Uganda: IGG Faults CAA, Rea Over Shs2.3b Deals

18 October 2018

Kampala — The Inspector General of Government (IGG) has ordered the managing director of Civil Aviation Authority (CAA) to recover $407,050.07 (about Shs1.5b) lost in irregular payment of taxes on behalf of a company contracted to install a new baggage handling system (BHS) at Entebbe International Airport.

In a report dated September 6, IGG Irene Mulyagonja wants CAA boss David Kakuba to recover the money from Vanderlande Industries B.V. and return it to the Consolidated Fund within 60 days.

The IGG had earlier on July 28, directed the CAA boss to recover and return $541,544.47 (about Shs2b) after it was found to have been lost in irregular payment of import Value Added Tax, Withholding Tax, pre-shipment inspection and variations, instead of the contractor paying these dues.

But the IGG report says Vanderlande Industries B.V., a Malaysian company initially supposed to pay those taxes, offered to refund $407,050.07 (about Shs1.53b) instead of the $541,544.47 (about Shs2b) that her office had directed to be recovered.

"The managing director of CAA is ordered to pay all monies recovered from M/s Vanderlande Industries B.V. into the Inspectorate of Government Asset Recovery Account. The money should be paid into the stated account through direct transfer or using bank draft to the Inspectorate of Government," the IGG said in her report.

Justice Mulyagonja also wants the CAA boss to give an update about the Authority's evaluation of the offer by the contractor and the plan to recover the money.

The IGG findings say the irregular payment of the said money by CAA followed the signing of a $4,838,053.44 (Shs18.2b) contract with Vanderlande Industries B.V. on February 17, 2015.

The IGG also faults Mr Ronald Twesigye, the project manager of CAA, and Mr Rama Makuza, the former managing director, for causing a financial loss to government when they irregularly approved payment of $148,586.65 (Shs560m) in variation orders without jurisdiction.

The IGG has vowed to prosecute the two officials and others involved should the CAA boss fail to recover the funds within the stipulated time.

IGG order

Meanwhile, the IGG has also ordered the board of directors of Rural Electrification Agency (REA) to punish Mr Godfrey Turyahikayo, the executive director of the agency, for causing a financial loss of Shs779.2m after breaching the Public Procurement and Disposal of Public Assets Authority laws.

The Shs779.2m contract for management of Consumer Awareness and Communication Strategy was handed to Real Marketing Ltd in the absence of a contract management team, a lapse that the IGG says led to poor project performance.

Mr Turyahikayo, the IGG directed, should also be reprimanded for "continuous requisition of funds for foreign travel before utilising and accounting for previously requisitioned funds and the late submission of accountability contrary to the Treasury Accounting Instructions, 2003."

But the report exonerates Mr Turyahikayo on allegations that he altered payment terms for the Consumer Awareness and Communications Strategy because there is evidence that particular contract was prepared by the legal department, and cleared by the Solicitor General before it was signed by the executive director.

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