President Museveni's government is paying $14.2 million (about Shs31.3 billion) to the Burundi government as compensation for material and financial support offered to the National Resistance Army (NRA) before the rebel group seized power in 1986.

According to classified documents obtained by Daily Monitor, the Uganda government accepted to settle the claim made by their Burundi counterparts following negotiations that started in 1995 and a subsequent agreement that was reached and signed by the two parties on October 14, 2005.

The debt relief agreement, signed by Mr Mwesigwa Rukutana, Uganda's Minister of State for Finance (General Duties) at the time, and Burundi's Minister of Finance then, Mr Dieudonne Ngowembona, mandated Uganda to pay $8.7 million (about 19.2 billion) as compensation for goods supplied to the NRA by individuals and companies from Burundi around 1985.

Burundi had also demanded during the 10-year long negotiations that Uganda pays accumulated interest amounting to $5.5 million (Shs12.1 billion). In the 2005 contract, however, Burundi waived all that interest "with a view of assistance to the government of Uganda in its debt sustainability."

But Daily Monitor has learnt that in yet another twist, negotiations between Ugandan authorities and Burundi's representatives started late last year to have the $5.5 million interest also paid up.

Both Uganda's Deputy Secretary to the Treasury in the Ministry of Finance, Mr Keith Muhakanizi, and the Chief of Staff in Burundi's Ministry of Economy, Finance and Development Cooperation, Mr Joseph Ndayikeza, confirmed in separate interviews with this newspaper that Uganda is paying Burundi for the war debt.

"We had a debt with Burundi and we paid it like all other debts that we have paid," said Mr Muhakanizi, one of the officials directly involved in the deal.

Correspondence between Kampala and Bujumbura shows that Uganda is in turn paying for goods supplied to Burundi. After signing the 2005 agreement, Burundi sent to Uganda's Finance Ministry an Export Pro-Forma Invoice dated August 2, 2005 from Picfare Industries Ltd, with instructions to pay the Ugandan company.

The Jinja-based company had reached a separate deal to start supplying scholastic materials for Burundi's Universal Primary Education (UPE) programme, which was due to start in 2006.

Consequently, in an October 21, 2005 letter, Mr Muhakanizi, wrote to the Managing Director of Picfare Industries, pledging that Uganda would pay the $8.7 million (Shs19.2b) in five instalments starting end of October 2005 with $3 million and completing on August 30, 2009 with $1.3 million. The two-page letter was copied to Mr Rukutana and Mr Ngowembona of Burundi.

Mr Muhakanizi added that owing to the urgency of the matter, Picfare Industries would start immediate delivery of the scholastic material consignments to Burundi as Uganda processed the first instalment payment.

Uganda, however, delayed payments.

As a result, in a letter dated June 22, 2007, Burundi's Minister of National Education and Culture, Dr Saidi Kibeya, wrote to Uganda's Foreign Affairs Minister Sam Kutesa, informing him that delayed disbursement of the funds to Picfare was in turn affecting the supply of scholastic materials to Burundi.

Three days later, Mr Kutesa wrote to his then cabinet colleague, Mr Ezra Suruma, who was in charge of the finance docket, saying he had received two letters from Burundi authorities requesting Uganda to fast track re-payment of the entire loan to enable Bujumbura sustain its fledgling free education programme.

Sources privy to the deal say although the Uganda government was scheduled to complete the final instalment payment of $1.3 million on August 30, 2009, some of the last disbursements are still pending. Due to that delay, Picfare Industries had by April 30, 2010 not shipped to Burundi all the consignments of scholastic materials agreed upon in the initial contract.

The money that the NRA owed to Burundi was only transformed into a national debt after the individuals and companies who supplied goods to the guerilla group failed to claim compensation from the Uganda government. In 1993, President Museveni wrote to Burundi's President at the time, Melchior Ndadaye, promising to honour the debt.

Two months after Mr Museveni wrote his letter, however, Burundi went through a period of political unrest following the murder Ndadaye. It was not until 1995 that negotiations started, with Burundi's team represented by Ugandan lawyer, Mr Jehoash Sendege of Sendege, Senyondo and Co. Advocates.

The Burundi government promised, in writing, to pay Mr Sendege four per cent of any money recovered and he helped them negotiate the sum of $14.2 million - including the interest of $5.5 million - that Uganda has been paying since 2005.

Suspicious deal?

The payments to Burundi have, however, been disputed by some lawyers as illegal. According to the Shadow Attorney General, Erias Lukwago, even if individuals and companies from Burundi supported NRA, payment to them is illegal because whatever contract they signed with the NRA is null and void.

“Legally speaking, whoever facilitated subversive activities committed treason as well. What they did was criminal under the laws of Uganda and it would not give rise to legally enforceable contracts between the government of Uganda and the people of Burundi because that is not a contractual relationship,” said Mr Lukwago, who specialises in constitutionalism and human rights law.

The Chairman of the Public Accounts Committee, Mr Nandala Mafabi, said the debt relief agreement has not been declared to Parliament and has not appeared in any of the audit reports from the Auditor General’s office.

“We must investigate the agreement. If we were to pay Burundi in instalments, did we deliver? It is highly suspect that some officials colluded with officials in Burundi and got the money,” said Mr Mafabi.

Mr Muhakanizi, however, argued to the contrary.

“To the best of my knowledge, the agreement was officially sanctioned by the Attorney General of Uganda as proper and within the laws of Uganda and therefore, I have no reason to think that it was illegal,” said Mr Muhakanizi. “It had been also sanctioned through international organisations like IMF so there is no question that it was illegal.”

Mr Lukwago, who belongs to the opposition Democratic Party, further argued that in law, “there is no contract that is enforceable after six years.” This, he said, is the second ground that the government has violated by paying Burundi.

The Minister of Justice and Attorney General, Dr Khiddu Makubuya, however, defended the bi-lateral debt relief agreement, saying a precedent was set in the 1998 case between Bank of Uganda and Banco Arabe Espanol, where Uganda’s Court of Appeal ruled that an agreement cannot be operational until the opinion of the Attorney General about its legality is received.

This is not the first time that Mr Museveni’s government is paying for debts incurred by the NRA during its 1981-1987 guerilla war, although it is arguably the largest pay-out so far revealed to the Ugandan public. In 2006, Daily Monitor revealed that the government entered into a contract with a local firm to build two secondary schools in Tanzania.
The schools cost Uganda $933,000 (about Shs2.052 billion).
Uganda has also paid other war debts, including $67 million (Shs147.4 billion) paid in 2007 to Tanzania for its role in the 1979 overthrow of Idi Amin. The money was paid as compensation for Tanzanian property destroyed when the Idi Amin government invaded Tanzania and for equipment used by Tanzania People’s Defense Forces against Idi Amin.

Other war debts that Uganda incurred during the overthrow of Amin include $100 million (Shs220 billion) owed to Libya for helping to beat off Tanzania’s offensive and $35 million (Shs77 billion) to Yugoslavia.