Kampala — FINANCE Minister Ezra Suruma has said he did not have a hand in the mysterious disappearance of Shs7.7 billion from the Uganda Development Bank.

"I want to clarify that when this whole issue was being transacted, I was not yet minister of Finance. So it should not be taken that Dr Suruma has 'eaten' that money," he told journalists at a press briefing at the Finance ministry on Thursday.

"I did not 'eat' any money because I was not in office then. And the money was spent before I became minister." In 2002, the government injected Shs7.7 billion in Uganda Development Bank (UDB), which was 100 per cent state owned, from the Consolidated Fund.

However, the Auditor General's report of 2006 indicated that the government's share capital account reflected a balance of only Shs2, 000.

Mr Gerald Sendaula, who served as Finance Minister from 1998 to 2005, was Dr Suruma's predecessor. Documents show that the bank instructed the finance Ministry technocrats to give Shs2.5 billion to the defunct Apparels Tri-Star (U) Ltd and about Shs1.2 billion to Phenix Logistics (U) Ltd.

Both companies are apparels exporters to the US under the African and Growth Opportunities Act (Agoa).

The whereabouts of the other Shs4billion are unknown.

The Public Accounts Committee of Parliament (PAC) on Tuesday summoned Dr Suruma and his top officials to explain circumstances under which the money vanished from UDB.

Dr Suruma explained that the Public Accounts Committee requested him to explain the policy issues and not the accountability issues because it is the accounting officers who are technically supposed to explain.

"I am not an accounting officer and I was summoned to explain policy issues, not accounting issues," he said.

However, he defended the government's decision to fund Ugandan companies with less expensive capital to do business through the UDB.

"The government has been putting money in UDB so that it can be lent to industries and businesses in Uganda and we will continue to do so," he stressed.

He said in the last financial year, the government injected Shs14 billion in UDB which will rise to Shs20 billion this financial year.

Dr Suruma said as PAC is concerned, the issue is not whether the government should assist Ugandans with cheap capital but whether the government was telling UDB whom to lend.

"I want to say that the government does not tell UDB to whom it should lend but it provides the money and then the board of directors and management are supposed to make the professional decisions," he said. The technocrats asked PAC for "more time" to provide detailed accountability for the funds and documentary evidence to show the two companies were servicing the loans.