney General before any government entity or MDA can write off any GoU money.

“In this case, Prof Nawangwe as Vice-Chancellor committed the University into a deal which turned out to be a dubious one. The outstanding debt NIC had to clear was Shs16.7bn but they accepted NIC’s Building on Kampala Road [Plot 2A housing the current Tropical Bank Headquarters] which had been valued by the Chief Government Valuer to be worth Shs8bn. They negligently committed the GoU to an agreement that indicated NIC had now been 100% discharged of its payment obligations for a debt that originally stood at Shs16.7bn,” MP Mpaka Mwiine explains.

The MPs are curious as to why the Nawangwe-led Makerere top management ignored the President’s letter that clearly required them to involve the finance Ministry, the PM and the Attorney General who naturally could have advised or guided against such a bad deal that saw the taxpayer lose Shs8.7bn for which the MPs want Nawangwe and others to be severely sanctioned.

The Mpaka Mwiine-led MPs are also intrigued over the courage with which the Makerere members of top management went about claiming the Finance Ministry (and more specifically the PSST) had verbally (!) okayed the very repressive provisions of the Consent Agreement to the clear detriment of their employer the GoU.

The MPs are intrigued that Parliament was ignored yet provisions of the PFMA Act explicitly require approval of Parliament for any government entity or MDA to write off any GoU money exceeding Shs10m.

Anything below Shs10m, for the MDA to write it off (occasioning financial detriment to the GoU), the accounting officer must have express permission of the Finance Minister yet the Nawangwes gave away a whooping Shs8.7bn without bothering to involve Parliament or even the Finance Ministry.

“We aren’t so reckless as to say that he is guilty as yet. All we are demanding is that step aside for the Select Committee of Parliament to investigate your conduct and only bounce back after the actual truth as to what happened has been established and authenticated through transparent investigations by a Select Committee, ”says Mpaka Mwine.

Watch this space!

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