Uganda: The Inside Story of Uganda Airlines Flawed Revival and Graft

(file photo).

The revival of Uganda Airlines could have suffered the birth pangs of a weary industry and the turbulent skies as the Covid-19 pandemic brought the aviation industry to its knees.

On May 23, 2016, President Museveni, during the first sitting of Cabinet of his sixth elective term, announced that government planned to revive Uganda Airlines.

Many aviation experts feared that it could incur losses just like many African airlines that have sunk billions of dollars in a cut-throat industry peppered with protectionism, high taxes, and restrictive regulations.

But the national carrier's operations have suffered more because of graft and internal fights.

By the time the Works and Transport minister, Gen Katumba Wamala, suspended the board, and the airline's top management, the work environment had become too toxic.

Daily Monitor has established that these problems sprouted from the concepts on which the foundation of the airline was built.

A committee led by the commissioner for transport regulation and safety in ministry of Works, Mr Winston Katushabe, was set up to work on the revival plan of the national carrier.

Ms Enrica Pinetti, who was linked to the controversial Finasi-International Specialised Hospital of Uganda in Lubowa, according to highly placed sources, proposed a Swiss consultancy company to assist in drawing a business plan. The blueprint suggested the source of financing.

The then Works and Transport minister, Ms Monica Azuba, eventually presented a White Paper to Cabinet about all plausible options.

Cabinet advised that a company be formed to revive the airline's business, and the ministry manages the bureaucratic procurement processes.

One minister suggested that a team of technocrats should study other successful airlines and replicate their models.

During these meetings, a group of local aviation experts had been trying to get involved in the revival process but were deliberately locked out.

Unknown to the technocrats, the aviation group had been fervently lobbying, and subsequently got audience with the President.

Sometime in 2017, sources added that Mr Museveni summoned Ms Azuba and her technocrats to State House where they were "utterly surprised" to be ushered in the meeting room with "people clad in uniforms"--which bore a resemblance with aviation uniform.

"The President was like; Azuba, where have you reached with the revival process?" a source said.

The minister responded: "We are trying to hire a consultant to help us move forward."

Capt Ephraim Bagenda, an aeronautical engineer and business executive previously working with RwandaAir as director of maintenance and engineering, told the meeting how his group could help draw a business plan and dispense corresponding advice.

"The Works technocrats were definitely not amused," a source, who attended the meeting, recounted.

But the President reportedly ordered: "Go, and work together, and come back to me."

The source added that it then became apparent the President was too busy to meet the team at their convenience.

They then reportedly started falling behind schedule, owing to the failure to get through certain key points, and bickering until the reporting line was delegated to the former Prime Minister, Dr Ruhakana Rugunda.

It is reported that both sides grudgingly got along, they finished a business plan, which Cabinet approved, and it was also decided that a select team "graduates into an interim management for the airline."

The management, as detailed in the business plan, then embarked with negotiations with various suppliers, and settled on the Bombardier CRJ-900 aircrafts and Airbus neos.

"The beginning was not so good. And seeing what is happening, some of us are not surprised," a senior official speaking anonymously said.

The business plan, a copy seen by this newspaper, involved a detailed analysis of the reasons for the success and failure of several airlines, including Emirates, Air Mauritius, Ethiopian Airlines, Malaysian Airlines, South African Airways, Kenya Airways, RwandaAir, and Air Botswana.

"In general, success and failures are attributed to capitalisation, management practices, corporate governance fleet selection, financial and commercial policies and interferences," the 121-page business plan partly reads.

However, for the new national carrier, trading as Uganda National Airlines Company Limited--whose two share-holders are the Works and Transport, and Finance ministries--management was a thorny issue from the start, our investigation reveals.

First interim board

When Cabinet approved the revival team to graduate into management, the first interim board included Capt Gad Gasatura, the Works and Transport Permanent Secretary, Mr Waiswa Bageya and Mr Keith Muhakanizi of Finance, who delegated his commissioner for Infrastructure and social services, Mr Laban Mbulamuko.

Capt Bagenda then became the airline's first chief executive from 2018 until late-2019 when he requested to become director of engineering and maintenance.

"Bagenda was fatigued. He was a flight engineer, besides, he was not a good administrator," sources said.

Recruitment went into overdrive throughout 2019 when the national carrier later in August commenced its maiden flight next-door in Nairobi, Kenya.

According to correspondences seen by this newspaper, and interviews with multiple sources, the airlines company had no formal governance structures and systems.

When a new board led by the former State Minister for Local Government, also Rubanda East MP, Mr Perez Ahabwe, was inaugurated in June 2019, more chaos was let loose as the head was a greenhorn in the aviation sector.

Sources intimated that Ms Azuba had constituted the board to be led by former Multi-choice managing director, Charles Hamya for Cabinet approval when in one of the Cabinet meetings a senior minister proposed Mr Ahabwe's name, who was not originally on the list, as a choice for board chairperson.

"Mismanagement and incompetence are part and parcel of our government, so there is no way Uganda Airlines was going to be exceptional; even when people knew the President would be closely watching," a source in Finance said separately.

"It was a matter of time for the wet dirty linen to dry out in public," the source added.

The top management consists of the chief executive officer, Mr Cornwell Muleya, finance director Paul Turacayisenga, director of marketing Roger Wamara, human resource manager Joseph Sebbowa, and director of safety Bruno Oringi.

Other board members are Mr Benon Kajuna, Mr Godfrey Ssemugooma, Ms Catherine Asinde Poran, Ms Rehema Mutazindwa, Mr Hamya, and Mr Stephen Aziku Zua.

The board, in numerous correspondences, accused former State Minister of Transport Joy Kabatsi of frequently interfering with operations of the airline.

In one dossier, Mr Ahabwe alleged that Ms Kabatsi pressured the airline for $50,000 (Shs176m) for her campaigns, and tried to meddle with the recruitment of staff.

In an interview last week, Ms Kabatsi denied the accusation of asking for the money, and instead accused the Ahabwe-led board of incompetence.

"These claims were brought up to cover their many failures. I have never asked for $50,000, as if the money is always sitting there anyway; I even asked my personal assistant whether they could have gone behind my back to ask for the money but they have never.I don't want to talk about Uganda Airlines issues because there is an ongoing investigation, but that place had many issues," Ms Kabatsi said.

"The last meeting I called, the board did not show up, they used to say they only report to my [then] senior (Gen Katumba) and Mr Kasaija [Finance minister]. I later wrote a letter raising some of the issues at hand, then I learnt later everyone had been sent on leave," she added.

In an April 26 letter titled: "Pertinent issues regarding Uganda Airlines Operations and Management", to Mr Ahabwe, Ms Kabatsi raised, among others, governance issues the board was involving in recruitment of staff at all levels, while Mr Muleya was failing to rein in on errant staff, procurement of ground handling equipment that hadn't been used for months, and certification of the aircrafts that heads of departments had failed to develop manuals to the satisfaction of the aviation regulator Civil Aviation Authority (CAA).

In a rejoinder, the management noted that the board's involvement in procurement was "an anomaly" arising out of conflict of interest.

It also observed that the CEO had attempted to rein in on errant staff some of whom routinely sought intervention of board members, and their godfathers elsewhere in government, and decisions overturned, and that the ground handling only arrived in the country on April 14, and is still undergoing cortication by CAA.

In another rejoinder on May 10, the board deflected the issues as "technical aspects of the airline as opposed to governance" ,and oversight.

Mr Muleya, who previously worked with the defunct Air Uganda and later as technical adviser during the revival of Uganda Airlines, and subsequently elevated to chief executive in September 2019, replacing Capt Bagenda, declined to comment on the matter.

Report

In a January confidential report to the President, Mr Muleya raised concern on a number of issues, including incompetence of the board as one of the members has no aviation background, tendency by some board members to interfere in management areas, especially in the areas of procurement and staff, procurement managers have been particularly problematic because they have also worked with people in government ministries to find ways of making money from the airline.

"They advised that I must try to understand how business is done in Uganda because these practices are normal in this country. They have gone so far as to suggest that our ethical approach management may be one of the reasons why we are experiencing delays in the release of company project funds from the ministries within government."

He said the airline requires Shs218.9b in the first quarter of the year to cover arrears from the last two financial years.

On the contrary, the board says Mr Muleya is the problem. In a May 21 report to Gen Wamala, Mr Ahabwe, who was seeking audience with the President to discuss the crisis at the airline after suspension, wrote that "whilst Mr Muleya had demonstrable technical competence, which the board appreciated, his leadership style is divisive and toxic."

Mr Ahabwe detailed that several heads of departments, including Capt Bagenda, the director for maintenance and engineering, Capt Lukman Ndusa, the director flight operations, Mr Oringi, director security and Mr Don Mubiri, the IT director, are all former employees of Air Uganda as Mr Muleya, so they formed a "clique" inside Uganda Airlines.

Mr Ahabwe further detailed that the board was particularly concerned by his reference to his colleagues, Mr Paul Turacayisenga, the director finance (came from RwandaAir), the human resource manager, Mr Joseph Ssebowa (from National Housing), marketing manager, Mr Deo Nyanzi, the commercial director, Mr Roger Wamara, the senior administrative officer, Mr Andrew Tumusiime and manager corporate quality, as a 'mafia' and "a stumbling block in the nurturing of the progress and steady development" of the airline in one of his confidential reports.

Also drawn in is Ms Jennifer Bamuturaki Musiime, previously director commercial, who also worked at Air Uganda. Ms Bamuturaki, according to correspondences, was terminated on October 25, 2019 during the six-month probationary period for failure to "master her duties and responsibilities."

In the appraisal report, she was accused of, among others, "being more concerned with politics than her team role, and interest of airline, lacking commitment to role, doing things of interest to her and ignoring other roles, being hostile to those of different opinion, and poor handling of both the maiden flight event to Nairobi in August 2019, and a tender for publicity and events."

After her sacking, she petitioned the labour office in the Gender ministry for unfair termination.

She sought Shs3b for unfair dismissal of which the airline management counter offered Shs1.4b in February this year but she rejected it through her lawyers, and on April 29, withdrew the complaint.

Ms Bamuturaki bounced back in May at the airline first as aide to the interim CEO, Capt Steven Wegoye, and later as acting CEO, and is now part of the team superintending over the investigation into the long-running mess.

Sources say she bounced back at the request of President Museveni.

In the May 21 report, Mr Ahabwe defended her sacking on grounds of conflict interest; that she engaged a PR firm, Abbavater, in which she was a related party, and its engagement was not "carried out in a competitive and transparent manner."

During the ceremony to receive the first Bombardier jets in 2019, the airline incurred through the PR firm Shs778m for hosting 600 guests, an average of Shs1.2m per guest, while for the event to receive the first airbus, the airline spent Shs119m for 350 guests the equivalent of Shs340,000 per guest.

Then, there have been other issues of inflated air-tickets, unnecessary travels by both management and the board, the sorry state of airline stations in countries where the airline launched, shady procurement deals, and dubious fuels deals, especially on the Mogadishu route in which a certain UPDF general is reportedly involved.

Back to the drawing board

Towards the end of last month, President Museveni said he had raided a den of graft at the airline and suspended the board and management, whom he described 'as corrupt and will face the consequences.'

In his state-of-the-nation address on June 6, President Museveni said the airline is now being "pacified by these young people of mine because there was a lot of corruption which some of them helped me to unearth and things are going to change [for the better]."

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