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CHOGM PROBE: Govt has no shares in Munyonyo resort - Sudhir

In the run-up to the biennial 2007 CHOGM in Kampala, government injected about Shs 15 billion into what was said to be a joint venture with Commonwealth Resort Munyonyo. Government also paid Shs 13 billion for the construction of a marina and pathways.

However, SUDHIR RUPARELIA, the proprietor of the resort, told the Public Accounts Committee on April 19 that there was no such an arrangement. DAVID TASH LUMU recorded the proceedings:

Claudio Kabondo Tindamanyire (Bunyaruguru): Is it [the government’s investment in Speke Resort Munyonyo] a public good since it was contracted by government?
Henry Banyenzaki (Rubanda West): That is a good question.
Sudhir Ruparelia: Wait. You see, I had my own marina, and they (government) replaced it.

Banyezaki: I presume this marina is within the waters of Lake Victoria; do you own it?
Sudhir: Why should it be taken?
Charles Okello Oduman (Bukedea): Mr. Chairman, government put in money to construct a marina. You [Sudhir] say you had a marina.
Sudhir: Yes, I had my own marina. They just replaced my marina.

Oduman: Now, did the one government constructed enhance your marina? Was it better and bigger in terms of value?
Sudhir: You see, they needed a bigger marina for security reasons related to CHOGM. So, I didn’t ask for a new marina.
Oduman: So, did the new one become a better marina?
Sudhir: Yes.

Banyenzaki: Is this marina part of your land title?
Sudhir: I have to check.
Oduman: If government, using taxpayers’ money, put additional value on that asset, how do the taxpayers’ get value for the money?
Sudhir: I think [that] will be answered by [government], not me.

Claver Peter Mutuluuza (Mawokota North): Mr. Chairman, this memorandum of understanding [between government and Sudhir], paragraph 4.3 says: “Government of Uganda capital contribution shall be in cash. Where contributions are made in kind, a value agreed by all parties shall be determined and agreed prior to being entered into the joint venture books.” Now, I want to find out from you, Mr. Sudhir, whether these kinds of negotiations were there.

Sudhir: No, no. There were no negotiations.
Banyenzaki: You mean there was no mutual understanding between you and government?
Sudhir: Nothing.

Theodore Ssekikubo (Lwemiyaga): Mr. Chairman, the matter coming up is that public funds were injected in the investment to enhance the resort, but you have come up to say that ‘since I had my old marina, the one of government does not add value’.
Sudhir: You enhance for purposes of bringing in benefits. They [government] did not enhance the marina to bring in any additional income.

Ssekikubo: No, no.
Sudhir: Excuse me, I am talking.
Ssekikubo: But you are not answering me. I was saying that now that public money has been sunk in the marina, how is the public benefiting from this [investment]?

Sudhir: First of all, you have to appreciate that the marina is a cost. The marina is not bringing any [revenue] to the hotel (Speke Resort Munyonyo) or anybody else. It is just a cost.

Nandala Mafabi (Chairman PAC): Now members, let me summarise it this way. One, the joint venture agreement is clear on how to make an investment in the joint venture business both in cash and in kind.

Two, Mr. Sudhir has told us today that we [should] ask government. They [government] were overzealous and put our money there. [Sudhir] has confirmed to us that the [marina] is not a public good and yet we put in public resources.

Mutuluuza: Mr. Chairman, I think Mr. Sudhir is right. This question should be put to the Ministry of Finance, who made this mistake. They [government] shouldn’t have worked on the marina before negotiating the terms.
Ssekikubo: No, no. We can cure that [blaming government].

Mathias Nsubuga (Bukoto South): How can you cure that?
Ssekikubo: We can cure that because we are led by the joint venture agreement. And also, Mr. Sudhir is here with us. He can say that if it was an oversight, he is ready to issue shares.

Sudhir: There is no oversight here. Maybe you are misunderstanding [me] ssebo (sir). There is no oversight on anybody’s side. I am not the one who went and negotiated to build this marina. Number two; I am not the one who did the bills of quantities. I am not the one who went and contracted and paid for this marina.

Ssekikubo: No. If we are to go by the joint venture agreement, there were negotiations.
Tom Kazibwe (Ntenjeru South): Gentlemen, I think we have now understood. There’s an extraction we have got from Mr. Sudhir and we have noted that. So, when we are in-house, we shall make a decision. We cannot go on arguing.

Ssekikubo: But these are facts that he [Sudhir] has to explain.
Sudhir: There is no problem with that. It is my right to tell you.
Ssekikubo: But I am dispensing a duty.
Sudhir: But you are forcing me to make a decision. Now you better get a gun and shoot me.
Ssekikubo: Give us our shares and we go.

Sudhir: Go where?
Mafabi: You see, Mr. Sudhir, we have understood. We are happy that the value [of the marina] has appreciated. Two, [the marina] is a private good and not a public good. But, what about the parkways, roads and other investments [in Speke Resort Munyonyo]? Do we deal with these in the same way we have dealt with the marina?

Kazibwe: It is the same thing.
Sudhir: Same thing. You see, I was never part of the negotiations. I was never part of the bills of quantities. They [government] went and negotiated directly with the contractors and paid directly to the contractors. I had nothing to do with the negotiations.

Mafabi: This means that if you had been part of the negotiating team, you could have negotiated it down. Now these people wanted to spend money and looked for their own ways of spending it.
Sudhir: [They spent it] on their own.
Mafabi: But now, you have accepted that there was enhancement.
Sudhir: Yes.

Mafabi: Now, this enhancement is what we are looking for. In your mind, do you think there was additional value?
Sudhir: You know, for me I can buy a shirt of $2 and look smart, and you can buy a shirt of $10. It is up to you.
Banyenzaki: So, you mean that you were happy with your [old facility]?
Sudhir: Yes.

Banyenzaki: You didn’t need that [new] facility at all.
Sudhir: No, I didn’t want it.
Ssekikubo: To refresh our minds, Mr. Chairman, the Solicitor General briefed this committee about the ongoing negotiations between government and Speke Resort Munyonyo to forge a way forward on what to do with the investment government injected into this private asset of Sudhir. You mean you are running away from that?

Sudhir: I am not part of any negotiations and there is nothing to negotiate.
Ssekikubo: But our money is with you.
Sudhir: There is nothing to negotiate.
Ssekikubo: Mr. Sudhir, the public funds are invested in your asset.
Sudhir: You see, I pay more taxes than you do.

Ssekikubo: I thank you for that.
Sudhir: Thank you very much.
Ssekikubo: There is no way I can doubt that (paying more taxes), but our funds are with you in your private asset.
Sudhir: I have nothing to negotiate.

Banyenzaki: Are you saying that you are the bigger taxpayer or a bigger shareholder?
Sudhir: I am saying that I am the biggest Ugandan taxpayer in the country.

Ssekikubo: But Mr. Chairman, is it fair for Mr. Sudhir to look at me, a simple parliamentarian, and start to say how big [a taxpayer he is]? Did we come here to compare taxes?
Sudhir: You are not simple, honourable. You are complicated. And you are good at your job, I must say.

Mafabi: One’s tax margin is from the income. The higher the income, the more the tax. The lower the income, the less the tax. And that’s why in the Bible there was a lady who paid five pence and she was declared the best. So, you could be the biggest taxpayer and he [Ssekikubo] also pays at that small rate; so, each of us contributes.

Sudhir: I meant no offence to anybody.
Mafabi: So, we have understood the joint venture and the memorandum of understanding. We have known that the investments are not public goods but they are private. And you are saying that the government just brought the [money] to you. Government told us there are negotiations going on and you are telling us there are no negotiations.

Kazibwe: How did the government benefit from that investment?
Sudhir: First of all, we built one of the finest resorts in Africa. It is a great resort. And it has added value to the GDP. We are able to employ over 800 people. We are also able to hold international conferences. And you know this is the only resort in Africa with 59 presidential suites.

Kazibwe: Who did the bills of quantities [for the construction of the hotel]?
Sudhir: We employed an independent professional person.
Mafabi: Who employed?
Sudhir: Meera Investments.

Banyenzaki: Did both parties (government and Meera) agree on who did the bills of quantities?
Sudhir: Yes.
Ssekikubo: But you are a witness before us, you answer the questions.
Sudhir: I am a witness? Witness of what?

Ssekikubo: You are a witness. You can’t run away from that. You mean you didn’t know?
Sudhir: I am accused?
Mafabi: You are not accused.
Kazibwe: Were there board meetings whereby government was represented and then you agreed on how to go about the bills of quantities?

Sudhir: The way the board works is that there are two members of government and three from us [Meera]. Now, the bills of quantities were agreed and passed on to the Ministry of Works.

Mafabi: Mr. Sudhir, we have agreed there is an approval process. In Uganda, anything done by government goes through what is called the PPDA. We have information that you prepared the bills of quantities and sent them to the Ministry of Works.

Sudhir: We did it jointly.
Ssekikubo: Mr. Sudhir, a while ago you informed the committee that when you were approached by government, you approached a technical person who determined the bills of quantities.

Sudhir: Which person are you talking about? After the memorandum of understanding there were meetings that took place, and you can ask government for those minutes.
Kazibwe: Who supervised the construction?
Sudhir: They were supervised by FBW.

Nsubuga: You have said that your investment employs a lot of Ugandans, what is the percentage of black people working in your place?
Sudhir: 95%.
Kazibwe: Let’s go back to supervision. Who employed this company?

Sudhir: I am not very sure but I will check and see.
Mafabi: Who was the decision maker in Meera?

Sudhir: Myself. But a company is a corporate body and we all make decisions. And even when I make a decision, I make it on behalf of the company. And it depends on the way companies are run.

I run very successful companies in this country, and all of them operate independent of each other. I don’t mix one or two or three, no. Each company has its obligations, and incomes and assets are all separate. We all run companies in our own way.

Ssekikubo: Coming to profits, Mr. Chairman. Have you declared any profits yet…?
Sudhir: You know, you don’t make profits in the first year and then start declaring dividends. The minimum is three years before you start declaring dividends.

Ssekikubo: Okay, lastly from me, Mr. Sudhir; what do you want us to report to the public from here? You want us to report that Shs 15 billion was sunk into the investment, and that it was money given away? At the end of the day, how do you conceive this?

Sudhir: I think you are good at politics and I am good at business. You know if I get a cow, I will milk the cow first, not eat it. Maybe you (Ssekikubo) will eat the cow the next day. But there is a difference between running a business and politics. So, when the right time comes, we would make sure that this business is nurtured and not eaten away.

dtlumu@observer.ug

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