27 October 2008
Daily Monitor has obtained a copy of the final report into the Parliamentary inquiry over what is now the NSSF-Temangalo scandal. This is slightly edited extract of the report, which has recommended the dismissal of two Ministers, Ezra Suruma [Finance] and Amama Mbabazi [Security] and action against NSSF Managing Director Chandi Jamwa.
In this section, MP's review the testimony of several witnesses including the Ministers and conclude that there was a clear conflict of interest. It also has the never before seen testimony of Mr Jamwa who testified in camera to the committee.
The Board
Suruma, Amama and conflict of interest.
The committee met the Board of NSSF, and received and examined the Minutes of the 68th Board meeting held on Wednesday 31st January 2008 in the NSSF Board room in order to ascertain how the decision to purchase the Temangalo land from Arma Limited and Mr. Amos Nzeyi was ratified and the dynamics that were involved in the process.
The following facts were noted from the Board of Directors minutes of the meeting mentioned above.
Specifically minute 161.4(2) noted details of a land code named " Wakiso" located at Busiro, Temangalo [ mailo land used for agricultural purposes, totalling 414.44 acres, belonging to Arma Ltd a company owned by Hon Amama Mbabazi, the Minister for Security and NRM Secretary General [ 109.22 acres] and 302 acres belonging to Mr Amos Nzeyi].
The board minutes say "that to manage conflict of interest, Arma Ltd be advised to transfer their land to Mr Amos Nzeyi for purposes of transacting with the Fund" and that "that Mr Amos Nzeyi be asked to present a resolution and powers of attorney issued by Arma Ltd authorising him on their behalf to transact with the Fund in respect of their piece of Land'". The board recommended the purchase of the land from Mr Nzeyi at a price "below 25 million per acre". The minutes note too that Director Dr. Ijuka had declared a conflict of interest as a shareholder in the National Bank of Commerce.
Further that Prof. Mondo Kagonyera, Deputy Managing Director had alerted the Committee of a potential conflict of interest on his part and that he had been advised to formally declare the nature of that interest"
In his introductory brief to this committee on August 22nd 2008 the Chairman Board of NSSF Mr Edward Gaamuwa testified that all NSSF investment projects "must be economically viable" and when land is purchased NSSF carries out " due diligence to ensure the seller has a good title, free from fraud or encumbrances" regardless of who the seller is.
Mr Gaamuwa on behalf of the Board wrote on 14 February 2008 ref no. [FA/CONF/19 VOL.II] to Dr Ezra Suruma, Minister of Finance, Planning and Economic Development requesting for a 'no objection' for investment in four different areas including the ones involving the land purchases from " Mr Amos Nzeyi" for housing projects.
Asked if he agreed there was conflict of interest and if not why the Board minutes referred to managing conflict of interest, Mr. Gaamuwa testified to the Committee on 26th August 2008 that "we did explain that we did not want to negotiate with the government minister because that would be a conflict of interest for a government body to negotiate with a government minister."
Mr Chandi Jamwa
When asked what conflict of interest was referred to in the minutes of the 68th Board meeting, the Managing Director Mr Chandi Jamwa appearing before the Committee on the 22nd of August 2008, testified that since the owners of Arma Ltd were " government leaders" and since NSSF is government controlled it was deemed managing a conflict of interest to exclude them [ owners of the firm] from negotiations for the land purchase " in case there is undue influence".
He, however, said NSSF was concerned of a potential conflict of interest only at the negotiating stage in determining the commercial terms and once this was concluded it had " no problem paying to those accounts" [ of Arma and Amos Nzeyi]. However, in his testimony obtained in camera on 2nd October 2008, however, the Managing Director said the transaction could not be said to be free from conflict of interest.
Below is part of his testimony.
"There is one person called Amos Nzeyi in this issue. He is not a public office holder, but he is a serious political influencer by proxy. October 2007 is when he introduced himself to me and talked about this land. He introduced the land; he introduced the sellers to me and said the price was 35 million per acre.
To that I said it appears to be very expensive, but you contact the responsible department, continue with them, they will show you what legal due diligence and verification you need to do. At that time the transaction had not taken much speed, and in December is when we had the first set of titles presented to us, the ones which has up to 414 acres.
January, things changed. I was personally sat down by Minister and told to help them save their Bank. This was for one and half hours at Munyonyo Speke Resort on the 9th of January during the Warid Launch Ceremony to which I obliged because my job was to make sure, one, no money is lost; two, there is a viability to support around the investment as it were. From that time, the pressure increased and the pressure was being exerted seriously by Amos Nzeyi, who informed me that the Minister of Security went to the President and got permission to sell his land to us."
"I was not appointed to NSSF on political grounds, it was strictly on merit, how could I corroborate that; and this is a man, he is on phone, he says he talking to the First Lady; he is on the phone, he is saying the President wants to sleep in his hotel in Kabale; I am just a villager from Tororo but with something on top of my shoulders, what do you expect me to do with such pressure? These people wanted me even to pay for the land before it was fully regularized in February; you can go to Tropical Bank, they will give you all the correspondences where we said we would deposit 10.5 billion in expectation of this transaction and so on and so forth. But I negated that, it never happened."
"We were telling them that we would deposit 10.5 billion with them to clear the loan for these people in anticipation of this land transaction. A lot of the pressure came from the Bank because they had borrowed money to pay off some shareholders." "But eventually I resisted that, I could not find that supportable in any fashion and I tried my best to make sure that the land was regularised and actually we were buying something. If you remember, the monies were released in March, but I was under pressure for three months."
Specifically on the question of conflict of interest he said 'As a professional, you asked me if there is conflict of interest, of course it was there. When I was asked to implement this transaction, I had three levels of external controls to assist me. You know very well when this transaction went to the Board the political interference was raised and the Board overruled it.
Number two; the appointing authority approved this transaction in a record time. Number three; and the last line of defence was the Solicitor General. These issues about PPDPA, about conflict of interest and political anomalies, he should- I think he is the fountain of legal honour in this country. The Solicitor General came here after clearing this thing, he says it is NSSF's fault.'
Mr Ezra Suruma
Dr Ezra Suruma, Minister of Finance, Planning and Economic Development testified before the Committee when he first appeared on the 22nd September 2008 that he gave a no-objection to the NSSF intended purchase of Temangalo land in a letter referenced MFPED/01 and dated 29th February 2008 as the Fund had requested.
He, however, denied there were any other correspondences on the matter and claimed discussions with the Fund were limited to the principles of investment. The Minister told the committee he had known. Mr. Nzeyi since they first met in Nairobi in 1977 and that they attend church fund raising functions together.
He said Mr. Nzeyi is not a business associate and had not discussed with him the Temangalo land transaction. He also said he did not know the company Arma Ltd and said while he knew Nzeyi and Mr Mbabazi they were neither his friends nor his enemies.
Dr Suruma informed the Committee that he was a share holder and formally Vice Chairman of the National Bank of Commerce (NBC) and denied having any conflict of interest in the Temangalo land purchase.
Dr Suruma was asked about the appointment on the Board of NSSF [ he is the one who appoints of Mr Edward Gaamuwa [Board Chairman] and Mrs. Joyce Acigwa who are both subscribers in UGAFODE a company limited by guarantee where he is also a director to which he acknowledged that he had known Mr Gaamuwa for " a very long time" and that the NSSF Board Chair was also the Chairperson of UGAFODE, a charity where Suruma is a director.
"We are one of the earliest members [of Ugafode] as was Joyce Acigwa.Of course Ms Acigwa also served with me in Uganda Commercial Bank" the Minister said. He however said he had taken no action since the Temangalo saga broke.
Dr Joseph Byamugisha
Dr Joseph Byamugisha and advocate conducted a due diligence of the Transaction further obtaining clearance from the government Solicitor General who approved the draft sales agreements on behalf of the Fund.
Dr Byamugisha is however also a lawyer for Hon. Amama Mbabazi and Mr. Amos Nzeyi even if he claimed he was not working for them in this particular transaction.
Mr Amos Nzeyi
According to Mr Nzeyi in his first appearance before the Committee on 12th September he said they urgently needed money to purchase shares from majority shareholders from the National Bank of Commerce and that before the approval of the Temangalo purchase, he had asked Dr Suruma [ one of shareholders of the Bank] as well as Minister of Finance to help to raise themoney for that purpose.
Mr Amama Mbabazi
Below is the testimony of Hon. Amama Mbabazi on 11th September 2008 on the issue of conflict of interest. "Conflict of interest. Mr Chairman and honorable members, as I am sure all of you know, this is a term broadly speaking used to describe the situation in which a public official or trustee who contrary to the obligation and absolute duty to act for the benefit of the public or a designated individual exploits the relationship for personal benefit typically relating to money.
In Uganda, conflict of interest is covered under the Leadership Code Act, sections 8 and 12 and the code provides that a leader shall not put himself or herself in a position which his or her interest conflicts with his or her duties and responsibilities. Clearly, there was no conflict of interest in my role in all this.
I was not involved even most remotely with decisions NSSF made in this matter. I could not have been because I am not part of the decision making process of NSSF. As I have already indicated above, I never met or even discussed by phone that sale with any one leader or staff member in NSSF. I did not discuss it as some innuendos have suggested with Hon. Dr. Suruma, the Minister of Finance."
"I have seen in the papers that the Board of NSSF raised the issue of conflict of interest in buying land from a government minister. I think they took reasonable precaution even though the understanding of the concept of conflict of interest was faulty. I was however not informed of their position and if they sent that advice to me it never arrived. What Mr Amos Nzeyi told me was that they needed him to have evidence from Arma Limited that he was authorized to act on its behalf. That is all."
Observations:
1. According to the Leadership Code Act, Sections 8 and 12, Hon. Dr. Suruma, in giving a no-objection to the purchase of land by the NSSF from his co-shareholders in the National Bank of Commerce for purchase of majority shares of their bank put himself in a position where his interests as a co- shareholder in the bank could easily conflict with his duties and responsibilities as a Minister of Finance, Planning and Economic Development.
2. Hon. Dr. Suruma having appointed his business associates to the Board, a position he agreed to with a reason that he had worked with them for a long time and that they are people of integrity, put himself in a situation leading to a conflict of interest.
3. The committee further notes that, the Powers of Attorney for the said land were granted to Mr. Amos Nzeyi by Arma Limited on, 31st January 2008 the same day the Board of NSSF took a decision to purchase the Temangalo land.
4. The Committee observed that the Board in their 68th meeting under minute 161.4(5)(ii), recognised the existence of conflict of interest and advised that to manage conflict of the interest, Arma Ltd be advised to donate powers of attorney to Mr. Amos Nzeyi for purposes of transacting with the Fund in respect of their land.
5. Although the Powers of Attorney were granted to Mr. Amos Nzeyi to 'manage' conflict of interest which was highlighted in Board minute 161.4 (5)(ii), the proceeds of the Temangalo land purchase were paid directly to the joint account of Hon. Amama Mbabazi and Mr. Amos Nzeyi in Tropical Africa Bank, account no. 0010130115.
6. There exists tremendous advantage that high ranking public officials like Mr Amama Mbabazi have over selling anything including land to government institutions like NSSF. Mr Amama Mbabazi is a public official and a trustee by virtue of being a Cabinet Minister in charge of Security where the Internal Security Organisation is located with an economic desk. His obligation to NSSF as a minister although not directly is collective.
Contrary to his obligation to NSSF, a public institution with workers money, he was with Mr Amos Nzeyi interested in money to buy shares for themselves in the National Bank of Commerce than protecting the workers funds entrusted to NSSF. His personal interest has been put before public interest. This is in breach of Section 8 and 12 of the Leadership Code Act.
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