Cooperatives cash scandal: MPs’ recommendations turn tables on PS Ssali 

The Committee further established that under the directive of the accounting officer, some cooperatives such as Masaaba Cooperative Union, Lango Cooperative Union and Teso Cooperative Union were verified on two different claims and paid before some were verified on their original claims.

The verification exercise created avenues for abuse and manipulation because individual cooperatives were sourcing witnesses to testify before the verification committee in support of their war loss claims.

Observation(s) of the Committee 

The Committee observed as follows: (1) that there was no criteria or policy guidelines for the verification committee on the selection of claims to verify; (2) that there was no prior communication neither after the verification exercise was concluded, therefore denying beneficiaries information on decisions made; (3) that there was no avenue for redress of any cooperative after the verification committee had concluded the exercise in case there was dissatisfaction with the report; (4) that some cooperative unions connived with some officials of the verification committee to inflate the claims;  (5) that the verification exercise was not necessarily a prerequisite for payment of claims as some cooperatives were paid without verification, for example Banyankole Kweterana Cooperative Union, Bwavumpologoma Cooperative Union and South Bukedi Cooperative Union, among others.

General observations 

The Committee observed the following: (1) That whereas compensation for war losses primarily targeted cooperative unions, some primary cooperative societies submitted claims to the government for compensation and were paid, yet by structure they are members of secondary cooperatives. The Committee further observed that there are risks of duplication of claims submitted by primary cooperatives; (2) That prior to the start of the ongoing verification process, there were 21 cooperatives that had been identified and verified to receive war loss compensations. However, the Committee observes that some of the original 21 cooperatives have never been compensated to date. Instead, new cooperatives that came on board much later have been verified and paid or even paid without verification; 

(3) That some cooperatives like Lambuli Central Pulpery Cooperative Society Limited; Buyaka Growers Cooperative Society Limited and Busoga Growers Cooperative Union Limited, among others, submitted original claims, were duly verified by Ministry of Trade, Industries and Cooperatives and benefited more than once; others like Bwavumpologoma Growers Cooperative Union Limited; South Bukedi Cooperative Union Limited and Okoro Coffee Growers Cooperative Union Limited, were never verified but payments were made for their war loss claims. Further that some cooperatives like Kabarole Growers Cooperative Society Limited; Madi Cooperative Union Limited; Tooro Dairy Cooperative Society Limited; Bwamba-Rwenzori Cooperative Union Limited and Sebei Cooperative Union Limited submitted war loss claims, were neither verified nor paid for war loss claims. This is a clear indication of a lack of equity in the war loss compensation process; 

(4) That whereas it is a requirement that the governing boards and members of cooperatives should be notified by the MTIC when payment has been made, this was not done by the Ministry. Furthermore, Unions were not guided by the MTIC nor assisted in formulating strategic plans upon which funds were utilised. As such, some board members of cooperatives shared money amongst themselves, while other Unions were not even aware of the monies being remitted for war loss compensation. This communication gap led to the misuse of the money compensated; 

(5) That in order for a cooperative to get compensation, the following are supposed to be in place; (a) The  general   assembly,   governance,   management  and  operational structures; (b) Board minutes and resolutions; and minutes of management; (c) up to date and proper records of formation, accounts, registration certificates, membership register, assets register and operational manuals; whereas the above were requirements, the Committee observed that most cooperatives did not have them, which is contrary to Section 18A (1) of the Cooperative Societies Act 2020; 

(6) That whereas it is a requirement that cooperatives should have financial statements in place and audited regularly,  55 cooperatives had not submitted their files for audit. This was observed by the Internal Auditor General Report, therefore it was not possible to confirm the authenticity of the claims. The Committee observes that this could pose risks of having non-existing cooperatives being compensated; 

(7) That most payments for war loss compensation were not made directly to the beneficiary cooperatives but were advanced to law firms for onward remittance to the beneficiaries. The Committee further observed that this was a very risky procedure considering that most cooperatives were left at the mercy of the law firms who would remit the funds as and when they deemed it; 

(8) That whereas Parliament appropriates specific budget lines to cooperatives, some cooperatives are allocated funds over and above their verified claims while others not listed on the payment schedules are actually paid. The Committee further observes that this undermines the objectives of appropriation by Parliament. Furthermore, this could imply that there was collusion and biases in the process thereby creating unfairness and lack of transparency in the settlement of the outstanding compensation funds; 

(9) That some compensations were made on unverified claims. The Committee observes that payment of unverified claims makes it difficult for the government to plan and budget for funds for compensation; (10) That some cooperatives were paid in excess of the amounts varied. This indicates a lack of due diligence and possible fraud; 

(11) That there was a general lack of appreciation of the rationale for compensation to cooperatives for war losses by the Government of Uganda. That cooperatives did not have any record of compensation to the supposed beneficiaries and the extent to which they were to be compensated;

(12) That the government policy to compensate cooperatives for war losses was to a large extent misused as a means of facilitating corruption, bribery, abuse of office inter alia both within the cooperatives and MTIC. The claims for compensation were majorly instituted upon instructions from government officials who would then benefit themselves through the said claims as they deemed it; 

(13) That there was no dispute as to war loss compensation upon verification as such, the Committee finds the role to be played by law firms or third parties in the war loss compensation negligible where the Government of Uganda has the goodwill to compensate the cooperatives; 

(14) That during this inquiry, some current and former Members of Parliament who were implicated for having either directly or indirectly influenced payments to respective cooperatives for war loss compensations, did not fully cooperate with the Committee in its bid to ascertain the veracity of the allegations levelled against them. Some submitted general written memoranda whereas the Committee required personal interface with them; 

(15) That on October 6, 2023, the Committee received the legal opinion of the Learned Attorney General concerning the inquiry into the governance of and value for money for budgetary appropriations to cooperatives, and was guided. In the case of Saleh Kamba & Anor v Attorney General & 4 Others (Constitutional Petition No. 16 of 2013) [2014] UGCC 5 (February 21, 2014) Constitutional Court Considered the supreme Court decision in Bank of Uganda vs Banco Arabe Espanol, Civil Appeal No. 1 of 2001 where in Court held that the Attorney General’s opinion “should be accorded the highest respect by such a public institution in so far as that opinion affects the rights and interests of third parties…; and 

(16) That whereas there were third party payments to, among others, lawyers and consultants, some of the witnesses that appeared before the Committee acknowledged their willingness to remit taxes if required. 

Recommendations

The Committee recommends as follows: (1) That MTIC should formulate and develop strategic guidelines to facilitate proper utilisation of war loss compensation funds for the benefit of the cooperatives; (2) That the Registrar of Cooperatives in MTIC should play a supervisory role in ensuring that war loss compensation funds reach the targeted beneficiaries;  (3) That Government of Uganda should condition any further payments for war loss compensation not to be remitted through law firms or any other third party for that matter as their contribution is negligible and inconsequential in the process;  (4) That all the aggrieved cooperatives are advised to petition the Law Council to take appropriate action against the law firms and lawyers in personal conduct, for professional misconduct;  

(5) That the DPP, and IGG should invoke their special powers of investigation provided for under Section 33 of the Anti-Corruption Act, 2009 to conduct further investigations on the following current and former Members of Parliament on their personal involvement and influence peddling in the affairs of cooperatives and specifically mismanagement of war loss compensation funds: (a) Hon Michael Mawanda Maranga, Member of Parliament representing Igara County East in the 11th Parliament of Uganda for his involvement in West Mengo Growers Cooperative Union Limited, Buyaka Growers Cooperative Society Limited and Bumwambu Growers Cooperative Society Limited; (b) Hon Ignatius Wamakuyu Mudimi, Member of Parliament representing Elgon County in the 11th Parliament of Uganda -for his involvement in Lambuli Central Pulpery Cooperative Society Limited, Bumwambu Growers Cooperative Society Limited, Masaaba Cooperative Union Limited and Buyaka Growers Cooperative Society Limited; (c) Hon Ann Maria Nankabirwa, former Woman Representative for Kyankwanzi District in the 9th and 10th Parliament of Uganda for her involvement in Wamala Growers Cooperative Union Limited;

(6) That the DPP should invoke its special powers of investigation provided for under Section 33 of the Anti-Corruption Act, 2009 to conduct further investigations on the following lawyers on their personal involvement and professional misconduct in regard to war loss compensation to cooperatives: (a) Mr Ezra Kabali who conveniently traded as M/S Probata Advocates, M/S Masereje & Co Advocates and M/S Kabali Ezra & Co Advocates in Buyaka Growers Cooperative Society Limited, Uganda Cooperative Transport Union Limited, East Mengo Growers Cooperative Union Limited and West Acholi Cooperative Union Limited; and (b) Mr Nandaah Wamukoota of M/S Nandaah Wamukoota & Co Advocates for his professional misconduct in Uganda Cooperative Transport Union Limited; 

(7) That the MTIC should not make any further payments in relation to war loss compensation to any cooperative without verification of war loss claims as a prerequisite requirement; (8) That the MTIC should develop standards and guidelines for qualification of cooperatives for war loss compensation; and cooperatives once verified and paid should be declared ineligible to file new claims for compensation; (9) That MTIC should implement the War Loss Compensation Policy in a coordinated manner and in conformity with appropriate laws of Uganda specifically the Public Finance Management Act, 2015; 

(10) That the MTIC should develop and implement an appeal mechanism for purposes of enabling cooperatives to seek redress in circumstances where cooperatives are not satisfied with the verification process and/or decisions of the war loss compensation verification committee; (11) That Ministry of Trade, Industries and Cooperatives should with immediate effect reinstate the Inter-ministerial war loss verification committee as constituted by Cabinet and with immediate effect dissolve all other parallel verification committees constituted by the PS, Ministry of Trade, Industries and Cooperatives; and   

(12) That Uganda Revenue Authority takes a special interest in war loss compensations to ensure that all third parties who benefited from the process fulfill applicable tax obligations, if any, as required under the law.