Uganda: Museveni Stops Shs90b Payout to Basajjabalaba

Kampala businessman Hassan Basajjabalaba.
3 November 2019

A tough-talking President Museveni has pulled the plug and ordered an inquest into a plan, which was in advanced stages, to pay businessman Hassan Basajjabalaba Shs90b for lost business in a city abattoir deal. The President has also set up a committee to investigate ministers and technocrats connected with the deal.

The three-man Cabinet sub-committee is chaired by the First Deputy Prime Minister, Gen Moses Ali. The other members are Ms Sarah Opendi, the State minister for Health, and Ms Grace Kwiyucwiny, the State minister for Northern Uganda.

Sunday Monitor has learnt that the President tasked the committee to study the genesis of the controversial payment, the people involved and ascertain whether verification was done before government officials at Kampala Capital City Authority (KCCA), Finance ministry and Attorney General's Chambers agreed to compensate Mr Basajjabalaba.

Sources told Sunday Monitor that Mr Museveni, who they described as "very angry," almost ejected a junior Finance minister [names withheld] from a Cabinet meeting after he presented the request for Shs90b to pay Mr Basajjabalaba.

During a stormy Cabinet meeting held on October 14 at State House Entebbe, the President "fumed" and demanded to know the people who approved the payment to Basajjabalaba and why the matter was brought to Cabinet at the tail end of the process.

He ordered that no money should be given to the businessman.

Sources say silence engulfed Cabinet as Mr Museveni pushed Deputy Attorney General Mwesigwa Rukutana, Finance Minister Matia Kasaija, Finance State minister for General duties Gabriel Adjedra and technocrats in the Treasury to explain the genesis of the payment and whether the Office of the Auditor General verified the figures.

Sources add that after receiving intelligence information that some MPs on the Presidential Affairs Committee were also suspected to be part of the deal, the President, on Tuesday, took the matter to the National Resistance Movement (NRM) Caucus and echoed how he had intercepted a plot hatched by senior ministers and government officials to pay Mr Basajjabalaba Shs90b through unclear circumstances. He made it clear to MPs that the matter was under investigation.

Last year, MPs on the Presidential Affairs Committee, recommended that the government, through KCCA, pays Mr Basajjabalaba Shs85b for failure to enable him assume vacant possession of the abattoir.

It is not clear how the figure later jumped to Shs90b.

Cabinet also heard that the first installment of the compensation to Basajjabalaba was expected this financial year.

Addressing the NRM Caucus on Tuesday, sources who attended the meeting told Sunday Monitor that President Museveni took time off the day's topic - Makerere University, to dwell a bit on the matter of Mr Basajjabalaba's compensation.

The President reportedly wondered how the Ministry of Finance, which he said he had asked to look for money to finance Saccos (Savings and Credit Cooperative Organisations) said they had failed, had turned around and now would find Shs90b to compensate Mr Basajjabalaba.

While Gen Ali did not pick up our calls at the weekend, the other sub-committee members [Ms Opendi and Ms Kwiyucwiny] on Friday confirmed their appointment to the committee and explained that they were waiting for the chairperson to invite them for the first meeting.

The two ministers also told Sunday Monitor that they are supposed to meet all stakeholders in the latest Basajjabalaba compensation saga, including ministers, and report directly to President.

"I know the problem [we discussed it in Cabinet] but I have not yet attended any meeting," Ms Kwiyucwiny said, adding: "The President was dissatisfied with the figure and instructed our sub-committee to look into the matter and we are supposed to investigate the payment and report back to him."

When contacted on Friday, Mr Rukutana denied any wrongdoing in the alleged legal advice to pay Mr Basajjabalaba.

"I do not recommend payment, our duty [as Attorney General's chambers] is to look at the submitted agreements and ensure they comply with law," Mr Rukutana said.

On whether his actions were a subject of an investigation by a Cabinet sub-committee, Mr Rukutana said: "The decision to investigate was made in Cabinet."

Mr Ajedra at the weekend wondered why he would be investigated over the compensation saga yet he was standing only in for his boss, Minister Kasaija, at the time.

"Why would I be investigated? I was only holding a portfolio of Minister of Finance and even then, nobody brought it to my attention that there was going to be a payment to Basajjabalaba," Mr Ajedra said.

The minister also explained that he was a political head of the Finance ministry and that any payments are made by the technical people. He denied any wrongdoing in the compensation saga and instead pushed the blame to KCCA officials, who signed the agreement with Basajjabalaba.

"I was not involved in any way and I will never be involved," Mr Ajedra said, adding that if there is anyone to blame for initiating the payment, it is KCCA.

However, Mr Ajedra explained that when the President got to know about the plot to pay Mr Basajjabalaba, he raised concerns over irregular payment to the businessman and immediately instructed the Secretary to the Treasury to halt the payment.

Mr Keith Muhakanizi, the Finance ministry permanent secretary and Secretary to the Treasurer, told Sunday Monitor on Friday that he was not under investigation and explained that the new Basajjabalaba compensation budget was approved in his absence.

"I am aware about the payment but I stopped it because Cabinet was going to discuss that issue...you also know that I was out of the county when that budget was done," Mr Muhakanizi said.

Mr Basajjabalaba lays claim to the abattoirs on Plot 1 and 3 Old Port Bell Road in Kampala, which he obtained through a lease from the then Kampala City Council (KCC) in March 2000.

After the City Abattoir Traders Development Association (Catda) members blocked him from taking over the facility, Mr Basajjabalaba sub-leased the abattoir to Mr Daniel Kwantampora, the proprietor of Travellers Coaches Ltd, without KCC's consent. He briefly run the abattoir before Mr Basajjabalaba repossessed the facility in 2011, only to be rejected by Catda members.

They started with a one-year deal in 2000, and later entered into a five-year management contract with Basajjabalaba.

The contract had a renewable clause on condition that the businessman fulfils a monthly payment of Shs20m exclusive of taxes.

On June 4, 2001, KCC again sub-leased the abattoir to Basajjabalaba's company for 49 years at a premium payment of Shs600m, a ground rent of Shs2.7m annually, payable by two equal half yearly installments in advance on the first day of January, and the first day of July in every year.

We could not reach Mr Basajjabala yesterday as his known mobile number was inaccessible, but he has previously denied any wrongdoing.

The Shs142b Markets Scandal

Mr Basajjabalaba is no stranger to controversy related to compensations by the State. Nearly a decade ago, there was an even bigger one.

The Shs142b compensation by the government arose from the reversing of the then Kampala City Council decision to sell Nakasero, Shauriyako, St Balikuddembe (Owino) markets and the Constitution Square to Mr Basajjabalaba.

An audit commissioned by the Auditor-General found that the claim by Basajjabalaba was without legal basis and inflated. Instead, the audit released in July 2011 found that the businessman owed the government Shs994m.

In 2011, MPs on the Public Accounts Committee (PAC) investigated allegations that government officials colluded with Mr Basajjabalaba to inflate the claims for lost business in the various city markets, which were paid to his Haba Group of Companies using public funds. The then Attorney General, Prof Khiddu Makubuya, told PAC on November 29, 2011, that President Museveni gave the green light to the controversial compensation payment of Shs142b to Mr Basajjabalaba.

President Museveni, however, in 2011 said that he had only approved the principle of compensation, not the figures. He later expressed outrage at the amount paid out to Basajjabalaba and asked government officials to recover the money.

Ministers Khiddu Makubuya (General Duties but had been Attorney General at the time of the controversial compensation) and Syda Bbumba (Gender) were later forced to resign from Cabinet over their role in the compensation.

PAC also faulted Bank Governor Emmanuel Tumusiime-Mutebile for succumbing to pressure to pay and failing to protect the independence of BoU.

Mr Mutebile had been faulted for failing to raise the alarm and question the compensation process after realising that the money was being paid to a man he was already pursuing in a case of forgery and fraud.

When Mr Basajjabalaba was given the Shs142b, BoU was pursuing him over forgery of land titles the Central Bank was holding in connection with an earlier cash bail-out of over Shs20b advanced to the businessman.

Whereas Mr Basajjabala had deposited the titles with BoU as security and later recovered them, cancelled and new ones issued by the Land Registry before they were transferred to new owners.

The Governor was cleared of any crime in the Shs142b saga after it emerged that it was the BoU board he chairs that authorized him to pay the businessman.

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