Uganda Law Society President, Pheona Wall Nabasa/Courtesy photo
The controversial coffee agreement between Uganda through Ministry of Finance and Uganda Vinci Coffee Company limited is illegal and should be revised, the Uganda law Society (ULS) has said.
Appearing before Parliament’s Trade Committee that is investigating the controversial coffee agreement between Uganda and Italian investor Enrica Pinetti, Uganda Law Society President, Pheona Wall Nabasa, cited some exemptions in the agreement that are directly in contravention of the law, especially the clause that stipulates that where infrastructure is going to be removed, government will incur the cost, saying this provision is a direct contravention with laws like the Water Act where anybody who is going to move a water installation has to do it at their own expense.
“So if there is already a law that says that, how can we make a law that is a direct contravention of an existing act? This is where we talk about the illegality of this contract. The Uganda Law Society therefore concluded that the agreement is illegal and needs to be reviewed before it can be allowed to bind the country,” Wall said.
According to Uganda Law Society, the electricity subsidy provided for in the agreement is an overly broad subsidy and could be easily interpreted as illegal and a distortion of international trade which could lead our coffee exports to be subjected to trade remedies.
“If this coffee company starts trading on the international market and anybody comes across this agreement, it is anti-competition. Every other coffee competitor on the global market is going to say these people are unfairly advantaged and can’t compete and sell coffee at the same price as everybody else,” she explained, adding: “And that is only going to cost the Ugandan person because Vinci coffee will not be able to afford to buy our local coffee at a very good price.”
The Uganda Law Society also expressed shock at the absence of termination and liability clauses within the agreement, warning that if it is maintained as it is, there is nothing that could stop Pinetti from mortgaging that land and running away with the money.
“An agreement that has no termination clause causes what we call continuing rights like ownership of the property and assets and incentives that are envisaged under the agreement. The agreement should prescribe timelines for performance. The agreement has no termination clause, it is endless and it is restrictive. It offers no benefit onto the coffee farmers. We are also at pain to see what benefits the government is going to get,” said Wall.
Uganda Law Society didn’t hold back when it came lashing out at Ministry of Finance officials for excluding the agencies mandated to take part in the agreement, and chose to shroud the coffee agreement in secrecy.
“This trend is unethical and against our collective agenda, we urge all state institutions and office holders to observe and protect the interests of the citizens of Uganda on whose behalf they hold and exercise the mandate they possess,” explained Wall.
Uganda law Society also bashed Ministry of Finance for usurping powers of Parliament, when it exempted Vinci Coffee from paying any taxes, citing a case between Heritage Oil and Uganda Revenue Authority where court held that Tax obligations are created by Acts of Parliament and not by agreements.
“For government to offer to pay taxes for somebody they are putting tax obligation on Ugandan people and this can only be done by Parliament. Uganda Law Society notes that it has become habitual for government institutions, Ministries and Authorities to enter into questionable agreements which often shadow investors and this often cause financial loss to the tax payers, encourage rights violations and stifles our economic progress,” said Wall.
The investigations into the coffee agreement will enter the second day with Civil Society expected to present their views on the agreement.
