20 September 2017

Uganda: BOU Under Probe Over Shs1.4 Billion Payment to Private Lawyers

Parliament — Parliament's Committee on Commissions Statutory Authorities and State Enterprises (Cosase) is investigating Bank of Uganda officials over the expenditure of Shs1.4b in legal fees to private law firms, despite having a fully-fledged legal department.

In four successive Financial Years, the committee heard that top city law firms, including MMAKs Advocates, the firm representing BoU in Crane Bank case involving city tycoon Sudhir Ruparelia, were paid more than Shs1.4b, with an accrued balance of Shs15.8b.

The BoU matters handled by hired lawyers include representation in different court cases and offering legal opinions and processing of land documents.

The Committee chairperson, Mr Abdu Katuntu (Bugweri, FDC) yesterday grilled the central bank officials on the rationale of having in place a legal department and then hiring private lawyers.

The MPs, who are currently scrutinising the Auditor General's reports on BoU, described the expenditure as 'uncalled for'.

Mr Katuntu and other committee members said it is untenable to provide for a legal department, yet most of the legal work is done by private lawyers.

"Who takes the decision that this case has to be referred to the legal counsel outside?" Mr Katuntu asked.

Other MPs who spoke to Daily Monitor after the meeting called the disputed hiring of private lawyers as "a money-making venture" and called for an investigation into the deals.

The central bank's legal director, Ms Margaret Kaggwa Kasule, however, explained that the decisions on what cases are handled by the contracted lawyers are taken with a consideration to the "complexity of the matter."

The MPs questioned her explanation on account of the various cases BoU officials sent to private lawyers.

"That decision is taken by the legal counsel through internal consultation with the lawyers. It depends on the complexity of the matter and a number of other issues," Ms Kasule said.

Mr Katuntu asked why "even a caveat" is placed by external lawyers, to which Ms Kasule responded that "the issues of land office, Mr chairperson, are outsourced."

Ms Anita Among (Bukedea, Ind) said in their next siting, the central bank will be required to present "a budget for internal and external operations".

"We also need a list of your contracts [with external lawyers] and a list of all the advocates," she added.

BoU officials have also been asked to present the budget for MMAKS Advocates and AF Mpanga Advocates - the external lawyers representing BoU in Crane Bank case.

Mr Ruparelia accuses the two legal firms contracted by BoU of conflict of interest. The case is pending before the Commercial Court.

Mr Katuntu said the committee interface with BoU officials will see a legal audit of the bank, asking BoU governor, Prof Emmanuel Mutebile, who was characteristically silent throughout the sitting, to provide the terms of engagement.

"Bring the term of engagement between legal firms, we want to see the performance of your legal counsel, do a quick audit of cases you won and those you lost and also the costs you recovered because the cases you win, you win with costs," said Mr Katuntu.

Other orders

Mr Katuntu also asked the central bank officials to produce its legal department's itemised annual budget in today's sitting without fail.

Ms Kasule said she did not have it off-head yesterday, but promised to avail it in the set of documents that will be presented today.

In an array of documents seen by this newspaper, a particular law firm received a total of Shs62m being paid in respect of "balance on agreed instruction fees and Value Added Tax."

Another case in the documents involved another law firm, which received shs31m for "obtaining planning permission in respect of plot 15-17 Birch Avenue."

Mr Katuntu said the legal department will have to justify its existence in relation to the amounts of money paid to the external law firm.

Mbarara Municipality MP Michael Tusiime claimed that whereas BoU is hiring private lawyers, their land in parts of Mbarara "has been encroached on."

The central bank undertook to investigate the claim.

Totals paid

In Financial Year 2016/2017, the total amount paid to external lawyers was Shs300m, with an outstanding balance of Shs2.9b.

For FY 2015/2016, the amount paid was Shs387m, and the remaining balance amounts to a total of Shs8.8b

In FY 2014/2015, Shs681m was paid, with a total of Shs4.1b remaining in balances.

For FY 2013/2014, a total of Shs61m was paid, with no detail of the balance remaining.

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