Prime
MPs, govt play blame game over China deal
Travellers at Entebbe airport. A report by Cosase has recommended that Finance minister Matia Kasaija issues a public apology for committing the country to a loan agreement with unfavourable terms. PHOTO/JOSEPH KIGGUNDU
What you need to know:
- Some legislators have asked the Minister of Finance to apologise for his role in the deal.
A report by the Parliamentary Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) has recommended that the Finance minister—Mr Matia Kasaija—issues a public apology to Ugandans for committing the country to a loan agreement with unfavourable terms.
Last November, Daily Monitor reported exclusively about the predatory deal that reportedly put Entebbe International Airport on the line if the government defaults on a 2015 loan from Beijing.
Cosase was tasked to investigate operations at the Uganda Civil Aviation Authority (UCAA) following alleged misuse and mismanagement of funds, accumulation of unpaid leave allowances and non-remittance of NSSF deductions.
The purported misdeeds were raised on the floor by Mr Solomon Silwanyi (Bukooli Central) based on the information received from a whistleblower.
The committee findings show that the government entered into a contract with the Export and Import (EXIM) Bank of China for the expansion of the Entebbe International Airport. The contract is alleged to be of a predatory nature.
Some of its clauses include a requirement for an escrow account where all revenues of the UCAA are to be deposited. Beijing also reportedly has to approve the budget and expenditure of the UCAA. The agreement also imposed Chinese legal jurisdiction on the loan recovery mechanism and arbitration as well as waiving Uganda’s international immunity.
Parliament in 2015 approved the proposal by the government to borrow $325 million (Shs1.2 trillion) from EXIM Bank of which $200 million (Shs722.7 billion) was ring-fenced for the expansion of the airport.
“The loan terms referenced above were undesirable, unsustainable and a huge constraint to the country…Due diligence was not carried out by the negotiators on the government side,” the report states.
It thus recommends: “The Minister of Finance, Planning and Economic Development should be cautioned and should apologise to the nation for his role in this unfavourable loan agreement.”
Joel Ssenyonyi, the committee chairperson, said the minister reasoned that he could not negotiate the contract because the country is “poor.”
Plans by the government to renegotiate the terms also hit a snug.
A two-hour debate in the House on Thursday saw the executive and the legislative branches of government trade accusations around who dropped the ball. For some like Milton Muwuma (Kigulu County South), the answer to the question of due diligence lay in between.
“When we are processing loan requests, there are stages we go through, including our own House. There is a Committee on National Economy, which peruses and comes out with recommendations to this House,” he noted.
He added: “Where did we go wrong? Couldn’t we raise a red flag then? What was the role of Cabinet because before any loan request Cabinet pronounces itself? Where did they go wrong? ”
But Nathan Mafabi (Budadiri West), quoting Article 159 of Constitution on power of government to borrow or lend, faulted Parliament since in his assessment it “approved the loan.”
He added: “There is no way you will castigate the minister of Finance because he is implementing what [Parliament] approved.”
Mr Mafabi’s view did not go uncontested. Mr Medard Ssegona (Busiro County East) strongly disagreed while urging caution “to avoid self-incrimination.”
“Parliament does not discuss details of projects before approving a loan,” Mr Ssegona said, adding: “Parliament does not draft agreements. It is an Executive function and does not conduct feasibility studies and does not do due diligence.”
Mr Thomas Tayebwa, the government Chief Whip, in a rejoinder said Parliament was equally to blame because the Committee on National Economy in 2015 supported the said undesirable terms.
According to the report, the committee also approved the contractor—Seyani Brothers—with no due diligence conducted.
Owing to this, Mr Silas Aogon (Kumi Municipality) said those in office must be held accountable, questioning how the Attorney General and Solicitor General missed the red flags.
Mr Kiryowa Kiwanuka, the Attorney General, however, insists there is no risk to the country’s airport as the government is committed to paying back the loan.
Deputy Speaker Anita Among has tasked the Auditor General to conduct a “comprehensive” audit of the operations of the UCAA, with the view of establishing whether there is value for money on the expansion works at the airport.
The report has been adopted with amendments, including thorough scrutiny of loan agreements.
