Govt pulls plug on South Sudan deal

The development comes against the backdrop of the revelation that only 10 of the more than 150 individuals and companies that claimed to have lost goods and services were paid. A fresh bilateral agreement addendum that Kampala and Juba signed in August added three companies to those expected to be paid up to $190m (Shs708b). This was amid protests from other traders, who accused the government of favouring Dott Services, Ranway Petroleum Services Limited and Tomasi’s Farm Bwesharire.

Mr Kasaija said those asking how the three companies were cherry-picked and fast-tracked for payment “should direct those questions to the government of South Sudan, but not that of Uganda.” 

Contradiction
Mr Kasaija’s latest pronouncement contradicts the addendum he signed on behalf of the government in the company of Uganda’s ambassador to South Sudan, Gen Ronnie Balya. The addendum made clear that the government of South Sudan agreed to issue a sovereign guarantee based on which Kampala would pay the traders on behalf of Juba.

Sources privy to the events which led to the signing of the bilateral agreement’s addendum, however, say Mr Kasaija was not present at the time of discussions. He was, they add, represented by Gen Balya. The discussions reportedly took place in South Sudan.

A close source within the Finance ministry, who spoke on condition of anonymity for fear of reprisal, said Mr Kasaija “must have been duped to sign that addendum.” The source further disclosed that the Finance minister “didn’t participate in the discussions and might not have understood the content.” 
Mr Jim Mugunga, the Finance ministry spokesperson, said on Thursday that Mr Kasaija doesn’t have to attend all meetings for him to commit the government and sign such documents.

“The Minister of Finance has the legal and constitutional mandate to undertake such commitments on behalf of the government. He doesn’t have to physically be present to sit in these meetings because at times he is represented or he mandates officers to do so on his behalf and, therefore, he will, by obligation, sign on when he has sufficient information to do so,” he said, adding that the “minister will not be able to attend every meeting and, therefore, those officers who act on his behalf are duty-bound to brief him.”

On whether the officers who attended the discussions briefed Mr Kasaija correctly before signing, Mr Mugunga said: “I cannot confirm because I was not privy to these meetings because I do not know which officers represented him.”

First bilateral agreement
Kampala and Juba first signed a memorandum of understanding (MoU) in November 2010 to spring to the rescue of some traders under their umbrella body of the Uganda Grain Traders. This was insofar as settling an outstanding claim of $56.4m (Shs210.2b) was concerned.

The Uganda Grain Traders had supplied food to the government of the Republic of South Sudan (GoRSS), together with other traders from Eritrea, Sudan, Ethiopia and Kenya. This was under the Strategic Food Reserve Supply established by the GoRSS between February 2008 and 2009 to address the shortage of grain as a result of crop failure and other natural calamities.

In 2009, after widespread allegations of massive corruption in the supply of grain, an incident popularly known as the Dura Saga3, the GoRSS undertook the verification of the grain supply to ascertain which companies had supplied and which had not. The verification process also sought to find out which companies had been paid and which had not. The verification report indicated that 24 Ugandan grain traders had a genuine claim of $56.4m.

Under the agreement, the GoRSS committed to pay $15m (Shs55.8b) as part payment and complete the remaining $41.6m (Shs155b) in four instalments. The first instalment of Shs40 billion was paid to 10 companies. When war broke out in South Sudan in 2013, the GoRSS could not complete the payment.

The payment generated anger among those who were not paid. They accused the Government of Uganda of selectively choosing the companies based on close proximity to the powers that be, nepotism and a string of other accusations. This forced the 10th Parliament to appoint a select committee to investigate the matter and report back to the House. The committee eventually verified the companies and recommended that they be paid.

Following this outcome, the number of companies and individuals whosought compensation rose up to 160. Many of them, however, did not have documents to support their claims.

Second bilateral agreement
The two governments once again entered into a bilateral agreement on December 22, 2016, in which the GoRSS yet again committed to pay the lost money. At the time of the agreement, the GoRSS acknowledged that it owed Uganda Traders only $41.6m, having already partly paid $15m to 10 companies named in the first schedule.

The two countries in August this year signed an addendum to the 2016 bilateral agreement in which the GoRSS agreed to pay three other companies namely Tomasi’s Farm Limited, Dott Services and Runway Petroleum Co. Limited. This was in addition to the companies named in the first schedule to the original executed bilateral agreement dated December 22, 2016.

“That both GoRSS and GoU (the government of Uganda) now acknowledge that GoRSS owes $232m (Shs864.5b) hereinafter referred to as die total debt. The parties have agreed to execute an addendum to clarify on the bilateral agreement mentioned herein to reflect agreed changes in the terms and conditions hereinafter contained,” part of the addendum reads.

Bloated figures
Originally, eyebrows were raised around why the government only selected 10 companies for the first part payment and the criteria used to select them. Now, fresh questions are being asked on how Dott Services, Ranway Petroleum Services, and Tomasi’s Farm Bwesharire Limited were catapulted to the front of the payment queue when those with earlier claims have been sidelined.

There are also concerns about the bloating of claims. Dott Services, for one, has had its claim soar from the initial $12,821,805 (Shs47.8b), when Parliament of Uganda sent a select committee to investigate the claims, to $128,390,664.92 (Shs478.4b). Elsewhere, Tomosi’s Farm Bwesharire Limited had its claims increase from $10m (Shs37.3b) to $14.8m (Shs55b). Ranway Petroleum Services has meanwhile had a $147,187,404 (Shs548.5b) claim green-lit.

The GoRSS only issued a sovereign guarantee of $190m (Shs708b) for payment of the claims for the three companies.
One of the traders, who lost huge sums of money in South Sudan but preferred to speak on condition of anonymity, said there have been a lot of backdoor additions. The trader said the genuine people are either threatened or pushed away as companies with close ties to the regime are reportedly awarded bigger claims.

“You know this Ranway Petroleum Company has never been among the claimants, but suddenly, it appeared and has been given the biggest amount. Who verified it and when? It must have been smuggled by Ugandan officials because throughout our struggle, there was no company of such name, so at what point did they supply all these goods worth that amount?” our source questioned.

The trader added: “If you see both Tomasi’s farm and Dott Services, their figures have also been inflated from $10m for Tomasi’s Farm to $14m, while Dott Services was increased from $12.8m to 128m. How do you explain this huge increase for Dott Services? Uganda government officials are colluding with South Sudan and these businesses to defraud taxpayers.”
Mr Denis Oguzu Lee, the Maracha County lawmaker, last Thursday rose on the floor of Parliament to demand a copy of the bilateral agreement. He also asked the Finance minister to explain how they catapulted the three companies for compensation with exorbitant amounts.

“I have come before this House as the custodian of peoples’ interest to ask the minister of Finance to explain; one, what criteria they used to fast-track the three companies which have been selected out of the 23. Two, how did they arrive at a company that was not even on the list of companies which the select committee verified? And that company is called Ranway Petroleum and they are now demanding more than $147m (Shs547.7b),” he said.

He proceeded to note thus: “The total is now about $190 million, way higher than what the committee verified. I need to know how the figures changed. We have Ugandans losing businesses and they are among the 23 companies which were verified.”

What the latest agreement says

The latest addendum amended the earlier bilateral agreement dated December 22, 2016 by creating two schedules of companies to be compensated. According to the document signed both by Uganda and South Sudan, the first schedule to the original bilateral agreement remains intact and has the original companies entitled to $41.6m (Shs155b), while the second schedule is created with three other companies that were added later and these are entitled to $190.4m (Shs709.5b).

“… and for avoidance of doubt GoRSS has already issued Guarantee in the form of FIN 760 Guarantee / Stand by letter of Credit ref. No. BSS/SL/001/2021 dated September 30, 2021 in favor of Ranway Petroleum Company Ltd, Tomasi’s Farm Bwesharire and Dott Services Limited,” part of the agreement states.

“This Addendum and the Bilateral Agreement dated December 22, 2016 AD referred to above embodies the entire agreement and understanding among the Parties hereto and supersedes all prior agreements and undertakings, whether oral or written relative to the subject matter hereof, and shall be binding upon and inure to the benefit of the Parties,” it adds.