The interdicted permanent secretary and principal accountant in ministry of local government caused loss of $1.7m (sh4.5b) to government, court has heard.
Accountant General Gustavo Bwoch told court on Thursday that John Kashaka Muhanguzi overrode procurement procedures by authorizing payment and therefore caused loss to government.
Bwoch told the Anti-Corruption Court presided over by Justice Catherine Bamugemereire that Kashaka caused the loss especially when he ignored advice given to him by Bank of Uganda that the shipping documents presented by Stanbic Bank on behalf of Amman Industrial Tool/Aitel had inconsistencies.
Bwoch testified that Kashaka should have contacted the Solicitor General and advise him on the document presented before authorizing payment.
According to him, Kashaka should have consulted and discussed with Bank of Uganda to have the anomalies rectified. But "he instead took it upon himself and authorized payment contrary to the procurement law.
The Accountant General said that the bill of lading, packaging lists, original delivery note and certificate of origin submitted to support the payment were not authentic.
Court heard that Kashaka ignored Bank of Uganda's warning of missing vital documents pertaining to the payment.
The Accountant General said the loss was not caused by Bank of Uganda but instead by Kashaka, principal accountant Henry Bamutura and the internal audit because they claimed that the goods (bicycles) had been delivered yet that was not the case.
Another witness, Cherry Reginah Mbabazi, a police officer who investigated the case told court that Aitel, the purported partner of Amman Industrial Tools, did not have any past experience of handling a contract of such magnitude.
She further testified that there was no joint venture between Amman and Aitel - purported to have been contracted to supply 70,000 bicycles for the LCs.
Mbabazi told court that at the evacuation stage of the contract, several amendments were made with the approval of the contract committee.
He said the contract required the payments be made fully, but the term of the contract was amended to cater for only 40% payment.
Kashaka and Bamutura are accused of causing financial loss by authorizing payment of US$1,719,454.58 to the purported supplier M/s Aitel, despite being warned by Bank of Uganda that documents presented by Stanbic Bank did not comply with terms for letters of credit. The prosecution says the two knew their action would cause financial loss to the ministry.
Prosecution led by Jane Frances Abodo and Marion Acio said Kashaka and Emorut signed the bicycles' contract with irregularly-amended terms which allowed payment of 40% of the money on presentation of shipping documents instead of full payment on delivery of the bicycles.
They also allegedly extended the bicycles delivery period by one month.
According to the State, Mwebaze also advised bidders to ignore technical specifications and reduced the bid security to sh300m without consulting the contracts committee.