Finance (523)

Seyani Brothers In Trouble Over Fraudulent JLOS Tender

The Contracts Committee in the Ministry of Justice and Constitutional Affairs has scrutinized and described as illegal, the process employed in awarding the contract for the building premises intended to house the Justice Law and Oder Sector (JLOS)—citing glaring illegalities and gross fraud.

Seyani Brothers and Company Uganda Ltd, a local construction firm, have also still been named in Parliament for contract breaches in the Entebbe International Airport upgrade, is now on spotlight after officials started investigations on how the firm was dramatically awarded a contract to erect JLOS headquarters.

A top source, who did not want to be identified said the said contract, the committee unearthed irregularities in the bid evaluation process, that suggested error and omission that could have been intended to favour a particular contractor, and in the process unfairly awarding the contract Seyani Brothers who had emerged the lowest bidders.

According to a report of the Evaluation Committee chaired by Mr. Sam Wairagala, ten companies submitted bids to the committee, including M/S Zhongjiao third highway engineering (EA) Company Ltd (UGX329,085,479,040),

M/S China Civil Engineering Construction Corporation (UGX224,561,455,452), M/S Consortium of China Communications Construction company Ltd and China First Highway Engineering Ltd (UGX522, 281, 795,283) and M/S Zongyang Construction Group Company Ltd (UGX270, 533, 009, 992) all Chinese companies.

Others are M/S Seyani Brothers and Company Uganda Ltd, an Indian firm, (UGX241, 698, 637, 254), M/S China National Aero-technology international engineering Corporation (UGX280, 093, 511, 526), M/ S SMS Construction Limited and Farrin Joint Venture (Ugandan) (UGX212, 263, 924, 272) and China Railway Construction Engineering Group (UGX274, 874, 281, 734.21).

M/S Sino-hydro Corporation Limited (UGX 496, 414, 290, 527) and M/S Sadeem Al Kuwait General Trading and Contracting Company (UGX243, 143, 599, 032) had also applied. 

However, M/S Zhongjiao Third highway engineering (EA) Company Ltd, M/S China Civil Engineering Construction Corporation and M/S Zongyang Construction Group Company Ltd were eliminated at initial stage.

The rest of the companies were subjected to rigorous technical evaluations according to the source.

The source said three of the remaining seven, were eliminated on technicalities including SMS Construction Ltd and Farrin Joint Venture, who was the lowest bidder.

These are; M/S Consortium of China Communications Construction company Ltd and China First Highway Engineering Ltd

SMS Construction M/ S SMS Construction Limited and Farrin Joint Venture and M/S Sadeem Al Kuwait General Trading and Contracting Company.

The lowest bidder of the four, was M/S Seyani Brothers and Company Uganda Ltd at UGX256, 438, 726, 074 followed by China Railway Construction Engineering Group at UGX294, 263, 358, 382, China National Aero Technology International Engineering Corporation came third at UGX299, 654, 081, 010 and the fourth was China Sino-hydro Corporation Limited at UGX531, 163, 290, 863.

On that basis, the bid went to Seyani Brothers and Company Uganda Ltd. However, it is not clear how Seyani Brothers quotation changed from 241, 608, 637, 720 to UGX256, 438, 726, 074.

The source said, the Contracts Committee found that the Evaluation Committee flouted the bidding law particularly Regulation 17(2 and 6) of SI No.7 of 2014, which empowers the contracts committee to invite a technical person to clarify on the submissions.

In this case the evaluation committee blindsided some of the bidders. For example, whereas clarification was sought from Sadeen and Kuwait General Trading and Contracting company, M/S Seyani Brothers concerning their bid documents the other two companies Consortium of China Communication Company Ltd and China First-Highway Engineering Ltd were never contacted.

This is in contravention of Section 43 A and B of the PPDA Act.

The Contracts Committee according to the PPDA Act holds power to approve an Evaluation Committee for each submitted procurement. It also has power to approve negotiation teams, to ensure that before it is approved, a procurement is in accordance with the procurement plan.

The Contracts Committee also approves bidding and contract documents.

According to the Contracts committee report, the process was marred by “incurable irregularities” and the contract could not be passed.

The committee’s decision saves the Ugandan government and tax payer billions of shillings.

OPINION: Ugandans Will Remain Poor Until They Own Their Bank

By DR Ezra Suruma

One of the most blatant aims of new colonialism (neocolonialism) is to ensure that Africans are denied access and control of capital. The evidence is overwhelming.

It started in 1987 when the World Bank financed consultants to do “diagnostic” studies of locally-owned banks: Bank of Uganda, Uganda Development Bank, Cooperative Bank and Uganda Commercial Bank.

The findings were that all these banks were poorly managed, insolvent and candidates for restructuring, closure and privatization. The financial sector reform that ensued is discussed in my book: Advancing the Ugandan Economy, published by the Brookings Institution in 2014.

Following the recommendations of the diagnostic studies, a far reaching financial sector reform followed. The law governing the Bank of Uganda was scrapped. A new one was written. The main change was to make the Bank of Uganda independent of the ministry of finance in particular and of government in general.

That is why BOU can close domestic banks as if they are private property without bothering what parliament or any other branch of government thinks. They have successfully ensured that foreign banks (read colonial banks) dominance grows and indigenous banks are harassed and closed.

This is a critical hypothesis which all patriotic Ugandans can study and accumulate the evidence to show that neocolonialism in the financial sector has increased. Everything possible has been done to deny Ugandans access to the ownership and control of capital. This, in turn, has ensured that foreign investment is favoured over domestic investment. Without capital, Ugandans are destined to be labourers. Those who are not labourers will be unemployed beggars however educated they maybe.

The rest will immigrate to the Middle East to work as slaves. Secondly, the law governing the supervision of banks was also rewritten in 2004 so as to strengthen the powers of BOU in their supervision, making it impossible for Ugandans to start a bank by increasing the capital needed beyond their means.

You need Shs 25 billion to start a commercial bank! Even those who had started earlier were made to sell to foreigners as the minimum capital required kept rising. For example, Kigezi Bank of Commerce which we had started to help in developing Kigezi area struggled to remain open when the minimum capital required was increased from Shs 2 billion to Shs 5 billion. We were forced to look for new investors both domestic and foreign.

The domestic investors brought in very little. We were lucky to get some Asians from Kenya who came in and now owned 76 per cent of the bank. Later on, when we tried to get those shares back we were dragged into the Temangalo saga, which our enemies were using to stop us from regaining control of the bank.

In the end, it was closed anyway because the neocolonial masters and their agents are determined to stop Ugandans from owning and controlling capital. Similarly, Uganda Commercial Bank was privatized because the colonialists could not bear to see Ugandans controlling such a strong bank with nearly half of all bank deposits in Uganda.

At first they gave the excuse that it was insolvent. I gave up my position as Deputy Governor and went to UCB and restructured it.  It became profitable. I was triumphant and told the World Bank that the UCB was now profitable so there was no need to privatize it.

The World Bank delegation remarked casually, to me, that “now it will fetch a better price.” That is when I realized that “insolvency” that is, lack of profitability, was just an excuse to take the bank from us. The bank had been profitable from 1965 to 1987 except for 1978 when their buildings in Masaka were destroyed in the Tanzania war.

So, the loss of those buildings was written off, resulting in an overall loss. Otherwise the bank had a history of profitability. The fact that it was government-owned had not stopped it from profitability.

Today, the four biggest banks in terms of assets in the whole world are government owned: ICBC, China Construction Bank, The Agricultural Bank of China and Bank of China. The idea that government cannot operate a profitable institution is a sickening lie.

Alongside the restructuring of the Bank of Uganda – with advisors from Washington, London and Australia - came the closure of Cooperative Bank and the restructuring of the Uganda Development Bank.

The President of Uganda resisted successfully pressure from the IMF to sell Uganda Development Bank. When I became minister of finance in 2005, I was immediately required to come up with a paper on micro finance. I moved around the country looking for examples of successful micro finance practice.

I found successful saccos and recommended that model. It was adopted by cabinet. My colleague General Salim Saleh worked with me to draft regulations for the Saccos. Before we could take them to Parliament for adoption, we were dropped from finance!  In my case, I had just been voted the best Minister of finance with GDP economic growth rates ranging from 7 per cent to 10.3 per cent, perhaps the highest on record!

Looking back, I wonder if my dismissal in 2009, when our attempts to build local capital through Saccos, was similar to my dismissal in 1996 when I was sacked from UCB for making it profitable and resisting its sale.

When we proposed Saccos as a means to increase domestic savings and credits for our people, we knew that they had to be effectively regulated. Without regulation and supervision, people’s money would be stolen.

When we left finance in 2009, the regulations were put aside until 2018 when they were finally legislated by Parliament. By then many Saccos, including the one in my parish which had once flourished and helped so many people, had failed.

Incidentally, with the new regulations, the hand of the Bank of Uganda was smuggled in and the processes of registration became more complicated. For example, before you can register a Sacco, members have to be trained by a government commercial officer.

In every case I have been involved we had to pay at least Shs 100,000 to the commercial officer as “transport” to the commercial officer to come and train us. Even in Kampala!

Herbert Sabiti’s observations about the extension of BOU into savings and profit cooperatives will see the last window of freedom to form local capital subjected to the control of the number one neocolonial agency in Uganda. The facts are clear: Bank of Uganda has the most continuous presence of foreign advisers of any institution I know of in Uganda. The impact of that advice is the closure and persecution of indigenous financial institutions.

It is clear that no Ugandan can open a bank now. The Bank of Uganda has made sure that that no longer happens. Moreover, even the few avenues that we tried to open for Ugandans such as Saccos are being closed.

The threat to our future has never been greater than it is today. The ideology that foreign capital should be given every privilege while African investment is persecuted and treated with contempt is before our eyes. We are made to see foreign investment being praised as our own businesses and lands are taken over by foreign banks because we cannot repay loans from foreign banks given to us at exorbitant interest rates.

The lies that interest rates would come down if UCB was privatized were precisely that: lies. From Congo to Cape Town, the economic fate of the Blackman is as precarious as the fate of the young men on boats in the Mediterranean Sea or the young girls traveling to the Middle East only to end up as slaves, prostitutes and organ donors.

Do not be deceived. Colonialism is not only real, it is growing and we are losing even the land we had remained with at “independence.” If you do not believe me check your parish and see how much land remains with the natives and how much has been bought by foreigners. I hope I am wrong.

The author is a former minister of Finance, Planning and Economic Development.

India’s Aavishkaar, Germany’s KfW Unveil $250m Environmental, Social & Governance Fund

Indian based Venture Capitalists, Aavishkaar Capital (Aavishkaar) in partnership with KfW, a German state-owned investment and development bank, have unveiled $250m “ESG First Fund” focused on strengthening the Environmental, Social and Governance (ESG) practice of mid-cap businesses while offering them flexible capital to scale to new markets.

Leveraging on the global drive for sustainability and equality, the ESG First Fund is a fund focused on investing in Africa and Asia with the mandate of generating superior ESG outcomes and commercially viable financial returns alongside positive social impact.

The ESG First Fund will seek to provide transformational capital which can be invested across the capital structure, helping businesses improve their ESG standards so that they can capitalize on the increasing consumer preference for ecologically-conscious, gender-equal and purpose-driven businesses and meet increasing demands on corporate due diligence in the course of regulatory measures in the European market.

The Fund aims to partner with mid-cap businesses and entrepreneurs sharing Aavishkaar’s goal for enhanced ESG standards to deepen their access to markets in Europe. The ESG First Fund is in general open to all sectors, but focuses on those with high exports towards Europe.

The Fund is a global initiative with an investment process centred on ESG, gender equality and climate change goals. The Fund investment strategy aims to measure ESG improvements across value chain while providing catalytic capital across the capital structure, for mid-market businesses. 

The fund will go a long way in scaling businesses especially exporters in the agriculture, apparel and sustainable supply value chain in Uganda, by strengthening their ESG capacity to win in the global market. With agriculture being the backbone of Uganda’s economy, this initiative will also help boost the country’s economic growth.

Commenting on behalf of BMZ, Federal Ministry for Economic Cooperation and Development Germany, Anosha Wahidi, Head of Division 120 - Policy on sustainability in global supply chains, Commissioner for sustainability standards, said that with the investment of 50 million euros, they want to help set up a fund that demonstrates that increased respect for ESG can be a viable investment and business model.

“The German government has passed a due diligence law that obliges German companies to pay attention to social and ecological sustainability in their global supply chains. Corresponding European regulation will follow. It is important to us that we do not exclude companies in other parts of the world from supply chains towards Europe, but rather enable them to participate in better due diligence management. The fund is therefore primarily intended to help SMEs in Africa and Asia to meet the growing demands from European companies. 

Aavishkaar Group Founder and Chairman, Vineet Rai said the ESG First fund takes forward the Aavishkaar Group vision to “Bridge the Opportunity Gap for the emerging 3 Billion” with its focus on ESG,  Africa- Asia region, flexible instruments, Gender and climate change.

“The ESG First fund underscores the unique partnership that Aavishkaar Group has built with KFW Group to develop rapidly innovative products and launch them quickly with trust and long term impact as the bedrock of this partnership.  As we launch this fund we exhort other development finance institutions looking to enhance ESG impact to join us in delivering significant impact and generate attractive returns whilst bringing about a significant positive change in the lives of the people.”  Aavishkaar Capital (Aavishkaar) is part of Aavishkaar Group Company and a global pioneer in taking an entrepreneurship-based approach to scaling businesses for impact.

Speaking about their investment in the ESG First Fund, Dr. Jan Martin Witte, Director, KFW said “We believe in the ability of purpose-driven, responsible capital to be transformative while creating attractive investment returns. This fund aligns with our focus on ecologically-conscious sustainable businesses that bring in financial inclusion and economic development, and will help us reach businesses globally that are impactful. With this initiative, funded by the Federal Republic of Germany, we want to improve the Environmental, Social and Working Conditions as well as the Gender Equality in the SME along the supply chain.”

Commenting on the investment, Ashish Patel, Managing Partner, ESG First Fund - Aavishkaar Capital said, “Our focus is to help businesses scale by allowing them to participate in the significant growth of consumer demand for ‘socially-conscious products’. We will support our partners develop stronger ESG standards and share the benefits of our south-south leanings. Additionally, our investment approach of providing flexible solutions across the capital structure will help businesses which may not be ready for an all-equity or all-debt solution, or where shareholders may not wish to dilute.”

How KCB Bank Laundered $79m & Shs315m Using Illegal Tirupati Bank Accounts

Arguably East Africa’s biggest commercial bank, KCB Bank is in trouble after a client in Uganda went to the high court of Uganda at Kampala (Civil Division) accusing the regional bank of breach of contract, negligence, fraud and money laundering.

According to court submissions, Tirupati Development (U) Limited (the plaintiff) says KCB Bank Uganda and KCB Bank Kenya from whom it had acquired a US$ 7,000,000 loan in 2012 created illegal bank accounts without her consent and used it to launder money.

Tirupati through her lawyers Aegis Advocates and Kirunda & Wasige Advocates say that in August 2016, KCB Bank ‘opened and operate two separate US Dollar-denominated loan accounts the names of the Plaintiff without the Plaintiff’s knowledge or consent.’

These were account number 1059906732 with KCB Bank Kenya and account number 2150226057 with KCB Bank Uganda. Also, in January 2017, KCB Bank Uganda opened and operated another new US dollar current account No. 2290351628 in the names of the plaintiff without the plaintiff’s authorization, consent or knowledge.

Tirupati says they never received any ‘coherent explanation’ for opening these ‘illegal’ accounts and when they demanded a reconciliation of accounts, clarity on the status of their loan repayments, and bank statements, none was honoured causing the plaintiff not to meet her loan obligations.

Inconsistent Loan Statements

Tirupati, between 2018 and 2021, wrote a series of letters to the banks raising several observed irregularities on its bank accounts including committed fraud and conspiracy to defraud. The bank failed to explain the inconsistent loan statements and balances observed by the plaintiff on her accounts.

Tirupati accuses the 2nd and 3rd defendants of misappropriating and occasioning the disappearance of the plaintiff's funds in the sum of US$ 995,466.78 deposited on the plaintiff's current accounts 2150226057 and 1059906732 to aid her loan repayments.

"The facts alleged above show that the 2nd and 3rd defendants on several occasions dealt dishonestly with the plaintiff by acting without the authority and knowledge of the plaintiff, failing to provide explanations for their actions and concealing information about the plaintiff’s accounts," Tirupati said in the plaint.

Fraud And Money Laundering

Tirupati also believes that the banks were using bank accounts they created in their names to launder money thereby exposing the plaintiff and its directors to the potential prosecution for money laundering.

The plaintiff says KCB Bank failed to manage the risk of financial crime and IT fraud when they maintained separate ledgers for the plaintiff’s accounts. Similarly, Tirupati says, the bank utilized her accounts in the manner that made any audit trail difficult to avoid scrutiny by regulators and law enforcement in Uganda and Kenya.

In this claim of fraud and money laundering, KCB Bank facilitated the unauthorized use of the plaintiff’s accounts to transact in varying amounts between 2014 and 2021 totalling US Dollars 79,900,000 and 62 similar transactions totalling UGX. 315,992,747 which transactions bore no relationship to the plaintiff or its businesses for the period evaluated but appear in the names of the plaintiff.

"The plaintiff avers and contends that the 2nd and 3rd Defendant continue to this day to launder money through her named accounts. These actions did and continue to expose the plaintiff, its shareholders and directors to the legal and financial consequences and sanctions arising from the suspicion of engaging in illicit money laundering and probable terrorist financing, likely corruption, or payments procured through drug or child and sex trafficking through the illegal use of her accounts threatening her entire business enterprise."

Tirupati Makes Demands

With this suit, Tirupati wants the court to declare that KCB Bank breached the loan contract, is a fraudulent bank, neglected its fiduciary duties, failed to manage plaintiff accounts, failed to manage the risk of financial crime, cause the bank to return 20 certificates of title, account for all sums misappropriated with interest, declare that bank engaged in money laundering, pay fines and general damages and costs of the suit.

Loan Contestations

While the two entities agreed on a USD 7,000,000, the bank disbursed USD 6,990,000. The bank charged US$35,000 as a loan negotiation fee, a thing the plaintiff says was irregular because it was above the agreed amount and the bank refused to provide breakdowns of how the loan negotiation amount charged was arrived at.

At the time, the plaintiff held only one account with the first defendant vide, Account Number 2201449317 registered in the plaintiff’s name. And as collateral for this facility, the plaintiff agreed to and did provide the 2nd and 3rd Defendants a series of certificates of title to its properties.

Security Minister Jim Muhwezi Refuses To Rescue PPDA Boss Turamye From NWSC Shs17Bn Corruption Scandal

An old age idiom 'You Have Made Your Bed and Must Lie In It' comes to mind when you see Canon Benson Turamye, the troubled Executive Director of the Public Procurement and Disposal of Public Assets (PPDA), fighting hard to vend off an on-going investigation by the Inspector General of Government (IGG) that could see him end up in jail.

The IGG is investigating Turamye and other PPDA officials over allegations that they might have had a hand in a controversial procurement contract in which officials at the National Water and Sewerage Corporation (NWSC) purchased prepaid water meters worth Shs17Bn. Reports indicate that the PPDA boss turned a blind eye and allowed NWSC to proceed with the illegal contract.

To save his face, Turamye, reports reveal, tried to enlist the services of the Minister for Security Maj. Gen. Jim Muhwezi who he thought would influence the investigations in his favor. Unfortunately, the minister, whom Turamye, according to reports met at a hotel in Kololo, refused to have his name dragged in the corruption scandal.

This left Turamye butt naked and exposed to annals of the law. His attempts to frustrate and undermine Kamya’s investigation are yielding nothing and this is having Turamye running scared.

Before Muhwezi’s rejection, the PPDA board of director led by the Chairman Julius K. Ishungisa had similarly abandoned Turamye. Turamye had sought the intervention of the Board in the matter in a bid to use its powers to curtail the IGG from proceeding with the investigation.


Stanbic Bank Earmarks Shs60bn Booster financing To Support Schools Re-Opening

Stanbic Bank Uganda early January announced the immediate availability of Shs60billion in hugely discounted ‘booster financing’ to the education sector a move aimed at supporting the ongoing nationwide reopening of schools after nearly two years of inactivity. 

Under the discounted booster finance, schools are able to borrow up to Shs500M in collateral-free (unsecured) loans to prepare their institutions for reopening. Parents can also access up to Shs250million in unsecured loans processed digitally and dispersed within five minutes at zero processing fee.

Stanbic Bank further revealed that its decision to waive all 2021 unpaid accumulated interest on loans to privately owned schools is a proactive initiative based on the understanding that schools have not been earning and that they need to be supported to regain their ability to settle their liabilities.  

Anne Juuko, the Stanbic Bank Uganda Chief Executive said the ‘bold decision by management even in the face of uncertainty, speaks to our commitment to walk the talk of our business purpose, which is that we drive Uganda’s growth, as such, we have to exercise our corporate responsibility to the country’s education sector.’ 

She added that, “the Covid19 pandemic has left us with an unprecedented challenge; our schools have been closed and teachers have been out of work for two years, many parents and guardians also had their livelihoods interrupted as a result of loss of jobs or business. 

We at Stanbic Bank are taking bold steps to play our corporate responsibility to support the government and other stakeholders in facilitating a successful reopening of our learning centers,” she said. 

Collectively, privately owned schools and teachers, owe financial institutions over Shs1.5trillion in loans, with nearly Shs500 billion in accumulated interest alone. 

According to the Education Ministry, the sector requires Shs500bn in the medium term of which Shs150bn is needed immediately, to support successful reopening of learning centres, countrywide.

PPDA Boss Benson Turamye Turns To Intimidating Whistleblowers In The Sh17bn NWSC Scandal

On seeing that things are going haywire, the Executive Director of Public Procurement and Disposal of assets Authority (PPDA), Canon Benson Turamye, has reportedly, according to media reported resorted to threatening journalists and Whistleblowers behind the exposure of the Shs17Bn corruption scandal that involves the National Water and Sewerage Corporation (NWSC).

Turamye reportedly blocked an investigation into how NWSC officials flouted PPDA regulations when purchasing prepaid water meters at a whooping Shs17Bn. The office of the IGG would later institute an investigation into the matter following a report that was submitted by Whistleblowers about the rot at the PPDA’s office. 

On seeing the anti-corruption people moving in, reports in the media and public domain say that Turamye embarked on sabotaging any investigations.  The latest reports indicate that Turamye has since started using security agencies in the country to intimidate journalists and whistleblowers who exposed his dirty dealings in the contentious NWSC deal. 

“Turamye is now being accused of using security operatives to intimidate whoever is involved in the investigation by threatening them with arrest or disappearance if they don’t back off the matter. We have established that some journalists working with websites that have been exposing the scandal have been threatened with arrests and defamation suits,” Daily Express, a local online publisher, reported.

“The same Turamye is also using security operatives to intimidate the Whistleblowers who compiled the report that the IGG’s office is basing on to investigate the role PPDA officials played in the scandalous purchase, to establish whether or not they were accomplices in the corruption, yet they were supposed to play a watchdog role,” the news website added.

To emphasize his innocence, the PPDA last week issued a press statement in which they denied allegations of Turamye blocking the investigation.

“The PPDA did not block the investigations into the procurement of the prepaid water metres by the NWSC. On the contrary, the PPDA duly undertook an investigation and on 30th July 2020 issued a report citing the irregularities in the procurement process and made appropriate recommendations,” they said in the press statement.

Ham Petitions CJ Dollo Over Bias In Shs120bn Fraud DTB Case

The lawyers of city businessman Hamis Kiggundu have written to Chief Justice (CJ) of Uganda’s Judiciary Alfonse Owiny-Dollo expressing 'apparent bias' in the case between Ham Enterprises Ltd And Others versus Diamond Trust Bank and Another.

Kiggundu's lawyers of Muwema & CO. Advocates and Solicitors and M/S Kimara Advocates & Consultants wrote to the CJ regarding Civil Appeal No. 13 of 2021 and Civil Application No. 51 of 2021 to register their client's 'apprehension of apparent bias which has been exhibited by court's refusal to hear and determine the above application."

The lawyers said Kiggundu has fears that court will not bring an impartial mind to bear on the adjudication of this appeal' for several reasons that they list in the 16 page petition here attached.