Below is an abridged version of the draft report of the investigations into the Temangalo land saga

BACKGROUND

In the wake of the NSSF- Nsimbe Estates botched transaction, on the 6th of September 2004, control of the NSSF was transferred from the Ministry of Gender and Social Development to the Ministry of Finance, Planning and Economic Development. The above transaction led to a loss of billions of workers deposits and consequently dismissal of some of the top managers of the NSSF and the Board of Directors. This matter is still fresh in the minds of the workers and has not yet been resolved as there is an on- going court case and some of the culprits are on the run. The aim of shifting the Fund to the Ministry of Finance was meant, among other reasons, to prevent occurrences like the above-mentioned and to ensure the safety of workers' funds.

The NSSF is by far the largest financial institution in Uganda today with well over Shs1.3 trillion in workers deposits. The Fund has a monthly cash inflow of Shs12.5 billion and pays off benefits of Sh2 billion per month. NSSF also has an asset base of Shs800 billion out of which 75% of the investments are low earning local fixed income items and its overall average return on investments is 11.4%.

The Temangalo land transaction came at a time when the workers had become optimistic about the Fund considering the promised increase of interest on their deposits from 7% to 14%. Thus there is an urgent need to restore their trust and streamline the operations of the Fund.

Terms of reference

The committee defined the Terms of Reference for this investigation as follows; Whether there was conflict of interest by the parties involved; whether there was influence peddling in the transaction; whether there was value for money attained by NSSF in the purchase of the land; whether the procurement process as provided for by the Public Procurement and Disposal of Assets (PPDA) Act 2002 was followed

Background to the sale;

The three parties involved in the transaction informed the committee as follows;

Hon. Amama Mbabazi informed the committee that Mr Amos Nzeyi, a close friend of his and himself decided to purchase the shares of majority shareholders in the National Bank of Commerce Limited who had decided to sell them. Mr Nzeyi persuaded him that the money could be raised by sale of real property or land. Since the only land he had any connection with belonged to Arma Limited, a company in which he holds shares, he persuaded the shareholders to sell the company land.

Mr Amos Nzeyi stated that he had been approached by one Kizito an employee of the NSSF. The two met at the Kampala Golf Club and Mr Kizito inquired whether Mr Nzeyi could sell to the NSSF the land that he had previously failed to sell to Akright Projects. Mr Nzeyi then introduced the idea to Hon. Mbabazi who was agreeable and handed him the Powers of Attorney to act on behalf of Arma Limited.

On the other hand, Mr David Chandi Jamwa, the Managing Director of the Fund in a revealing testimony referred to hereunder informed the committee that the land was 'literally put in the NSSF's mouth'. He said that while the Fund required land for developing real estate considering that it is a dire need for this country, the Fund had not planned to purchase the 'Temangalo land' at the time it did.

Board minutes

The committee examined the minutes of the 68th Board meeting held on Wednesday 31st January 2008 in the NSSF Boardroom in order to ascertain how the decision to purchase the 'Temangalo land' from Arma Limited and Mr Nzeyi was ratified and the dynamics that were involved in the process.

The following findings were made by the committee;

I) Whether there was conflict of interest by the parties involved;

Conflict of interest may broadly refer to a situation in which there are two jobs, aims or roles and it is not possible for them to be treated equally and fairly at the same time.

For example there can be a conflict of interest between one's business dealings and his or her political activities.

Conflict of interest is defined under section 2(1) of the Leadership code Act, 2002; Act 17 of 2002. It refers to a situation where a leader has got to make a decision between his or her personal interests and public interests.

Under section 8(2)(a) of the same Leadership Code Act, conflict of interest shall be taken to arise where a leader deals with a matter in which he or she has personal interests and where he or she is in a position to influence the matter, directly or indirectly, in the course of his or her official duties.

a) Powers of Attorney

Aware that the 'Temangalo land' was owned by Hon. Amama Mbabazi, Minister for Security, according to Board minute 5(ii), the Board decided that the Powers of Attorney for the said land be taken over by Mr Nzeyi on behalf of Arma Limited owned by Hon. Mbabazi and family. This they stated was meant to manage the 'conflict of interest'. In the view of the Board, transacting business with Mr. Nzeyi would absolve the fact that NSSF is a government body that would have been deemed to have carried out business with Hon. Mbabazi a government minister.

The Committee further notes that, the Powers of Attorney were duly transferred to Mr Nzeyi by Arma Limited on that same day, 31st January 2008 when the Board took this decision.

Hon. Mbabazi on the other hand informed the committee as follows;

a) Arma Limited decided that since he was very busy with official work and the rest of the share holders had little experience in doing business, Mr Nzeyi would be requested to carry out the transaction. The latter was given full authority and he successfully performed this task and sold nearly 110 acres of land of Arma limited to the NSSF.

b) There was no conflict of interest in his role because he was not involved even most remotely with the decisions NSSF made in this matter. He did not even discuss the matter with Hon. Dr Ezra Suruma, the Minister of Finance, Planning and Economic Development.

c) Powers of Attorney are signed documents and they can never be instruments of concealment. They were backed by a Board Resolution and signed by one of the Directors of Arma Limited, Mrs Jackline Mbabazi and the minister himself.

In Mr Nzeyi's submission, before the approval of the purchase, he had asked Dr Suruma, the minister of dinance and director in the National Bank of Commerce if he (Hon. Dr Suruma) could help to raise the money for the purchase of some additional shares from the National bank of Commerce.

In the opinion of the MD, there was conflict of interest on the part of Hon. Dr Ezra Suruma.

This is illustrated by the fact that as the appointing authority of NSSF Board and a director in the National Bank of Commerce, he pressurised the NSSF to raise money to save the bank.

Findings

According to the Leadership Code Act, Section 8 and 12, Hon. Dr Suruma put himself in a position where his interests conflicted with his duties and responsibilities.

II) Whether there was influence peddling in the transaction;

Influence peddling according to the Oxford Advanced Learners Dictionary 7th Edition refers to the illegal activity of a politician using his or her position to cause something to be done for himself or herself or for another party usually with monetary implications.

According to Black's Law dictionary it is the illegal practice of using one's influence in government or connections with persons in authority to obtain favours or preferential treatment for another, usually in return for payment.

Minute 7(i) of the Board minutes noted that one of the Directors, Mr Claudius M. Olweny objected to the decision to purchase the Temangalo land on grounds that there was political pressure being exerted on the Fund to purchase the land. Despite assurances that there was no political influence in the transaction, Min 7 (ii) further states that Mr C.M Olweny maintained his position and his objection was duly recorded.

The committee interviewed Mr Olweny as a witness on oath.

He informed the committee that he heard of this land deal for the first time in the Board meeting and that he stood by his statement. He also added that in arriving at his decision; He was cautious that the issue of the Nsimbe transaction was still in court; he was not comfortable for the Board to transact business with a Cabinet minister; he was trying to check that the deal is not bogged down by political influence as was the case in a neighbouring country operating a similar fund that the board had earlier visited.

Hon. Mbabazi informed the committee that he had never spoken with any member of the Board of the NSSF on the question of the purchase of the land in question. He stated that the allegation that there was political pressure attributed to Mr Olweny could not stand because it did not have any reasonable basis.

The committee however received a revealing testimony from the Managing Director, Mr Jamwa in camera. He confessed as follows;

The transaction was characterised by political pressure from the very beginning. Mr Nzeyi had earlier introduced himself to the MD in October 2007 and offered to sell land to him at Shs35 million per acre. The MD then asked him to consult with the investment department of the NSSF. The first set of titles totalling 414 acres was presented to the MD in December 2007.

Dr Suruma imposed political pressure on the MD even prior to the transaction. This was initialised when the two met at the Munyonyo Commonwealth Resort on the 9th of January 2008 on the occasion of the launch of Warid Telecom.

At the said meeting, Dr Suruma categorically asked Mr Jamwa to help him to 'save their bank' which was going to be taken over by Nigerians. The money was actually required even before the land had been purchased but the M.D rejected this.

In Mr Jamwa's words "all they wanted was the money, it did not matter whether there were 400 acres or 600 acres", all they wanted was Shs11 billion. They came to us with a set price."

Mr Jamwa informed the committee that he put in place three levels of internal controls that would have helped to stop this transaction but it was approved at every level thus rendering his attempts futile. First he requested for authority from the Solicitor General but he cleared the transaction. The NSSF Board also approved the transaction and lastly, the minister responsible and the appointing authority of the Board, Dr Ezra Suruma gave a quick no-objection to it.

Mr Jamwa was asked to deposit Shs10.5 billion with the Tropical bank in anticipation of the transaction but he 'dragged his feet' until the idea was abandoned.

He further stated that there were personal and business connections between Dr Suruma and several of the board members thus they could not have rejected a decision where the former had interests.

Mr Amos Nzeyi on his part carried out serious political influence by proxy. He went as far as referring to the person of H.E the President when he told Mr Jamwa that His Excellency had approved that NSSF should purchase Hon. Mbabazi's land.On another occasion he informed the MD that he had been speaking with the First Lady on phone. Mr Nzeyi wanted payment for the land to be made in February 2008, even before the transaction was regularised.

Towards the end of February 2008, the pressure was increased and to comply with the PPDA Act became impossible.

NSSF was also requested to buy shares in the National Bank of Commerce. But this was withdrawn because the bank did not have adequate information.

Dr Suruma denied the allegations of political pressure levelled against him. When the committee inquired about his Munyonyo meeting with Mr. Jamwa, he said that it was true that he met him at the Warid launch on 9th January 2008 but it was not a planned meeting and he did not remember what they discussed. He said that all the other times he met Mr Jamwa, he was in the Minister's office and that there was always a third party at the meetings. He however conceded that he had several telephone contacts with the MD.

Mr Nzeyi also denied the allegations of political pressure levelled against him.

Observations

Planned long term investments by NSSF for FY 2007/08

The NSSF Board Chairman, Mr. Edward Gaamuwa on behalf of the Board wrote a letter dated 14th February 2008 ref no. FA/CONF/19 VOL.II on the subject 'Planned Long term Investments for the Financial Year 2007/2008' to Dr Suruma requesting for a 'no objection' to the NSSF Board to invest in four different areas.

The Chairman of the NSSF Board submitted a signed copy of the original letter. After close examination of the contents therein, the committee noted the following;

The letter requested the minister to give a no-objection to the following long term investments; Housing Finance Bank Ltd Shs30 billion bond; purchase of land for real estate development; acquisition of land codenamed 'Wakiso' at a price not exceeding Shs25 million per acre and measuring 414.44 acres.; acquisition of land code named 'Gayaza' at a price not exceeding Shs4 million per acre; forest development project (Shs 49.32 billion) to plant 10,000 hectares of eucalyptus and pine forests over a five-year period around Uganda; Crane Bank mortgage backed bond (Shs20 billion).

This involved the placement of Shs20 billion with Crane Bank Limited for 10 years at a fixed interest charge of 14% per annum.

The Minister of Finance, Planning and Economic Development gave a no- objection to all the proposals apart from the forth one involving a mortgage from Crane Bank.

The committee noted that although the subject of the letter, was a serious matter involving commitment of billions of shillings accrued from the hard-earned workers savings, it was treated in a casual manner by the Board.

No supporting documents were attached to the letter to enable the minister to make an informed decision before authorising the proposed investments.

The Minister therefore gave a no-objection to the investments basing on a two-page letter.

The Chairman of the Board informed the committee that the minister relied on an informal consultation he held with the M.D and the Board chairman in the minister's office to give the no-objection.

The only other person present at the said meeting was the minister's personal assistant and no record whatsoever of the proceedings was kept.

Dr Suruma confirmed that he gave a no-objection to the investment only basing on the two page letter and without consideration of the transaction's evaluation and financial implications.

He also confirmed that he held the consultation referred to above. He only differed with the Board chairman with regard to the timing of the meeting.

While the Chairman informed the committee that the meeting was held after approval of the deal, the minister insisted that the meeting was held before the Chairman of the Board wrote the letter requesting for approval.

Dr Suruma stated that he knew Mr Nzeyi and Hon. Mbabazi and that they were neither his friends nor his enemies. He added that he did not discuss this transaction with them and that he did not know any company called Arma Limited.

Membership of the Board

The Board members were identified as the following;

Edward Gaamuwa - Board Chairman

Henry Mukiibi - Member

Dr Ijuka Kabumba - Member

Joyce Acigwa - Member

Stephen Bandutsya- Member

Andrew Owiny - Member

Olweny Claudius - Member

Martin Kasekende - Member

The committee noted that of the members listed above, two of the members namely; Mr Gaamuwa and Ms Acigwa were associates of Dr Suruma in an NGO called the Uganda Agency for International Development (UGAFODE) where he is a director.

Role of the Ministry Of Finance

The committee met the Permanent Secretary and Secretary to the Treasury, Chris Kassami and noted the following issues;

Although Dr Suruma had earlier informed the committee that the Macro Economic Department under the Pensions Department in his Ministry was in charge of all the issues relating to the NSSF, this was not the case.

The committee noted that there is no specific officer or department in the Ministry of Finance responsible for the Fund. All the issues concerning the NSSF are directly handled by the minister. No technical staff whatsoever was involved in the decisions surrounding the Temangalo land purchase. The ministry is not represented on the NSSF Board either.

The P.S informed the committee that the lack of a professional regulator for the Fund was the cause of the problems affecting the NSSF.

III) Whether there was value for money; 'Value for money' understood simply would mean an analysis of whether the land purchased was worth the amount of money paid for it.

To determine value for money, it is important to consider the quality and quantity of land purchased as well as the following factors; conduct of legal due diligence prior to the purchase, the land acreage, the land valuation, payment for the land, the status of the land with reference to the real evidence on the ground and whether or not the land has any encumbrances. All these issues are analysed below;

Conduct of legal due diligence

The committee interviewed Dr Joseph Byamugisha, an advocate. He informed the committee that he had been an external lawyer for NSSF since 1987. His contract with the NSSF was on a case by case basis and was not written or permanent.

In this transaction, he was invited by the Board and his responsibility was to carry out due diligence which involved establishing the authenticity of the ownership of the land. Thus, he verified the certificates of title for the land and conducted a search of the titles in the land registry.

He further liaised with the Attorney General and the Solicitor General for clearance. Dr Byamugisha informed the committee that he wrote to the Solicitor General who cleared the draft sale agreements only with some additional conditions to be undertaken by the parties involved. The committee interviewed Mr. Billy Kainemura the Ag. Solicitor General and he confirmed the approval.

The committee queried why the legal department of the NSSF had not been used to carry out the due diligence. Dr Byamugisha responded that the best practice is to carry out some issues of due diligence with external lawyers in such transactions.

Dr Byamugisha stated that he did not commence the purchase of the land. His client the NSSF knew the vendors and had already handed over the powers of attorney at the time he started his work.

He also reviewed the sales agreement and the powers of attorney because the Attorney General advised that the person selling the land had to be the person to be paid.

The committee discovered that Dr Byamugisha was also a lawyer for Hon. Mbabazi and Mr Nzeyi.

He however clearly stated that he did not carry out any work for them in this particular transaction.

Hon. Mbabazi confirmed this revelation by stating that whereas he hires the services of Dr Byamugisha, one of the leading lawyers in this town, he did not do so over this transaction.

He also added that there was no problem in two parties to a contract using one transaction lawyer if the issues are agreed. He would be reducing the agreed position into a technically legal document.

The committee noted that the Board and the MD were not aware that Dr. Byamugisha, the external lawyer for the NSSF was also a lawyer to Hon. Mbabazi and Mr Nzeyi.

Land Acreage

The committee received conflicting information on the amount of land that NSSF bought from Arma Limited and Mr Nzeyi.

While the Board in its minutes approved a total of 414 acres to be purchased from Arma Limited at a cost of Shs24 million per acre totalling up to Shs 9,936,000,000 after investigations, the committee discovered that the Board actually paid for 463.87 acres amounting to Shs11,132,880,000.

This total was arrived at after adding up the acreage indicated in the sales agreements.

The committee further noted that the total acreage indicated on the map was 411 acres not 414 acres as had been represented and approved in the Board minutes. This implied that although the Board was meant to pay for 411 acres as indicated by the surveyed maps of the land purchased, the Board paid for 463 acres leaving 52 acres unaccounted for.

The committee was further astonished by yet another revelation by the Mr Jamwa that the Board had as a matter of fact paid for 497 acres not 463 acres as had been represented. The committee concludes that the Board was not aware of the exact amount of land they had paid for.

Hon. Mbabazi informed the committee that according to the acreage given to NSSF, the Fund acquired more land than it purchased. In the case of Arma Limited, all the acreage sold was handed over to the NSSF.

Hon. Mbabazi also informed the committee that he sold two plots of land to the NSSF.

However, according to the sales agreement, the Fund only purchased Block 280, Plot 35 from Arma Limited measuring 99.2 Acres. The second plot referred to was Block 280, Plot 61, measuring 9.99 acres.

Mr Nzeyi later informed the committee that he had not yet provided an accountability of the land purchased to Hon. Mbabazi and that he (Mr Nzeyi) is supposed to pay him for plot 61.

Observations

The committee observes that the NSSF Board signed a 'blank cheque' for the land purchase without actually ascertaining the amount and nature of land that was being paid for.

Land valuation

The Board claimed that it did not pursue the opinion of the Chief Government Valuer on the estimated cost of the 'Temangalo Land' owing to the fact that he did not respond to a communication to him on an earlier transaction.

The Board informed the committee that the Solicitor General advised that if the Board was unable to get the opinion of the Chief Government Valuer, it could seek the opinion of authorised private valuers.

Basing on that advice, the Board sought the advice of three private valuers of proven repute namely; Knight Frank, East African Consulting Surveyors and Associated Consulting Surveyors.

The Solicitor General however informed the committee that he was not aware of the request by NSSF and did not advise the Board to ignore the Chief Government Valuer.

The following estimates for the cost of the land were given by the valuers per acre; Knight Frank Shs14 million, East African Consulting Surveyors Shs18 million and Associated Consulting Surveyors Shs16.6 million.

The committee notes that although the above valuers were paid in total Shs22.7 million for their services, the Board did not consider their varied opinions. The Board thereafter opted to pay Shs24 million per acre of land.

The Chief Government Valuer however informed the committee that he was never contacted by NSSF about the Temangalo land valuation. This contradicted the NSSF Deputy Managing Director's testimony that he had frantically tried to get the Chief Government Valuer to value the Temangalo land in vain. The Deputy MD had earlier informed the committee that he made several phone calls to the C.G.V but had no recorded evidence. The Chief Government Valuer on his part emphasised that he heard of the NSSF Temangalo land purchase for the first time in the media.

He further informed the committee that given that the private valuers had valued the said land as illustrated above, the Shs24 million that the NSSF opted to pay was considered 'out of range.'

On his part, Hon. Mbabazi stated that he did not participate in the negotiations with the NSSF. Mr Nzeyi who participated on behalf of Arma Limited never informed the company that he had been presented with the above valuation reports.

He only got to know of the valuations from the media and thus it is obvious that they were internal figures obtained by the NSSF for its internal use. He defended the price of the land as follows;

a) The valuations by the three companies were not binding on the seller because the seller had his own valuations and figures. At best those valuations could be invoked only by the buyer in negotiations with the seller.

b) Land is an item that is bought and sold like any other in the market; its price is determined by market forces. The final price is the amount that the two sides would have agreed to since fixed prices were abolished in Uganda. The valuation reports by the three different firms were simply estimates or opinions.

c) Hon. Jim Katugugu Muhwezi had sold in July 2007 in Nansana at Shs28 million per acre.

d) The land had been sold to Akright in 2006 at Shs28 million per acre. Akright paid a deposit of Shs300 million but was not able to raise the balance in the time agreed and the two parties agreed to rescind the agreement. Thus NSSF got a good deal because they got the land below market price.

Payment of tax;

The committee noted that under the NSSF Act, clause 37, the Fund is exempted from paying stamp duty under this kind of transaction however clause 38 only exempts benefits from income tax. This clause does not exempt other transactions carried out by the Fund from payment of tax.

The committee inquired from the Uganda Revenue Authority about whether the NSSF had retained and remitted withholding tax. The committee was informed by the Office of the Commissioner General that there was no evidence whatsoever that NSSF had paid withholding tax on the land.

The M.D of the NSSF contested this position and informed the committee that the Temangalo land transaction did not necessitate payment of withholding tax. NSSF has already sent an objection letter to the Uganda Revenue Authority on this matter.

Observations

By the time the matter of purchase of the land came to the Board, the valuation reports for the land had already been made.

By failing to pursue the opinion of the Chief Government valuer, the Board led to a loss of Shs22.7 million which was paid to the private valuers for their services. The committee notes that the Chief Government Valuer would have provided his valuation to NSSF for free since this is a government entity.

Payment for The Land

Although the Board ensured that the Powers of Attorney to handle the land transaction and pass over the proceeds to Arma Limited were given to Mr Nzeyi, according to the NSSF payment vouchers, the payment of the Shs11,132,880,000 was made to a joint account of Hon. Mbabazi and Mr Nzeyi on account no. 0010130115 of Tropical Bank. The payment vouchers totalling Shs.11,132,880,000 (Shillings 9,000,000,000 paid from the Citibank Collection account and Shillings2,132,8880,000 paid from the Stanbic Collection account)

After further investigation however, the committee realised that the joint account no.0010130115 of Tropical Bank that was meant to have received the payment was a dollar account and there was no evidence at all in its bank statement of payment of the Shs11,132,880,000. The committee instead traced the payment to account no.001-0141184, also a joint account of Hon. Mbabazi and Mr Nzeyi in the same bank.

Transfer of Land Titles

According to the sale agreements, the land purchased was covered by six different titles that were found to be transactable out of 11 titles that had been submitted by Mr Nzeyi.

The committee noted that three of the titles purchased by NSSF all in the names of Mr Nzeyi have not yet been transferred eight months after the transaction had been completed.

The three titles comprise 55% of the land purchased whose total acreage is 247.24 acres costing Shs6.5 billion.

Mr Nzeyi initially informed the committee that he was willing to buy back his land if NSSF was selling.

In his response, the MD of the Fund assured the committee that the Fund would not accept to deal with Mr Nzeyi again in any matter since he has not honoured his part of the transaction to this day.

Although the land purchased was fully paid for, Mr Nzeyi, still insists that he owns 104 acres of part of the land of Mengo Busiro Block 296, Plot 12. This part of the land also includes the residence of Mr Nzeyi and other properties.

The implication of this is that despite the fact that NSSF paid for the land on 10th March 2008, the Fund has not yet received vacant possession of it as required by both the agreement and the law.

Mr Nzeyi referred the committee to a Memorandum of Understanding which was signed between him and the NSSF indicating that he would substitute another 104.88 acres, adjacent and connecting to the rest of the land to NSSF for the 104.88 acres that are occupied by his residence and property on Block 296, Plot 12.

The committee however dismissed his explanation because;

The said Memorandum was operational within three months after 10th March 2008 and therefore lapsed on 10th June 2008. It had long expired, eight months past that date and Mr Nzeyi had still failed to find replacement land. It is thus no longer binding on the parties.

The committee also noted that the alleged memorandum was not relevant as it was not incorporated in the purchase agreement neither was it referred to.

The committee further noted that the said memorandum and the sales agreement were signed on the same day and in the same place, one after the other. The payment for the land was also made on that day 10th March 2008.

The NSSF attempted in vain to have the land transferred through various letters to the Permanent Secretary of the Ministry of Lands.

The committee summoned the P.S to explain the delay and was informed that the three titles had not been transferred because they had a caveat by the NSSF. The committee advised the NSSF to have the caveat lifted so that the land is immediately transferred to the Fund.

Status of the Land

The committee made an on-spot visit of the Temangalo land on Thursday 4th September 2008.

Committee Findings;

The Temangalo land was proven to be 13km as measured from the General Post Office; the committee started off by inspecting Block 277, plot 191 comprising of 26.22 acres in Mengo Busiro purchased from Mr Amos Nzeyi. The committee also inspected Mengo Busiro, Block 280, plot 35, 98 acres purchased from Arma Limited.

The committee was not able to establish the real boundaries of Block 277, plot 191 owing to controversy. The committee was disappointed to learn that the surveyor from Geomaps that had carried out the survey did not know where the real boundaries of the land passed. This land was not clearly demarcated as is expected of land that has been surveyed and paid for. The people found in the area clarified that the surveyor was taking members around land that belonged to one Mr Lule and not the land that had been sold to NSSF. The committee established that Block 277, Plot 191 which was the land in question was adjacent to the land that the surveyor had been referring to.

After further probing, the surveyor admitted that he did not know the exact land that had been purchased by the NSSF and did not have access to the land titles. He also acknowledged that he had not been informed if the land transaction had been concluded. He stated that he was still waiting for the NSSF management to confirm the details to him six months after the land had been paid for. The officers of the NSSF were not sure of the real boundaries either.

Encumbrances

The committee observes that the land had several encumbrances namely;

i) Mengo Busiro, Block 277, plot 191, 26.22 acres

The land above was found to have six bibanja holders, a number of structures both permanent and semi-permanent and mature gardens mainly comprising of cassava, beans and potato plants.

The committee interviewed a number of squatters. All the mentioned testified that they had lived on this land all their lives.

ii) Mengo Busiro, Block 280, plot 35, 99.2 acres (previously owned by Arma Limited)

Although the land is said to have a total of 99.2 acres comprising mainly of fenced-off farm land, there was a visible swamp and a number of fish ponds in the said area.

The land was found to have five bibanja holders with big families. The farm manager further informed the committee that a portion of the land was still being used as a burial site.

The land also has permanent and semi-permanent structures and a number of gardens under cultivation.

Petition of the Bonafide occupants of the 'Wakiso Land'

The bonafide occupants of the land/ bibanja holders petitioned the committee and testified as follows;

The land that formerly belonged to Arma Limited has five families while the land that formerly belonged to Mr Nzeyi has eight families.

Families on the land that formerly belonged to Arma limited;

Paul Z. Mpagi (since 1964), has 8 acres with 2 residential houses and gardens.

Agatha Nalongo Mulima (Widow of Matia Mulima Salongo (since 1958), has 3 acres and grows food on the land.

Nakitende Hadijjah (since 1970), has 6 acres with a house and gardens.

Kizito Joseph (since 1953), has approximately 3 acres with 10 children.

Kironde Ashiraf (since 1920), has 8 acres used as a source of income.

Families on the land that formerly belonged to Mr Nzeyi

Bonefancio Nyombi, has 6 acres of land and has lived on it for 36 years.

Galiwango Charles has approximately 2 acres of land.

Konde Stephen has 2 acres and has lived on it for 20 years.

Najjuma Teddy (Daughter of the Late Benwa Sebowa), her family has lived on the land for 65 years and it measures 600ft by 110 feet.

The family of the Late Abdul Ntege ( Lubwama M.), has 2 bibanjas used for farming, land has eucalyptus trees.

Semambo George William has 3 acres, bought in 2000 with a permanent house.

Kaloli Mugerwa, has 3 acres and has lived on the land since 1963 Nanteza Katereke, has 4 acres of land and has lived on it for 35 years, has a number of orphans and grand children. She uses the land to earn a living.

In both cases, the families testified that they were 'bibanja' holders and that they were never informed about the sale of the land.

The families appealed that if the land was sold, they should be adequately compensated so that they acquire alternative land or that they should be allowed to buy off their portions of land and acquire titles thereof.

Land Survey

The committee summoned the Surveyor of the land, Mr. John Musungu from Geomaps to give an account of his role in the transaction.

He informed the committee that he was contacted by NSSF on phone to carry out the survey work in October 2007 because he is a pre-qualified service provider. He was given a Local Purchase Order and has not yet been paid the Shs19 million for his services.

He liaised with Mr Nzeyi to identify the corners of the land and acreages with the use of appropriate surveying methods. Thereafter he compiled a report indicating the acreage owned by Amos Nzeyi and Arma Limited, the encumbrances and total acreage of the land.

The committee noted the following;

According to Mr Musungu, Mr Nzeyi had created the impression that he owned the entire chunk of land, however, the land titles were from different blocks of land and they were not continuous. He assured Mr Musungu that he had all the titles for the land. The latter compared the titles with the maps, combined all the maps in one sheet and made a preliminary report to the NSSF.

This was further corroborated by a letter dated 5th February 2008 written by Mr Nzeyi to the NSSF informing them that the six plots of land were free from any squatters and had no claims on them by any third parties.

Mr Musungu did not open the boundaries of the land. He just showed NSSF the corner points of the land and it is from this basis that they carried out the purchase. The surveyor is currently opening up the boundaries and trying to locate the exact plots purchased long after the transaction was concluded.

The surveyor earlier informed NSSF that part of the land purchased had a school and a health centre measuring three acres. NSSF also paid for a police station and a road reserve measuring one and a half acres. NSSF responded that the institutions could be incorporated in the NSSF development plan. The surveyor stated that part of Block 280, plot 35 was a swamp.

Is the Temangalo land partially wetland?

Hon. Mbabazi He disputed the observation of the committee that part of Block 280, Plot 35 owned by Arma Limited was a wetland and stressed that the presence of a wetland could only be competently confirmed by the National Environment Management Authority (NEMA), the constitutional body mandated to do so.

In an effort to ensure harmony and agreement by all parties, the committee thus instructed NEMA to inspect all the six blocks of land purchased by the NSSF on the 17th of September 2008. The purpose of this inspection was to confirm whether a wetland existed on any of the blocks of land purchased. Dr Aryamanya Mugisha, the Executive Director of NEMA appeared before the committee with his technical team on the 23rd of September 2008 and presented the following findings;

NEMA report

The Executive Director of NEMA informed the committee that NEMA duly inspected the six blocks of land.

A team of environmental inspectors from NEMA, the wetlands Management Department and a technical staff from Wakiso District Local Government carried out the inspections to verify the nature of the land and determine the portion which is a wetland.

It is necessary to understand what a wetland is before conclusions on this matter are made. Dr Mugisha defined a wetland as follows; The National Environment Act, Cap 153 under Section 2 defines wetlands as "areas permanently or seasonally flooded by water, where plants and animals have become adopted."

Wetlands include permanently flooded areas commonly known as swamps (papyrus dominated vegetation) swamp forests, flood plains and damboos (depressions that developed in association with permanent of temporally flooding). The boundaries of these eco-systems are difficult to define with precision.

NEMA's findings show that the total area which is a wetland of the land that was purchased by the NSSF is 116.18 Acres out of 463.87 acres representing 25.05%.

In the circumstances, NEMA advises the following as the next steps that should be undertaken; the part of the land which is a wetland must be used in accordance with the provisions of the law as provided for in Article 237 (2) (b) of the Constitution, the National Environment Act, the Land Act and the regulations on wetlands, river banks and lake shores.

In accordance with the law, the land owner who is adjacent with a wetland has got a duty to prevent any degradation of the wetland. Only regulated activities as required by the law and approved by NEMA should take place.

The channels that were dug on Plot 35 Block 280 should be covered with soil to facilitate restoration of the wetland. This part of the wetland is important for flood control and regulation.

Sections of the wetlands in Plot 12 Block 296 degraded from brick making should be restored. This section of the wetland plays a very important hydrological function to the Mayanja- Kato wetland system.

Hon. Mbabazi disputed the NEMA findings. He argued that;

The fact that seven fish ponds had been abandoned due to lack of sufficient water suggested that the conditions NEMA found on the ground were not in conformity with the definition of a wetland and for nearly 15 years that Arma Limited had utilised the land, it had never flooded.

Fish farming on the land was abandoned because there was not enough water to fill the ponds in order to sustain oxygen levels necessary for the fish to grow well. The channels were dug not to take away water but to bring water to the ponds.

At one time, Arma Limited planted and got very good harvests of maize, beans, soya bean, okra, sunflower and vegetables. None of these would grow and survive in water logged conditions.

If Plot 35, Block 280 was a wetland, it should have been categorised and put on the National Register and presumably gazetted so that all and sundry know of the existence of a wetland but this was never done.

He concluded that "if it is a wetland then it is a man- made wetland"

The committee informed Hon. Mbabazi that the professional opinion as advised by NEMA on his recommendation would be considered and that if he had a different opinion he should seek legal redress.

The committee also sought the opinion of the bonafide occupants of the Temangalo land about the status of a wetland on Plot 35, Block 280.

Mr Paulo Mpagi who has lived on the land for 43 years stated that the wetland had been existent for very many years and that it stretches from Bujuuko to Kanyogoga. It has however reduced in recent years because the fish ponds collect the water in the surrounding area.

Mr Bonafancio Nyombi and Mr Segujja, both bibanja holders in the same area also confirmed Mr Mpagi's statement.

Observations

The committee notes that the fact that the land had several encumbrances was is in contradiction with the testimony given by the NSSF Board and Management. The lack of structures and 'bibanja' holders on the land had been emphasised as one of the main advantages of purchasing this land. This was not the case as shown by the evidence on the ground.

The committee observed that the NSSF Board gave a go-ahead to the purchase of this land without reference to a physical inspection report.

The value for money was compromised considering that the same amount of money was paid per acre for 116.18 acres of wetland in comparison to the remaining clear land.

NSSF paid for public facilities like a health centre, a school and a police station as part of the acreage.

55% of the land valued at Sh6.5 billion of the Temangalo land has not yet been transferred to NSSF long after payment was made.

IV) Whether or not the procurement process as provided for by the Public Procurement and Disposal of Assets (PPDA) Act 2002 was followed;

The Public Procurement and Disposal of Public Assets Act 2002 defines "procurement" as "acquisition by purchase, rental, lease, hire purchase, licence, tenancy, franchise or any other contractual means, of any type of works, services or supplies or any combination."

On the other hand, the same Act defines "procurement process" as "the successive stages in the procurement cycle including planning, choice of procedure, measures to solicit offers from bidders, examination and evaluation of those offers, award of contract, and contract management."

While NSSF refers to the land transaction as 'an investment', the Executive Director of the PPDA, Mr Edgar Agaba assured the committee that with reference to the definition of procurement in the PPDA Act 2002 as indicated above, the Temangalo land purchase was a procurement. It was an acquisition by 'purchase', it lies in the category of a 'lease' which applies to land and can be rightly referred to as a 'supply'.

Basing on this and after thorough investigation, the committee thus observed that while carrying out the Temangalo land transaction, NSSF breached the procurement procedures.

The committee was informed by the Executive Director of PPDA that the according to the procurement rules, any procurement between Shs30 million and 70 million is supposed to go through competitive bidding. The Procurement Guidelines Number 1 of 2003 made under the same Procurement Act, permit the use of the restricted bidding method only where the value of the supplies does not exceed $35,000 or Shs70 million, otherwise, solicitation of bids through advertisement is a legal requirement.

Mr Jamwa confessed that, "by February 2008, it became increasingly difficult to follow the PPDA Act as a result of the intense pressure that was being imposed on the Fund by Hon. Dr Ezra Suruma and Mr Amos Nzeyi."

According to the PPDA Act 2002, the procurement regulations were flouted right from the start as proven by the following;

There were no adverts or notices for the said deal; Section 140 (2) of the Public Procurement and Disposal of Public Assets Regulations, 2003 states that "a bid notice shall be published in at least one newspaper which must be of wide circulation to reach sufficient prospective bidders to ensure effective competition."

The advertising period as provided for by section 141 (5) and the bidding period as provided for by section 145 (1) of the PPDA regulations were not put into consideration.

Section 51 of the Act recommends that the open competitive bidding method shall be used in the acquisition of goods and services. Mr Musungu, the surveyor of Geomaps argued that he was a pre-qualified service provider of NSSF.

However, even such providers should go through competitive bidding within the pre-qualified list.

Standard bidding documents were not used as provided for by the PPDA Act for bids whether opened or restricted.

Bidding documents have conditions attached including the details of the company bidding. The bidder must fulfil all the conditions therein as provided by the documents. All this was not complied with by the NSSF.

Section 63 of the PPDA Act 2002 states that "all methods for the selection of bidders to be invited to bid shall allow for fair and equitable selection and ensure maximum competition." There was no evidence of maximum competition by bidders in the process.

The information said to have been used by the NSSF Board was got from unsolicited data banks. PPDA submitted that the NSSF breached the PPDA Act by using volunteered information to procure land worth billions of shillings.

Although NSSF has a Contracts Committee that is supposed to handle such transactions as provided by Section 26 of the PPDA Act 2002, it was never involved in the entire process. Instead NSSF opted to use its investments committee to procure the land.

The PPDA Regulations 2003, section 169 (1) provides for an evaluation committee that is supposed to report to the procurement and disposal unit. Its responsibility is to compare different values and bids and select the winning bid based on approved criteria but such a committee was not used.

If this provision had been complied with, the said committee would have determined the best value for the land in a legally accepted manner.

NSSF had been submitting monthly procurement reports to the PPDA. However, the land transaction is not included in the Fund's reports yet its last submission to PPDA was in June 2008 and the land was paid for in March 2008.

Section 45 of the PPDA Act 2002 provides that all procurement and disposal shall be conducted in a manner which promotes transparency, accountability and fairness. The Temangalo land transaction was not subjected to public scrutiny as shown by the evidence above. Thus, the NSSF did not comply with the provisions of this clause.

The committee was informed that the Solicitor General must clear any contract above Shs50 million. The committee notes with concern that if he had not cleared the NSSF purchase of the Temangalo land.

The Solicitor General agreed that he had cleared the transaction although he acknowledges that it was not in line with the provisions of the Public Procurement and Disposal of Assets (PPDA) Act 2002.

He informed the committee that he did so because he did not wish that any delays are encountered in the process and he did not want to paralyse the process of the purchase of the Temangalo land. In his view the buyer flouted the PPDA.

Although the Solicitor General is supposed to provide timely, legal advice, the committee notes that while he was aware that the transaction breached the PPDA, he only advised against it after it had been carried out. In a letter to the Board, he advised that the PPDA should be adhered to in future transactions.

The legal services used in this transaction provided by Dr Byamugisha were not procured in accordance with the provisions of the PPDA Act.

PPDA does not interfere with the procurement process but regulates it on the understanding that it is decentralised. In this case however, the 'Wakiso land' purchase came to the attention of the PPDA through the media.

The law also enables PPDA to grant deviations and accreditations in cases where government bodies are not able to comply with some of the provisions of the PPDA Act. Accreditation is granted only for a period of two years and is reviewed on a monthly basis. If a government body does not seek deviation or accreditation, the assumption is that the procurement rules have been followed.

The committee notes that NSSF sought for accreditation from PPDA retrospectively on the 7th of August 2008, long after the land transaction had been concluded.

Further, the committee noted that the accreditation granted to NSSF was granted only in respect of treasury bills, equities and bonds.

The law does not provide for PPDA to cancel signed contracts when there is evidence that the procurement regulations have been flouted. The most PPDA can do is to recommend to the appointing authority in case of ministers and the public service in case of public officers.

The committee was informed that the PPDA is also investigating this matter and will soon report its findings.

Observations

The Solicitor General is partly responsible for the irregularities in the transaction since he acknowledged that he cleared the transaction with full knowledge that the NSSF had breached the PPDA Act 2002, the regulations and the guidelines.

The workers' opinion

The committee met the National Organisation of Trade Unions (NOTU) and the Central Organisation of Free Trade Unions (COFTU). They presented their views to the committee as follows;

Although NSSF sought approval from the Minister of Finance, Planning and Economic Development, this is irregular and illegal and is not backed by the law. Section 54 of the NSSF Act provides that;

In this Act, "Minister" means "the Minister responsible for social security". Traditionally, the world over, the function of social security falls under the portfolio of the minister responsible for labour.

That the deal was fraught with many inconsistencies, the procedures were not followed, the Board and Management of the NSSF seemed to have processed and paid money hurriedly even before the land being purchased was ascertained and properly inspected.

They emphasised that this is a clear testimony that the people who concluded this deal did not know what they were doing and did not get value for money.

The workers were not consulted and only came to know about it in the press. According to the workers, the employers' representative was only smuggled onto the Board after the scandal. Further, apart from workers not being represented on the Board and other structures of the Fund, there is no consultation of workers and workers organisations on investment decisions of the Fund. Investment decisions of the Fund should not only be used to generate capital for the Fund but should also be used to expand benefits for members, for example housing units mortgaged to members and health services, among others.

The workers reiterated the need to amend Section 3 of the NSSF Act to include stakeholders among the members of the Board.

There is no doubt that the sale of the 'Wakiso land' is questionable and has caused alot of controversy.

This scandal is similar to other scandals in NSSF thus necessitating that we find solutions to the root of the problem other than the cosmetic actions that only handle the symptom leaving the problem to recur.