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MPs set to start debate on Dura cement report

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By Yasiin Mugerwa

Posted  Monday, February 11  2013 at  02:00

In Summary

The report, which was tabled by the Public Accounts Committee last week, implicates senior government officials in the cancellation of a mining lease that cost taxpayers Shs43.5 billion.

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Parliament

MPs today begin debate on a highly-billed report about the cancellation of a mining lease that cost taxpayers Shs43.5 billion.

The report, which was tabled by the Public Accounts Committee vice chairperson Maxwell Akora on Thursday, implicates senior government officials, including the President. Central in the report is the decision by the government in 2007 to cancel a mining lease that had been awarded to Dura Cement Ltd. According to the report, President Museveni ordered the termination of the contract and instead asked that it goes to Lafarge/Hima Cement. In the resultant suit for breach of contract by Dura, the government forked out Shs43.5b.

Whereas the President told the committee that he ordered the cancellation based on “economic” and “strategic” reasons, the MPs say there is evidence that Kamwenge District, which was to house the mines, has enough limestone to service up to three cement manufacturers. They concluded that the cancellation was uncalled for.

The committee has recommended that Parliament tells the President to “desist from gifting critical national resources to so-called investors free of charge and without following the due process”. The report also advises President Museveni to respect technical advice given by government technocrats instead of relying on briefs from “unofficial sources”.

The MPs, however, want tougher sanctions for current Nyabushozi MP Fred Mwesigye, who was then head of National Enterprises Corporation (NEC), accusing him of facilitating the irregular transfer of the mining lease from NEC to Lafarge without proper tendering. But Col. Mwesigye denies any wrongdoing.

According to the report, Col. Mwesigye introduced a middle man identified as Rawal, as the owner of Dura Cement, which had bought 278.5 hectares of land in Kamwenge, to the President and yet he held no shares in the company. The MPs hence want action taken against Col. Mwesigye for introducing a “fraudster” to the President.

Facing punishment
Also lined up for reprimand is Justice Billy Kainamura, the former Solicitor General. The MPs say the judge leaked a draft report by KPMG, an audit firm, to Mr Elly Karuhanga of Kampala Associated Advocates (KAA), who then used it to “mislead” the President on the amount of compensation for Dura.

KAA represented Dura and was later hired by the Uganda Revenue Authority to collect taxes from Dura.
In a closed-door meeting with the committee, Justice Kainamura denied any wrongdoing although MPs insist he takes responsibility for causing government a financial loss of $250,000 paid to KPMG, whose recommendations he later ignored and failed to secure a final report from the firm.
PAC wants Justice Kainamura to refund the money.

Elly Karuhanga implicated
For allegedly peddling influence and “professional misconduct”, the committee wants Mr Karuhanga investigated by other government organs and relevant professional bodies. The committee also wants the veil lifted such that the true owners of the company are exposed.

Former Attorney General Khiddu Makubuya has also been singled out for punishment. PAC wants him held responsible for causing financial loss to government by refusing to discount the offer of $14.5 million over 19 years to a single lump sum payment of $6.5million.

Close on his heels is the URA Commissioner, Domestic Taxes, Mr Moses Kajubi, whom PAC says should be investigated for waiving taxes on the compensation which was deemed to have arisen from loss of business profit over 19 years. The Committee noted that KAA made a false representation in the consent judgment to evade payment of taxes.

The report is silent on then energy minister Daudi Migereko, who was instructed by the President to transfer the mining lease to Lafarge/Hima. In his appearances before the committee, Mr Migereko pleaded his innocence, saying he was simply acting on the President’s orders.

ymugerwa@ug.nationmedia.com