Imperial Royale Hotel ordered to refund over Shs5.8b Chogm cash

KAMPALA- The Commercial Court in Kampala yesterday ordered Imperial Royale Hotel owned by city businessman Karim Hirji to refund taxpayers’ money worth more than Shs5.8b for having failed to provide accommodation to selected delegates of the Commonwealth Head of Governments- (Chogm) in 2007 despite government advancing payment to complete construction of the posh hotel.

Imperial Royale Hotel was one of the hotels that government advanced public funds to ahead of Chogm with the intention of completing the facilities to accommodate the huge numbers of guests that were expected in the country for the conference but failed to complete it in time.
Government had booked 217 of the 300 rooms at the facility for journalists (to act as a media centre for Chogm) and another 100 rooms for the business community but the guests did not occupy the said rooms as the hotel was not ready for occupation at the time of Chogm.

But while delivering his verdict, presiding judge Henry Peter Adonyo held that the conduct of the hotel management was by all standards not acceptable given that they had free access to public money in advance but failed to complete the construction work.

Further in his judgment, the judge described the conduct of the hotel management as unpatriotic, which actions he said substantially damaged the image of the country before the rest of the world as the guests had to find alternative accommodation elsewhere in such a short time.

“I find that the conduct of the defendant (Imperial Royale Hotel) was not only unpatriotic but shameful for it did substantial damage to this country before the rest of the world considering the fact that even the head of state [President Museveni] had to personally ensure that the defendant is given funds in advance to enable them complete the hotel in time so that distinguished visitors could find accommodation,” ruled the judge

Adding: “I also find that the amount advanced to the defendant (Imperial Royale Hotel) deny the plaintiff (Attorney General) the purpose for which the money had been advanced to it but continued to stubbornly retain the same detriment and yet the same funds that were from public coffers could have been used to address other pressing public needs.”

In breaking down the damages, Justice Adonyo condemned the hotel to Shs800m as general damages that he said will be paid at 23 per cent per annum from the date of judgment till payment in full. The judge went on to award more than $1.4m (about Shs4.8b) to government as special damages at an interest rate of 12 per cent per annum from the date of filing the suit.

Explaining the 12 per cent interest on the special damages, the judge in his verdict said the hotel being a private business entity, made huge profits arising from the this free loan got from public coffers. The court also ordered the hotel to foot all the costs that government spent in pursuing this case. The court emphasised that the costs should be of ‘reasonable’ amount.

The $1.4m (about Shs4.8b) that the hotel is supposed to refund to government was part of the $2.5m (about Shs8.5b) that government paid the hotel to guarantee accommodation for guests during the three-day global conference.

However, government had successfully argued that the hotel failed to provide the necessary accommodation when the time of the conference that was even attended by the head of the Commonwealth countries Queen Elizabeth II and yet all the monies they had agreed upon had been paid.

It is upon this background, that government, through the Attorney General, sued the hotel to recover the taxpayer’s money.

The judge in his analysis, cited the corroborating testimonies of Foreign Affairs permanent secretary Amb James Mugume and Patrick Muganda Guma, another official from the Foreign Affairs Ministry which showed that indeed the hotel was not ready to accommodate Chogm guests.

The Foreign Affairs ministry was the lead ministry in organising the Chogm event.

The judge went on to cite Amb Mugume’s testimony in which he tendered in court evidence indicating that some of the Chogm visitors arrived at the facility only to find building works still ongoing before relocating to other hotels due to non-readiness.

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