Friends For Peace In Africa

PARLIAMENT

FINANCE Minister Ezra Suruma and his senior ministry officials yesterday failed to explain the circumstances under which public funds amounting to Shs7.7 billion reportedly vanished from the Uganda Development Bank.

Dr Suruma says it is the bank management to account for the money, while the bankers say they had specific instructions to leave the management of the Shs7.7 billion to the Finance Ministry.

With nobody willing to explain where the Shs7.7 billion went, Parliament was left wondering whether the money was given to some 'investors' and if they paid any of it back.

Only Shs2000
In 2002, the government re-capitalised UDB, which was 100 per cent state owned, with some Shs7.7 billion from the Consolidated Fund. However, the 2006 UDB audited accounts report submitted to Parliament for scrutiny indicates that under the government's share capital deposited in the bank stands only at Shs2, 000.

Shocked members of the Parliamentary Public Accounts Committee yesterday asked Dr Suruma to explain how the cash left the bank. "We want to know who exactly took public money from UDB.

The public must get an explanation because it is their money. It is shocking that we have only Shs2,000 in the bank. This is ridiculous," the chairman, Mr Nandala Mafabi (Budadiri West), told Dr Suruma and his team, who were appearing before the committee for a second day running.

But according to a May 31, 2002 letter from the Deputy Secretary to the Treasury, Mr Keith Muhakanizi, a copy of which Daily Monitor has seen, the UDB board was instructed to give $1.5m (more than Shs2.5b) to the defunct Apparels Tri-Star (U) Ltd and about Shs1.2 billion to Phenix Logistics (U) Ltd.

Explaining his action, Mr Muhakanizi told the committee yesterday that Finance sought a legal opinion from the solicitor general and the attorney general before issuing the order and asked for more time to find the answers to the Sh7.7 billion mystery.
Mr Chris Kassami, the secretary to the treasury, also asked for more time to provide detailed accountability.

The Auditor General's report for the financial year 2001/2002 says the government authorised cash remittances from UDB to specific individuals without a resolution of Parliament.

MPs Gaodioso Tindamanyire andAlbert Oduman, who are accountants, criticised the interference in the financial autonomy of UDB. Kawempe South MP Ssebuliba Mutumba said the recapitalisation of UDB was merely a conduit to take away public funds.
Dr Suruma said the government's only role in the process was to disburse funds to these entities and not accounting for them, insisting it is UDB to account.

But UDB in its response to the 2006 audited report claimed that the mandate over the Shs 7.7 billion was hijacked by Dr Suruma's ministry, explaining that the money was deposited on a Trust they didn't run.

"These were funds received from government with specific instructions that they should be given to specific companies," UDB's response reads in part. "Everything is clear and we cannot accept the minister's ridiculous claims," said mr Mafabi.

"As a minister in charge, he should be able to give a convincing explanation about the missing funds. It seems somebody is trying to deny responsibility. We want to know if it was the bank that committed money laundering or otherwise because a lot of public money is at stake."

Dr Suruma tried to explain that the Shs3.7 billion given to Apparels Tri-Star and Phenix Logistics investors was on loan to assist the firms under the African Growth Opportunity Act (Agoa) framework intended to rejuvenate the textile sector.

But the committee rejected the explanation, saying the minister must provide documentary evidence to prove that the two firms had serviced the loans with interest.