30 October 2012

Uganda: MTN Tax Case - URA Seeks to Take Over

Telecom company threatens to sue The Observer

While court is yet to rule on whether the Director of Public Prosecutions should take over the tax evasion case against 13 directors of MTN Uganda, The Observer has learnt that the Uganda Revenue Authority also intends to take over the case.

Sarah Banage, the URA spokesperson, confirmed to The Observer today that the tax body was seeking to take over the case as the complainant. She added that such revelations are some of the ways through which URA obtains information on tax compliance.

MTN Uganda's former logistics officer, Naphtali Were, through his lawyers, Web Advocates and Solicitors, dragged the MTN directors to court, alleging in one of the counts that the telecommunication company made false or incorrect declarations of imported goods worth Shs 5bn. The directors sued include MTN Uganda chairman, Charles Mbire; the chief executive officer, Mazen Mroue; and board members Khumo Sehoole and Mozipho January Dardil.

Others are, the corporation secretary, Anthony Mutyaba Katamba; the chief finance officer, Mike Blackburn; his predecessor, Nigel Williams; a former procurement manager, Mervin Immelman; and his replacement, Francis Terffoute. Although court had summoned Mbire, Mroue, Katamba and Terffoute to appear last Wednesday, none showed up, prompting Were's lawyers to seek arrest warrants against them -- a request MTN's lawyers, Joseph Matsiko and Bruce Musinguzi of Kampala Associated Advocates (KAA) objected to.

Meanwhile the DPP, through State Attorney Martin Rukundo, asked court to allow him take over the case, a request Were's legal team objected to when the case came up for preliminary hearing last Wednesday. This session was closed to the media and the public. Today, besides ruling on whether or not the DPP should take up the case, the presiding magistrate was also expected to decide whether or not arrest warrants should be issued against those who defied criminal summons, and against other MTN directors, including those based in South Africa. She deferred the rulings to November 6.

"I have been unable to make the necessary rulings raised, because I have been ill. I adjourn the case to Tuesday next week," Nabaggala said, this time in open court.

MTN to sue Observer

Following our story on Monday, titled: MTN top brass face 169 counts of fraud, MTN, through KAA, wrote to the paper's managing editor demanding a retraction of the story and an apology.

"Take notice that unless you immediately retract the said story and correct defamatory content by giving the retraction the same prominence as the false story, and issue an apology to MTN, its board of directors and the named senior executives, we have instructions to commence legal proceedings to obtain the appropriate legal redress to which our client is entitled," KAA's letter said in part.

A source that is privy to the matter told The Observer today that Were was due to meet with URA officials that afternoon to discuss the possibility of the tax body taking over the case. In the event that this happens, Were, as a whistleblower, would be entitled to 10 per cent of any money URA would recover from MTN, if any.

According to Were's first affidavit, a copy of which The Observer has seen, MTN is accused of having under-declared money, ranging from Shs 763,070 to Shs 693.4m, on various occasions over a period of seven years.

"I am advised by my lawyers that the actions of the said MTN Uganda Ltd through the above stated officers amount to criminal offences under the East African Community Customs Management Act 2004," Were's affidavit says in part.

In the notice to The Observer, KAA Advocates contend that Were is an accused person in case No. 69 of 2012 in the Anti-Corruption Court on charges of embezzlement and causing financial loss to MTN, of $4.1m; that he is accused before the same court for the attempted fraud of Shs 600m; and is the subject of police investigations in a complaint filed by MTN for embezzlement and causing financial loss of $1.2m.

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