Uganda Property Holdings Limited (UPHL) lost close to UGX3 billion as a result of investing in a carport in Mombasa, parliament has heard.
The revelation was made when officials from the company led by the Managing Director Martin Kihembo , appeared before the Parliamentary committee on Commissions, Statutory Authorities and State Enterprises today.
They had appeared to answer to audit queries raised by the Auditor General in the year ended June 2013.
The team, told MPs that UPHL obtained a loan worth UGX3.3bn from Stanbic bank, Mombasa branch in 2006, repayable over 7 years to construct a carport.
The company expected to service the loan using rent from tenants renting the carport complex. However the investment immediately run into trouble as the very first tenant, CPC Freight Services, failed to pay the monthly installments.
“The carport was not making money, we leased it to a Ugandan company called CPC Freight Services, they meant challenges, there was too much competition from the Kenyans, and we were not able to service our loan properly” said Kihembo
The decision to evict CPC Freight Services led to protracted legal battles; first, with the company and then Kenya Revenue Authority.
He narrated to MPs that CPC Freight Services refused to vacate the premises and resisted eviction notices leading to a year long court battle.
Kihembo told the committee that the dispute with CPC Freight Services was fueled by the Kenya Revenue Authority’s (KRA) refusal to terminate CPC Freight Services ‘s license.
“Court decided that CPC Freight Services leaves our facility and they pay the UGX2.8 billion they owed us. However CPC Freight Services refused to issue a letter releasing the carport. We went to Kenya Revenue Authority requesting them to waiver the condition and KRA refused,” he narrated.
UPHL was then forced to drag KRA to court but this did not yielded any positive results as court ruled that the statutory body was following Kenyan laws.
UPHL was eventually forced into negotiations with CFC Freight Services and also forfeit another UGX 1.8 billion for CPC to chance the licence.
UPHL got a new client Unifright Ltd, and they have since reduced the loan from UGX 3.3bn to UGX2.5bn.
However, rent arrears of UGX2.8bn remains unpaid.
This angered the Committee Vice Chairperson Florence Namayanja who pointed to incompetence and laxity on the part of management.
She said the committee needs to find out the people responsible for these transactions and hold them accountable for the loss.
The Committee has demanded for a copy of the terms and conditions in the tenancy agreements.