New Vision (Kampala)

15 February 2013

Uganda: Contractor Petitions Museveni Over Pay

Sabric International Limited, the company that was contracted to rehabilitate the UPDF Armoured Brigade at Kasijagirwa in Masaka, has petitioned President Yoweri Museveni over non-payment for the work they did.

The firm proprietor, Edward Luyinda, in a letter to the President states: "Your Excellency, whereas the meeting held on June 10, 2009, at Masaka Barracks and chaired by Col. David Muhoozi (then armoured brigade commander) approved of our work done at the barracks and recommended payment, Ms. Rosette Byengoma (defence ministry permanent secretary) and Brig. Timothy Sabiiti (engineering brigade commander) declined to pay us."

Luyinda added that the refusal to pay him had resulted into the attachment and subsequent sale of his property, which he used as collateral to secure bank guarantees, leading to losses in millions of shillings. He said the material suppliers had taken him to court over non-payment of sh218m.

"We earnestly request your Excellency to expeditiously intervene in this matter," Luyinda's letter dated June 30, 2011 read in part. This petition followed an earlier letter dated December 9, 2009.

In November last year, controversy arose over a sh6.17b payment that the defence ministry allegedly made to M/s Sabric International Limited for rehabilitation works on the barracks.

Whereas Members of Parliament on the public accounts committee queried the circumstances under which the sh6.17b was advanced to Sabric, Luyinda denied ever receiving the money.

Origin of the battle

Business Vision has learnt that Sabric secured its first contract with the defence ministry on February 25, 2008, to rehabilitate the two tank shades at the armoured brigade in Masaka.

"We performed as requested and we were requested to carry out extra works," Luyinda said. Sources revealed that the project was under Capt. Boaz Banga (now deceased).

Luyinda said whereas all other officers approved his company's work and approved his payment, the engineering brigade commander, Brig. Sabiiti, refused to sign the completion certificate, thereby halting payment.

The officers who reportedly approved the works are; the project manager (Capt. Banga), defence quantity surveyor (only identified as Maj. Sempala), construction regiment commanding officer (Col. Besigye Bekunda) and chief architect (only identified as Maj. Khauka).

Records show that the defence ministry had earlier paid Sabric over sh880m for construction works through Tropical Bank, the construction firm's guarantor. Luyinda said besides the sh6.17b, there is an outstanding balance of sh60.9m for the extra works his company did while repairing tank shades.

Sabric wins second contract

As Luyinda waited for the sh60.9m balance, his company won a second contract with the defence ministry to rehabilitate and rebuild Masaka barracks. This was the sh6.17b contract signed on April 7, 2008 by Naome Kibaaju, the defence ministry's undersecretary, on behalf of Rosette Byengoma, the ministry's permanent secretary.

According to contract documents seen by Business Vision, the defence ministry was to make a 20% advance payment of the total contract sum for mobilisation, but it never did and instead 'blacklisted' his firm.

Sabric beat four firms; M/s Jiemeke, M/s Babcon and M/s Transaction to the contract.

Court battle

In the ongoing suit, Luyinda is seeking to recover his money, damages for breach of contract, costs of the suit all totalling to over sh35b plus a 25% interest per annum on the total payment. The case was earlier before Justice Irene Mulyagonja, now Inspector General of Government. Luyinda's lawyers were Kwesigabo, Bamwine and Walubiri advocates, while Elison Karuhanga led the defence on the Solicitor General's behalf.

State defence

In a statement of defence, Karuhanga confirmed that Luyinda's company did work for the defence ministry, but denied any wrongdoing on the side of the defence ministry. He denied Luyinda's claim that his firm had been 'blacklisted'.

Karuhanga also dismissed Sabric's demand of sh60.9m for additional works, saying there was no contract entered for the same. He instead lodged a counter claim against Sabric seeking damages of over sh1b for breach of contract when the firm stopped working. But later, the defence contended that Luyinda's company was non-existent as it was not registered with the registrar of companies. This was after Ngabirano Kahiriiti, an official from the defence ministry on February 22, 2012 wrote to the registrar of companies to check the legality of Sabric Building and Decorating Contractors Limited on behalf of Byengoma.

In a response dated February 28, 2012, Maudah Atuzarirwe, the assistant registrar of companies declared that Sabric Building and Decorating Contractors Limited does not exist in the registry.

However, New Vision has learnt that the defence ministry inquired about the legality of Sabric Building and Decorating Contractors Limited and not Sabric International Limited, which Luyinda registered and incorporated. Busness Vision has also established that both names (Sabric Building and Decorating Contractors Limited and Sabric International Limited) were used interchangeably in different communications.

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