Government loses Shs200b in dubious court awards

Tuesday April 2 2013

L-R: Attorney General Peter Nyombi, Police spokesperson Judith Nabakooba and Director of Public Prosecution Richard Butera.

L-R: Attorney General Peter Nyombi, Police spokesperson Judith Nabakooba and Director of Public Prosecution Richard Butera.  


Negligent lawyers, some of whom collude with litigants, have cost Ugandans over Shs200 billion in court awards, enough money to pay the salaries of 56,000 teachers for a year.

An investigation by this newspaper into the compensation and court awards to individuals and companies over several years has revealed evidence of negligence by technocrats and lawyers representing government, mismanagement of lawsuits against the government, and potential collusion with litigants and judicial officers to throw cases.

Government lost many cases after its lawyers from the Office of the Attorney General failed to turn up in court, leading to one-sided verdicts against it.

In one case, for instance, where a citizen sued the government for his illegal arrest by the police, the solicitor General requested the Director of Public Prosecutions for information on the case on January 25 2009. A reminder was sent on October 22 2009. However, the DPP’s response together with the Police file was sent to the Solicitor General nine months later, on November 6 2009 long after court had disposed of the suit on September 24 2009. The taxpayers lost Shs43.6million.

Government was also ordered to pay Shs87.3 million in a case of wrongful death of a man shot by a policeman in Kayunga District on July 16, 1997. The police failed to provide evidence for the defence to the Attorney General until October 2004, despite at least two reminders. Police Spokesperson, Ms Judith Nabakooba yesterday told Daily Monitor she needed more time to internalise the cases where police are mentioned as having aided the loss of public funds.

Few state attorneys
Robina Rwakoojo, the commissioner for Civil Litigation in the Justice ministry told this newspaper her department does not have enough state attorneys to represent government in all the cases brought against it. Ms Rwakoojo said about 30 cases are filed against the government every day yet she only has 25 lawyers to defend the government. This shortage of lawyers has prompted the government to hire private law firms to defend some lawsuits but often at exorbitant fees, compounding the under-funding of the judiciary.

Mr Earnest Bafaki, a senior official in the Justice ministry, said in 2011/12 financial year ministry of Finance allocated Shs4.3 billion against a budget of Shs196 billion needed to compensate torture victims, pay court awards and other compensation claims. The bill has since increased to over Shs200billion, according to Justice Minister, Kahinda Otafiire.

The Auditor General’s reports to Parliament have also highlighted some of the controversial cases where government has lost huge sums of money. According to the AG the interest rates charged on unpaid court awards range from 6 to 30 per cent, which is far above the market rate of about 11 per cent. For instance file No. HCCS 31/2002 shows that while Uganda Development Bank was entitled to only Shs91.2 million as of May 2003, because of an interest rate of 10 per cent, the bank is now entitled to Shs270.4 million. The government has since paid Shs24 million.

Delays in payment mean that the money taxpayers have to pay keeps growing every year, even without new cases, due to interest pegged to it. A firm, Const. Eng. Build, whose details remain unclear, is to be paid Shs5 billion and counting, instead of Shs2 billion it was awarded in court, because of a 12 per cent interest rate pegged on the lump sum amount. A list of individuals demanding money from the government, in unpaid court awards dates as far back as 1990s.

Sources within the judiciary who spoke to this newspaper said there are several cases in which poorly-paid government lawyers collude with lawyers representing litigants to throw cases, sharing the damages that are then awarded to them.

Sources also corroborated various claims that some judicial officers give exorbitant awards to litigants against the government and then share the proceeds with them. The delay in the payment of outstanding court awards and damages has also led to the development of a secondary market in which well-connected lawyers and law firms charge a hefty premium to lobby government officials to prioritise the payment of their client’s claims.

The Public Accounts Committee of Parliament recently found fault with a 2007 decision by government to cancel a mining lease that had been awarded to Dura Cement Ltd. The cancellation led to the company obtaining $16.4m (about Shs40bn) in compensation.

In its report on the matter PAC recommended that ex-Attorney General Khiddu Makubuya be held responsible for causing financial loss to the government by refusing to discount the offer of $16.5 million over 19 years to a single lump sum payment of $6.5 million; that Justice Billy Kainamura and lawyer Elly Karuhanga caused financial loss of Shs3.2 billion by “disguising the Dura compensation as special damages”; and that Kampala Associated Advocates be blacklisted from all government contracts for defrauding the country under dubious dealings with the Attorney General’s office.

The MPs also accused Justice Kainamura, the former solicitor general, of leaking a draft report by audit firm KPMG to Mr Karuhanga, used to “mislead” President Museveni on the amount of compensation for the deal.