24 October 2012

Uganda: Treasury, Basajjabalaba in Blame Game Over Shs 21bn

Lawmakers, ministry of Finance officials and businessman Hassan Basajjabalaba have all contrived to write a script with a 'who is fooling who' storyline after the NRM Entrepreneur League boss denied owing government Shs 21bn.

Basajjabalaba appeared before the Public Accounts Committee (PAC) on Monday to answer claims by Keith Muhakanizi, the Deputy Secretary to the Treasury, that the tycoon had not paid back Shs 21bn. In his defence, Basajjabalaba said the Shs 21bn was deducted from the Shs 142bn compensation he got for lost market deals.

"There is evidence that government was paid. I am going to collect the document [to prove that government was paid] and submit it by close of [this] week," Basajjabalaba told PAC members.

So, if Basajjabalaba paid back in that subtle swap arrangement, where is the money? PAC says it approved Basajjabalaba's Shs 142bn retrospectively. Retrospective approval essentially means that the approved money had already been spent. Treasury staff insist they don't have the money. In fact, Muhakanizi told PAC last week that government will auction Basajjabalaba's property to recover the Shs 21bn. Now, Basajjabalaba's revelation leaves one asking, who is fooling who?

Paul Mwiru, the Jinja East MP, demanded a receipt from Basajjabalaba. Sarah Mpabwa, a UPDF representative, wants the Treasury or government to "deliberate upon" this issue.

Basajjabalaba's lawyer, Geoffrey Nangumya, was more direct during the PAC deliberations this week. He said: "The threat to sell Basajjabalaba's property shows that there is a lot that the ministry of Finance is hiding, more especially when the Bank of Uganda accounts (and its 2010/11 report to Parliament) show that [Shs 21bn] was registered as a loss."

Nangumya argues that by continuing to hold Basajjabalaba's titles, government is playing a "political gimmick" given that Parliament approved the Shs 142bn retrospectively.

"The securities have no financial value because Parliament approved the money. This approved money is with the Treasury. I am afraid politicians (MPs) have deliberately refused to audit government and are playing politics," Nangumya said.

"Those MPs who are asking for a receipt need to know that bank transactions come with narrations not receipts. Basajjabalaba didn't go to the market to buy a goat that he should be given a receipt. These were transactions between the Treasury and Bank of Uganda," he said.

In the early 2000s, the government advanced Shs 21bn to Basajjabalaba to bail him out of his financial troubles. The money, for which he was ordered to deposit security, came from Standard Chartered, Stanbic and Uganda Development Bank (UDB). Eventually, Bank of Uganda which had guaranteed the transaction paid the Shs 21bn to the banks and held onto the businessman's securities.

Until Muhakanizi told Parliament that this money was still outstanding, and that government was considering auctioning Basajjabalaba's securities, which prompted the businessman to claim that he had actually paid up, it was assumed that the money had never been recovered.

But Muhakanizi insists that the "debt swap" Basajjabalaba is talking about never happened because it was rejected by the Auditor General.

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