Paul Amoru
25 August 2008
Kampala — THE National Social Security Fund Board last week agreed to disregard the advice of its lawyer and initiate an out-of-court settlement with Alcon International, whose contract to build Workers' House was terminated a decade ago for doing shoddy work.
Daily Monitor has learnt that the NSSF Board was on August 20 briefed about the decision to pay Shs17.7 billion to Alcon and another Shs13.7 billion in costs to two Kampala law firms - bringing the total payout to Shs31.4 billion - despite the Fund's lawyer, J.B Byamugisha Advocates' belief that he can win in court.
Sources familiar with the deal, who asked not to be named because of the sensitivity of the matter, told Daily Monitor that Alcon's lawyers Tumusiime, Kabega & Co Advocates had lodged costs of $7.2 million (about Shs11.5 billion).
The pact, according to minutes of the NSSF Board meeting that was chaired by Mr Edward Gaamuwa, also includes another $1.4 million (approx Shs2.2 billion) to be paid to Kampala Associated Advocates, a law firm that was in April thrown out by the Court of Appeal as having no instruction to represent Alcon.
It is not clear why the firm is being paid. Both Mr Gaamuwa and a Mr MacDusman Kabega, a senior partner in Tumusiime, Kabega & Co Advocates confirmed the developments and said negotiations were continuing.
"The negotiations are still going on but this is not a matter for the media," Mr Gaamuwa told Daily Monitor. The NSSF Board Chairman declined further comment, saying "you write what you want".
In a separate interview, Mr Kabega, who declined to reveal the actual figure of his firm's costs, indicated that it would be astronomical.
"We were asked to send out our bills covering from when this case started," he said. "We have five to six bills of costs pending from High Court and other applications we have since made. We have never been paid, never - never."
NSSF'S external lawyer, Dr Joseph Byamugisha, who was retained to handle the Alcon brief, was not available for comment over the weekend. Sources familiar with the matter said Dr Byamugisha had told the Fund that he was confident the NSSF would win the case on appeal.
However, a May 7 NSSF Board meeting at the Imperial Royale Hotel in Kampala chaired by Mr Stephen Bandutsya opted to ignore Dr Byamugisha's counsel and, on the advice of the Finance minister Ezra Suruma. "The meeting was informed that the minister had advised the Fund to get a second legal opinion to guide any further action," minutes from the meeting read. "It was agreed that the Minister's guidance be sought."
The Board later instituted a committee, chaired by Mr Cornelius Mukiibi, with Mr Claudius Olweny and Mr Martin Kasekende as members, to handle the matter.
NSSF's managing director David Chandi Jamwa told Daily Monitor on July 14 that the Fund had received "independent legal advice" from a top-notch lawyer who advised the NSSF to cut its losses and settle out-of-court.
Mr Jamwa declined to reveal the identity of the lawyer claiming he didn't want the press to "plague" him. "We are still negotiating over the case and we don't want to expose this person before we've disposed of it," Mr Jamwa said at the time, adding that waiting for a court verdict in the matter would "allow the cancer to grow".
Mr Kabega, Alcon's lawyer, attacked Dr Byamugisha's insistence seeing through the legal battle to the end. "He is the one who appealed and he knows why he is insisting," Mr Kabega said, "but we don't see any merit in his arguments."
"In court we have what we call scheduling conference where you file a list of authorities to support you case, but Dr Byamugisha's arguments are more less the same like those he lost in the earlier suits," Mr Kabega told Daily Monitor.
NSSF contracted M/s Alcon International Ltd, a company incorporated in Kenya, to erect and complete a partially-constructed structure in the heart of the city. In May 1998, NSSF cancelled Alcon's contract accusing it of stalling work, escalating the project's cost from its original $21 million to $35 million and sub-contracting a third party without its knowledge.
Alcon subsequently sued NSSF for breach of contract in the High Court and was awarded $8.9 million in 2001. NSSF later contested that award but lost. NSSF later lodged an appeal in Court of Appeal and that case has been pending for the last six years. The payout will wipe almost a quarter of NSSF's Shs131 billion profit from the last financial year but help end the long-running legal wrangle.
The work was handed to Roko Construction Ltd that finished the project, which is now Workers' House and one of the tallest buildings on the city's skyline. However, Alcon still retains the land title for the property.
NSSF's top officials are expected to reappear before a parliamentary committee tomorrow to defend themselves against allegations of influence-peddling and inflated pricing over a land transaction involving security minister Amama Mbabazi, and plans to triple the cost of a Tower complex in the heart of the city only four months after construction started, and without necessary approvals.
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