Sunday April 20 2014

Billions lost in NFA’s World Bank project

Michael Mugisa, NFA

Michael Mugisa, NFA executive director  


A multi-billion shilling project funded by the World Bank to improve management of environment in the country has posted disappointing results after an investigation found out that money was abused or blatantly stolen.

The $3.3 million (about Shs8 billion) venture, codenamed Environment Management Capacity Building Project, was meant to cover North Rwenzori sub-region and the Kasagara Central Forest Reserve under the National Forestry Authority (NFA). A similar World Bank credit was given to the National Environment Management Authority (Nema).

An investigation by NFA board’s select committee, led by Mr David Ebong, found that the project was failed by poor procurement management, financial abuse and lacked robust supervision by NFA’s technical group.

A report seen by Sunday Monitor shows that seedlings were procured from Brazil but the investigation team was not given accountability documents like payment vouchers and delivery notes to ascertain validity of the transactions.

“The final account indicated that payment was made direct from Bank of Uganda project account,” reads the report in part.

Fake seedlings
A source told Sunday Monitor that, for two years, NFA officials procured seedlings which could not grow in Uganda but continued to draw money from the project for the same purpose; planting seedlings which never sprouted. The source familiar with operations at NFA said the forestry body’s technical staff had not done research on the seedlings imported from Brazil but wanted the project for personal monetary gain.
The NFA executive director, Mr Michael Mugisa, confirmed that the project had not delivered the intended results. “Indeed there was spending of money to plant trees which could not sprout,” he said.

NFA is mandated to manage central forest reserves on a sustainable basis and to supply high quality forestry-related products and services to government, local communities and the private sector.
Mr Mugisa told Sunday Monitor that although the World Bank project had registered setbacks, “we shall continue with management of tree planting”.

The report of the board select committee notes that even after the imported seedlings had failed to sprout, NFA spent Shs352 million on buying agro-chemicals for the nurseries, Shs520 million on tools and equipment for spraying and Shs366.4 million on paying contractors for spraying.

“We therefore, recommend that procurement department, procurement committee, project accountant and plantation supervisors be held accountable to these losses,” reads the report.

The other questionable expenditure was on the construction and installation of boundary marks at North Rwenzori and Kasagara forest reserves. Out of 175 budgeted pillars, only 134 were constructed, according to the board report which also revealed that each pillar was constructed at Shs1.3 million instead of the standard average cost of Shs200,000. Even at the exaggerated cost of Shs1.3 million, 41 pillars were not constructed yet the contractor was paid for the expected 175, meaning there was an excess payment of Shs54.6 million.

“Corruption is highly institutionalised by management and largely condoned and or orchestrated by some members of the SMT [senior management team] to the extent that staff that remain principled on work ethics and values are alienated with intentions of non-contract renewals,” reads the report.

It added: “All these are being undertaken to pave way to smooth execution of corrupt practices.”
However, Mr Mugisa told Sunday Monitor that they had learnt lessons from the glitches in the project implementation.

Mr Mugisa said the board discovery was an eye-opener for future projects given that the World Bank project registered a cost overrun of Shs1 billion yet expenditures were lacking and approvals in the system had contradictions. NFA is developing guidelines for managing projects.

Asked what action had been taken following the board report, Mr Mugisa said Mr Sezi Mugisha, the project coordinator “resigned before the execution of those recommendations”.

“Procurement issues were critical and we opted not to renew the contract of Allan Mugisha, the procurement manager,” he said. He also confirmed that finance director Susan Batwala Kavuma got a new job and resigned a week ago.

We unsuccessfully tried to reach Mr Mugisha on a phone contact given to us from NFA.
“We have got new internal auditors and finance managers who are digging deeper; they are helping us reveal a lot,” executive director Mugisa said.

He admitted the mess was perpetrated more at the NFA headquarters in Kampala than at the project sites. Following the new audit work, Mr Mugisa said he had stopped sanctioning payment of fuel for vehicles without sufficient background like logbooks. NFA is spending Shs150 million monthly on fuel and maintenance for vehicles and motorcycles but some of them seem to have been non-existent.

According to Mr Ebong, the action so far taken by NFA management was unsatisfactory given that some staff have complained of victimisation. He wants further investigations into the legitimacy of the contractors who were paid the project funds.

“But right now, I am the only member of the board and I can’t transact any business. The board’s tenure expired in October last year,” he said.

He wants an investigation into the dubious giveaway of NFA land to individuals he described as powerful.

Supervision of baseline survey for North Rwenzori and Kasagara CFR, $134,000 (about Shs335 million). Most expenditure in the project overvalued three or more times.

Construction and installation of boundary markers, Shs187 million. No value for money.
Procurement of five digital hypsometers; Shs77.5 million. Was not part of the planned activities.
Procurement of vehicles; Shs800 million. All tractors and vehicles acquired for project implementation are grounded.

lKiln [for making improved charcoal] and record house construction. Shs124 million. Kiln collapsed.

Other NFA controversies
-On the eve of the Commonwealth Heads of Government Meeting (Chogm) in 2007, NFA senior managers entered into a shady deal with a company named Beachside Development Services (BDS) to construct an eco-tourism site in five acres in Kyewaga Forest Reserve in Entebbe. The contract was later cancelled forcing BDS which had not done any development, to demand compensation of $1.6 million (Shs4 billion) which later increased to $1.9 million (about Shs4.7 billion) for alleged loss of business.

-In 2006, President Museveni asked the then NFA boss Olav Bjella to quit after he refused to license a palm oil company to destroy a virgin rainforest in Kalangala, an island on Lake Victoria. Bjella resigned and returned home in Norway.

“In a meeting with HE the President on Monday 4th of December on that issue, I was given the options of signing the license or resign,” Bjella said in an email, “I regret to inform you I have submitted a letter... offering to resign.”