Wednesday November 16 2011

Mutebile reveals oil deal with Museveni

By Isaac Imaka

The Governor Bank of Uganda yesterday revealed that President Museveni asked him to release millions of dollars from the national forex reserves to buy fighter jets on the promise that they would be replenished from money received from oil companies.

Mr Emmanuel Tumusiime-Mutebile told the parliamentary Ad hoc committee investigating allegations of corruption in the oil sector, that capital gains tax levied on oil money, the subject of an ongoing dispute between Uganda and Heritage Oil, would be used to fill up the foreign exchange reserve account.

When Heritage sold its stake to Tullow for $1.45b including a $100m contractual settlement, it received $1.05b. The balance of $404m was assessed as capital gains tax by URA but disputed by Heritage. The matter is under arbitration in a London court.

However some MPs yesterday wondered how oil money which is still in contention could be promised. They also said the said tax is only $404m yet the money which was drawn to buy the jets was more than $740m. But Mr Mutebile said his actions were within the law when he was challenged over the release of money without statutory Parliamentary authorisation. He rejected accusations that his actions and that of government were a sign of poor financial discipline.

“This was not mismanagement,” Mr Mutebile said. “I was assured of how the money would be got and this is a good management position because I saw that getting money from oil was a good way of replenishing the reserves and that’s why I accepted.”

Mr Mutebile added: “I am not prepared to tell you anything about the meeting with the President at all apart from what I have said about fighter jets, full stop.”

Early this year, the purchase of fighter jets provoked public outrage at a time the economy had began showing signs of severe stress. Some economists partly blame the current 30.5 per cent inflation, on the transaction. President Museveni recently said oil money would be invested in infrastructure, especially dams.

Mr Mutebile was later thrown out over his refusal to tell the committee about his meeting with Mr Museveni. “Whatever you answer now will be irrelevant if you have not fully clarified on that meeting with the President,” said committee chair Michael Werikhe.