Former Attorney General Khidhu Makubuya will take up Parliament’s hottest seat this week to explain to legislators on the Public Accounts Committee why he sanctioned a huge compensation to two businessmen who controversially won tenders to build modern markets, but were later stopped after intense pressure from disgruntled vendors.
The legislators are particularly interested in finding out what conditions Makubuya considered in agreeing with the valuation that won Hassan Basajjabalaba, a prominent businessman and chairman of the ruling party’s Entrepreneur League, and Col John Mugyenyi, a man known more for his wealth than his military career, a combined compensation amount of Shs 156 bn.
In trying to get to the bottom of the matter, some MPs, convinced that a compensation of such magnitude would have to be shared by more than two already wealthy businessmen, will try and trace signs of influence peddling by any third parties and where money exchanged hands.
Through his Haba Group of companies, Basajjabalaba won tenders for St Balikuddembe, Nakasero market, Shauriyako and Constitutional Square. Col Mugyenyi got the Kisekka market deal using his Rhino Investments Ltd. But hundreds of angry vendors, facing eviction, lobbied the powers that be and issued threats of violence if Basajjabalaba and Mugyenyi took over the markets.
With the intervention of the President, both Basajjabalaba and Mugyenyi dropped their bids only if government could come up with a solid compensation. Negotiations for a compensation kicked off. The outcome has left many MPs, and the public, dumbfounded.
Now some MPs believe there is no way Basajjabala and Mugyenyi could have received such compensation without help from some officials within government. MPs say that in one deal government paid Basajjabalaba Shs 142bn as compensation for the botched market deals in St. Balikuddembe Owino Market (Shs2.8bn), Nakasero Market (Shs63.6bn), Shauriyako Market (Shs 5.6bn) and Constitutional Square (Shs70.5bn).
Quoting from the Auditor General’s report on the saga, lawmakers want government to explain why Basajjabalaba’s compensation shifted from Shs 8bn to Shs 46bn, then to Shs 88bn and finally to Shs 142bn.
They also want to know why Col Mugyenyi’s compensation figure for the Kisekka Market deal shifted from Shs 23.4bn to 6.8 billion and finally to Shs 14.9bn. Kassiano Wadri, the former Opposition chief whip and now chairperson of PAC, promised that his committee will “not entertain any loss” for the country.
It has also emerged that this money was not taxed and that some of the agreements were illegal because according to the Constitution, no government body is allowed to enter monetary agreements with any party without consent from the Solicitor General’s office if the contractual sum is over Shs 50m.
As a result, the MPs argue that the two businessmen should return the money to government since the compensation did not meet legal requirements. Looking at both businessmen’s profiles, the possibility that they could return the money remains remote.
Basajjabalaba occupies that special position of the man who has received some of the highest, and most controversial financial bailouts in the country.
The most prominent was the Shs 18bn that Bank of Uganda offered to save his hides and skin company from a possible collapse. In return, Basajjabalaba, as chairman of the ruling party’s Entrepreneur League, has played a role in sourcing for funds to keep NRM in power, usually in times of elections.
A man who had managed to elude the public limelight until his name was linked to the 49-year lease to develop two acres of the Kisekka market land, Col Mugyenyi is one of the richest army men around, some say. The few who know him well say his wealth, which spans around a number of businesses like owning buildings, will leave one speechless.
Basajjabalaba won the tender to manage St. Balikuddembe (former Owino) and Nakasero markets in 2003 while Mugyenyi got his Kisekka market tender in 2007. The probe by PAC into these market deals, regardless of where it swings, will nevertheless shade more light on how government continues to lose money through needless compensations.
There is a growing practice among shrewd businessmen to win tenders, licenses, and concessions with the aim of not making substantial investments but to fail and get some compensation. Government officials are being found complacent while signing agreements that give investors huge compensations in case a tender or licence is cancelled.
The Shs 156bn these MPs want the tycoons to refund can pay 3,500 primary teachers at Shs 600,000 a month each for six years. Primary school teachers currently earn Shs 270,000 per month.
The teachers want government to double their salaries but Education minister, Jesica Alupo, recently told MPs that government can only increase teachers’ salaries by 44% and in the next financial year. The reason: “There is no money.”