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Finance Ministry Spends Shs44bn On Ghost Law Firms

Uganda’s Ministry of Finance, Planning and Economic Development continues to generate controversial news of late.

The latest is that the ministry spent Shs44.76bn on ghost law firms.

An Audit Report by the Auditor General, John Muwanga, reveals that Finance Ministry led by the Secretary to Treasury, Keith Muhakanizi made payments in court awards without court orders.

In his audit report ending June 30th 2016, the Auditor General noted that Finance Ministry negotiated with some judgment creditors and reached agreements with them.

The move according to the Ministry was intended to curtail the accumulation of interest while setting timelines within which payments would be finalized.

However, the Solicitor General advised that such negotiated settlements subsequent to court ruling can only amend a court order if they are filed with the court.

The Solicitor General noted that if the Memorandums aren’t appropriately filed with High Court, there was a risk for the negotiated settlements waiving costs, to be deemed null and void.

The audit follows concerns raised by MPs during a plenary sitting in April 2016, ordering the Auditor General to undertake a special audit in respect of the mandamus payments made by the Ministry of Finance.

An order of mandamus is a judicial command requiring the performance of specified duty which hasn’t been performed and is employed to compel action, when refused in matters involving judgment.

Ministry of Finance at the time explained that actions were being undertaken to have the MOUs appropriately registered.

While appearing before the Finance Committee of Parliament in April, Finance Ministry PS/ST, Muhakanizi defended their decisions, arguing that they followed the Attorney General opinion at the time.

“We don’t negotiate, but once they get the order of mandamus to arrest me, we negotiate to ensure that Government has saved money and also to ensure that cash flow allows Government programs,” he said.

He added: “I am trying to save Government money and also work out a cash flow that will allow Government programs to work and nobody is going to threaten me. Now, those who are making a lot of noise, why didn’t they save Government money? Show me what they did? I have done and I will provide it.”

Controversial Payments

One of the controversial payments was made to Annet Zimbiiha after the claimant protested the unlawful compulsory acquisition of the land located at Nakibaale, Isingiro district by the Prime Minister’s office, which is occupied by Oruchinga refugees Camp.

Court ordered for compensation totaling to Shs30bn to the plaintiffs, dating back as far as 1964 when Government took over the land.

Despite the fact that the Ministry of Finance defended the payment, saying it followed an order of mandamus issued by court; no documents were availed to auditors to support the explanation, leaving the auditor with no choice, but question the payment.

Another controversial payment involved a one Wilberforce Walusimbi and 6367 others, whose judgment was entered in favour of the plaintiffs.

The case concerned the non-payment of pension arrears, gratuity and transport allowance to 3392 soldiers who were employed by the UPDF but retired between 2001 and 2003 as being non-effective.

Judgment was entered for the decretal sum of Shs3.81bn at the interest rate of 6% per annum from the date of judgment until full payment.

By the time payment was due, the interest rate had accumulated to Shs8.92bn as of June 2013.

The team was represented by Bashasha and Company Advocates, during the negotiation process.

According to the Audit Report, there was over payment of Shs1.48bn in the case of Wilberforce Walusimbi.

High Court in its judgment awarded Shs3.81bn and accordingly, Ministry of Justice proceeded to pay the claimant a total of Shs3.07bn by August 2013.

This left a balance of Shs736.5m in the Financial Year 2013/2014 and 2014/2015.

However, although payments were made, the auditors were never provided with negotiations minutes supporting the Memorandum of Understanding between the Plaintiffs and Ministry of Finance.

Additionally,  Singo Beef Farm Ltd received Shs647m, having been represented by Kampala Associated Advocates.

Apparently, the ranch was expropriated in 1990 during the ranch restructuring program carried out by Government. However, the plaintiff sued Government, protesting the unlawful manner in which Government expropriated the property.

A consent judgment was entered in favour of the plaintiff on June 22nd 2012, with Shs2bn being the value of the suit property. 15% on the Shs2bn was for disturbance allowance and 6% interest on the Shs2bn till the date of settlement. However, there were no support documents to prove the payment.

Following his shooting by an errant Police Officer, artiste Moses Ssali popularly known as  Bebe Cool dragged Government to court, demanding for damages.

Together with other three people he was in company with that night, Court awarded them Shs485m with 10% interest and costs of the suit.

In order to get the money quickly, Bebe Cool struck a deal with the Ministry of Finance in which he agreed to waive the entire interest rate in consideration for prompt payment and withdrawal of the appeal.

By January 2015, the interest had accumulated to Shs228.62m and the Attorney General accepted the consideration.

But before the payment was paid, no official documents were submitted by Bebe Cool team, an action that saw the Auditors question the payment.

Further, Yovan Bwambale and 914others, who were represented by Davis Ndyomugabe & Co Advocates, got paid Shs2.38bn by Finance without the team producing the requisite documents from court to support the payment.

The group was suit former workers of Mukisa Foods Ltd and Ugandan Rayon Textiles and Manufacturing Ltd.

The two companies were initially privately owned but later taken over by Government under the Ministry of Commerce, Trade and Industry.

The plaintiffs sued because their services were terminated with irregularities in the calculation of payment of their gratuity, terminal benefits and allowances while others were not paid at all.

In its judgment, High Court ruled in the group’s favour, ordering Government to pay Shs22.89bn as gratuity and interest of 8%.

Further, Court ordered Government to pay Shs2m as general damages to each of the 915 complainants and Shs924.2m as costs of the suit.

There was also a payment of Shs514.99m to  Mahmound Saad. This was after it was discovered that Finance Ministry made payment in excess of over Shs500m.

Through his lawyers, Kaahwa, Kafuuzi Bwiruka and Co Advocates, Saad sued UPDF for continuous occupation of his property in Kasese Municipality.

The creditor was awarded a decretal sum of Shs1.26bn as special and general damages, costs of the suit with interest rate of 25% from June 13th 2013 until payment in full.

The owner of Ankole ranch, James Rwanyarare was given Shs3.24bn by the Ministry, with no support documents.

Rwanyarare had sued government claiming recovery of his land, which comprised Ankole ranch scheme.

Judgment was entered, ordering Government to pay Special damages amounting to Shs1.75bn and General Damages worth Shs1.2bn.

The claimant took his matter further, having a chat with President Museveni who later directed in his letter on February 17th 2015 to have the claimant compensated.

There was also no support documents availed to Ministry of Finance before the payment was effected.

Albertina Opio and 13 others who were represented by Omara Atubo Co Advocates also got paid Shs372.5m without support documents.

Victoria General Repairs also received Shs23.11bn without the plaintiff producing a copy of order of mandamus from High Court.

Through his lawyers, Byenkya Kihika & Co Advocates, Charles Bweranaho was paid also Shs2.1bn.

Bweranaho filed a suit against the Government seeking compensation for the death of his son and injury of his daughter who were involved in an accident involving the presidential convoy.

The matter was settled out of court and the Government agreed to pay the claimant f Shs2.14bn.

Further, Ocip Moses and others, represented by Bashasha and Co Advocates were controversially paid Shs3.18bn without support documents from court.

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