Katosi road: The fraud that lifted lid off politics of patronage in government

Members of Parliament drive past a boda boda cyclist on the Mukono-Katosi road last year. This was during the legislators’ inspection of the roadworks.
FILE PHOTO

At some point, the nonstop developments started confusing those following closely.

The suspense was at the zenith point. The mind games, power play courtroom drama, duplicity, to mention but a few, all played out like an adaptation of sorts from a Hollywood script for a political thriller.

But this was real-time drama bubbling from some place, the vaguely known Mukono Kyetume-Katosi/Kisoga-Nyenga 74km road stretch.

The plot so thick, the characters are not only cunning but daring-each supposing absolute power over another, coupled with legal narratives-rivalry was ripe and at its peak; what started as fraud ended up creating faultiness in government—bureaucrats versing bureaucrats in part one, and politicians versing politicians in part two.

Relatedly perhaps even resultantly, a Cabinet reshuffle is reportedly around the corner and its results might not to be surprising.

One thing certain though, the scandal lifted a lid off the politics of patronage in government procurement and reinforced further the already existing perception-of big money equations usually leaving dirty trails back to the highest political office in the land—State House, usually orders being given from above.

To start with, a new contract for the road was finally signed last week between the Uganda National Roads Authority (UNRA) and M/S JV SBI International AG and Reynolds Construction Co. Ltd, bringing to end almost one year of tight rope pulling.

On one side was Eutaw and CICO, the two contractors in question, State minister of Works John Byabagambi, Attorney General Peter Nyombi and “others” yet to be known or those who were mentioned in passing. On the other side was Inspector General of Government Irene Mulyagonja, police, UNRA and a few sympathisers.

Thrown in the mix were power brokers, lawyers, ministers and the mess got messier. Documents seen by Sunday Monitor indicate that the scandal was brewing even before the road was commissioned by President Museveni in the early days of July 2014. Some briefs had been sent to him, particularly on the contractor, Eutaw.

The problem was works on the road were long overdue. The President had been promising to deliver on the road since 1996. He had equally made promise on the same in subsequent election campaigns.

Yet another election in 2016 is looming, so braking on the project would be an undoing on his part and to a larger extent weakness on government’s part in an area with five MPs; three NRM, one independent and one DP.

Red flags had been raised, enough to call for brakes on the project. The Finance ministry had said there is a problem with Eutaw, the American company which had signed a Shs165 billion contract with UNRA and with whose directors the President had reportedly met prior. In the same regard, the IGG raised a red flag in February 2014.

Was the deal simply being protected by some people so powerful in government? Would an early intervention save everyone else this embarrassment, including the President? Did Eutaw really work alone or rather was it a cleverly thought out scheme?
The final submissions of the police and IGG from the on-going investigations are expected in two months’ time.

The action packed procurement
Whilst procurement processes, especially for big projects, are usually susceptible to scandal, the process behind the Katosi procurement strikes chord.

UNRA entered in contract with Eutaw in haste, after some officials according to documents seen, gave the green light and argued that due diligence could be conducted later. UNRA officials say they were under pressure from the Ministry of Works and Transport, who in turn says he was under orders from above.

Katosi Road had been earmarked for upgrade in 2010, two years to the general elections. Sources familiar with the matter say, “Then some clever people went to work.”

Some say the deal started in Washington, masterminded by a hitherto known Apollo Ssenkeeto, also the renowned local representative of Eutaw. Others say it was worked out here in Kampala.

The accounts are conflicting. But in May 2010 one company, Eutaw International Ltd, purchased bid documents which were returned later and serialised under number #44 for which seven receipts were issued. The company had submitted envelopes for five projects, among others, Mukono-Katosi, Kapchorwa-Suam, Moroto-Nakapiripirit, among others.

Later, a report of the prequalification evaluation committee that handled evaluating the bids introduced the name Eutaw Constructions Inc. according to a preliminary report of police investigations as a bidder for the seven projects.

It’s not clear whether it was a mix-up here, but this was not the company that had bought and returned the bid documents for prequalification.
Nonetheless, Eutaw Constructions Inc. was evaluated the best bidder months later

In November, Eutaw’s Ssenkeeto reportedly secured a “resolution” to the cause that the directors of Eutaw Construction Company in Mississippi, a US southern state had formed a Special Purpose Vehicle (SPV) with the same name; registered and headquartered somewhere in Vero Beach, Florida with the overview of soliciting and undertaking civil works in Africa and Asia.

The new company was to be led by Richard Pratt and Tim McCoy as directors and Michael Olvey as company secretary.

The resolution bore the signatures of CEO, Thomas Elmore [of the original Eutaw). Armed with document, the company would emerge as the best bidder in December 2010.

But the trails, like legal documents submitted in bidding, however, described the Eutaw in Mississippi as completely different from the one in Florida. The other company did not have any ownership or shares in this company bidding in Uganda although the articles of association provided indicated they were one.

In fact, sources familiar with the matter say during some of the first meetings with the government officials, Eutaw even expressed willingness to fund its works and receive payment along. It was at this point, if it was not really a scheme, that the bait was taken.

UNRA by this time was under Mr Peter Ssebanakita while the Works ministry was under Mr John Nasasira. Mr Ssebanakita was booted out office sometime in 2013 while Mr Nasasira was relocated to the ICT Ministry and replaced by Mr Byandala in the 2011 Cabinet reshuffle.

The project was shelved premised on a folding budget but meetings were held back and forth in between, including with the President. In February 2012, he reportedly directed the ministries of Works and Finance to accelerate discussions with Eutaw on the project. UNRA says at this point it was hesitant and somewhat pondering to retender the project.

Acting UNRA executive director Ssebugga Kimeze, who has been since been sent home and four other top officials over the matter, eventually succumbed and signed the deal.

On October 13, 2013, Mr Kimeze prior to signing had tapped a select team to do some background check on Eutaw and advice accordingly, and indeed on November 8 they reported back that the company was fictitious- from its website to addresses.

On November 13, 2013, Mr Kimeze shared the findings with Marvin Baryaruha, UNRA’s chief legal counsel, seeking his opinion.

Mr Byaryahuha wrote back on November 14, 2013,giving a green light to the signing, seemingly disagreeing with the team which had said Eutaw could be a scam.

He explained that Eutaw was formed as a Special Purpose Vehicle to protect the parent company in US against taxation and other liabilities, but nonetheless said, due diligence would be conducted later.
Boom—UNRA was now in the net.

To this date, a quick Google search of the Eutaw in picture returns results of Mississippi based Eutaw.
But did the company work singlehandedly?

UNRA now admits the company does not exist and its contract is void. Police is also working around ways to get to its American directors who retreated back to the USA.

In an earlier correspondence with this newspaper through their lawyers, Muwema & Co Advocates, Mr Pratt, one of the directors blasted UNRA and accused some of its senior officials of extortion.

The company later head-hunted for a subcontractor, ostensibly, with the expertise to undertake construction and landed on a Chinese firm, CICO at Shs155 billion. Eutaw paid CICO at least Shs12 billion as upfront of the Shs24.78 billion advanced payment from UNRA.

But the IGG says the two companies had developed a close relationship months earlier to the signing of the UNRA contract. Justice Mulyagonja in her earlier report said this was deduced from confession of CICO’s country directors, added to another fact that the two also shared the same address.

Enter the political fighting
It started with AG Nyombi and his deputy Fred Ruhindi dissenting on opinion to the President on whether CICO should be hounded off the project site.

Mr Ruhindi, the first to write the decision was warranted less government was supporting illegalities. His senior Nyombi differed, saying doing so would expose government to legal suites and financial loss if a new contractor was sought.

Along came the IGG’s report directing UNRA to toss CICO off the site, saying they were clearly part of the scam. The ombudsman later embroiled in a bitter spat with his Mr Nyombi, both giving unparalleled views and directives; they ended up in court. In the mix joined Mr Byabagambi in support of the Mr Nyombi, occasionally running to the President for intervention.

But the flavour to this fighting of the legal minds was when Works minister Mr Byandala sucked in two of his contemporaries in Cabinet- Mr John Nasasira and Minister for the Presidency Frank Tumwebaze, during a wide ranging interview with the Observer newspaper.

Minister Byandala, admitting to having ordered UNRA to sign on Eutaw, claimed it was his predecessor [Nasasira] who was in charge of the Works ministry at the time when procurement for Katosi was started and shelved. Ordering UNRA to sign, he said, was out of pressure and signed documents which were left behind. He said Mr Nasasira was fuelling war against him to have him out to repossess the ministry.

Mr Tumwebaze, he claimed was linked to one local company, High Tides Ltd, which is said to have sourced Eutaw. According to him, High Tides was to help the American firm with procurement and legal issues, and in turn would be paid a fee of $1.75 million.
High Tides is a registered company but inactive. Available details indicate that it signed MoU with Eutaw, but that was the last to be heard. The company’s name does not feature anywhere in subsequent developments.

Both Mr Tumwebaze and Mr Nasasira have since come out to deny the claims and told Byandala to carry his own cross.

To what extent do Mr Byandala’s claims hold any grain of truth? None of the investigating agencies has hinted if they are looking into them.

Notwithstanding, police has since named him a key suspect premised on the order letter to UNRA he wrote directing them to sign the deal. Some of his colleagues in Parliament are also calling him upon to resign.

Mr Byandala’s tight spot, some say, rhymes with that Soroti Municipality MP Mike Mukula found himself in during the Global Fund scam. In hushed voice, others say No!

Presidential spokesperson Tamale Mirundi, recently appearing on a local radio talk show, uncharacteristically weighed in on the “yes side” saying Mr Byandala is “naïve” to the patronage in government and is the sacrificial lamb.

Could there be other actors who have not yet been unmasked? Well if this is true, then it’s another reason to love Robert Greene’s best seller “The 48 Laws of Power” in particular rule number 31 -“Control the options: get others to play with the cards you deal.”

“The best deceptions are the ones that seem to give the other person a choice; Your victims feel they are in control, but are actually your puppets. Give people options that come out in your favour whichever one they choose. Force them to make choices between the lesser of two evils, both of which serve your purpose. Put them on the horns of a dilemma: They are gored wherever they turn.”

As the standoff deepened, President Museveni called all the actors to attention in State House on December 23, 2014, and although the dust has started, it’s easy to conclude that sanity was borne from here. The rest of the questions for now, can be left to the investigators to figure out who, did what, where and when.

THE NUMBERS
74km: The stretch of the Mukono Kyetume-Katosi/Kisoga-Nyenga road.
Shs12b:The money Eutaw paid CICO as upfront of the Shs24.78 billion advanced payment from UNRA.
$1.75m: The money that was to be paid to High Tides to help the American firm, Eutaw, with procurement and legal issues.