Since its establishment in April 1989, the Police Savings Association Limited (PSAL) has faced turbulent times. Mismanagement of funds, loss of clients and resistance from the police leadership, among other challenges, had taken a toll on the Sacco.
The association was a major issue of investigation during the Justice Julia Ssebutinde Commission of inquiry into corruption in the Force in 1999.
The commission uncovered rot in the Sacco’s administration and it was recommended that it be disbanded.
However, 30 years later, Mr Edward Ochom, the outgoing PSAL chairman, said the tough times are behind them.
“[The turbulent period] was due to unforeseeable and unavoidable circumstances prevailing at the time. Most of these issues have since melted,” Mr Ochom said.
The Sacco’s net value increased to nearly Shs13b last year up from Shs1b in 2006.
Its profits have shot to Shs785m in the financial year 2018/2019, according to its records.
The PSAL was started by senior police officers with a membership of 14,000 police officers to improve their standards of living.
It was compulsory for any police officer to make monthly savings to the Sacco.
The Inspector General of Police and his deputy contributed Shs5,000 each, a police commissioner saved Shs4,000 and a superintendent kept Shs3,000 monthly. An inspector saved Shs2,000 while officers of other ranks contributed Shs1,000. The members were eligible to apply for loans.
According to Justice Ssebutinde Commission report, majority of the association members, especially the low ranking officers, were unable to get loans.
“Many senior officers who own private companies that supply the Force often don’t have capital to finance their tenders. The association’s funds are the easy and convenient source of funding,” the report noted.
Mr Ochom said the officers would use the association’s funds to buy food and supply to the police’s quartermaster then misappropriate the profits.
“That is why we still demand Shs24m from the police quartermaster since 2000,” he said.
The commission found out that the association had also bought two acres of land owned by Mitchel Cotts in Lubowa.
But board members instead of negotiating with the landlord, dealt with a squatter, who sold them the land at Shs39m yet it was valued at Shs9m.
The association’s cashier, Mr Anthony Wabwire, was sentenced to three years in jail for embezzling upto Shs28m supposed to be transferred to beneficiaries in 1999.
Although Justice Ssebutinde’s report had recommended that the Sacco be disbanded, its then head of legal department, Mr Martins Okoth Ochola, suggested that membership be made voluntary.
As a result, more than 10,000 officers out of 14,000 opted out. Reforms in its management were made. Many officers chose to seek loans from credit financial companies that charged high interest rates. Majority failed to pay, thus burdening the Force.
In an attempt to solve the problem, the then Inspector General of Police, Gen Kale Kayihura, established a new Sacco -- Police Exodus in 2007.
Gen Kayihura said PSAL had failed to mobilise all police officers to save and get loans with low interest rates.
The PSAL had about 5,000 members yet the police strength had reached 38,000 officers.
Consequently, in 2007, Gen Kayihura oversaw the recruitment of about 5,500 new officers into the Police Exodus.
However, five years after its establishment, the numbers were not increasing and senior officers, who were members, were more committed to PSAL.
In 2011, the fight for clients between the two Saccos reached its peak. Gen Kayihura ordered that the two institutions be merged, a directive the PSAL board of directors rejected.
The PSAL legal team argued that the two Saccos could not be merged because they were being governed by different laws.
They demanded that one be dissolved. PSAL was governed by the Company’s Act while Police Exodus was under cooperative association law. The merger hit a dead end.
A few months later, Gen Kayihura ordered an investigation into the management of the PSAL, following reports of mismanagement.
Mr Ochom, then the PSCAL deputy chairman, and his board members were summoned and recorded statements at Central Police Station in Kampala over the allegations.
However, no evidence was found against the officers and the case was dropped.
In December 2011, police management evicted PSAL from the police headquarters, then at Parliament Avenue in Kampala.
The PSAL shifted to Raja Chambers opposite the police headquarters.
The next month, police issued a directive that any officer who is seeking a commercial or salary loan from any financial institution had to get an approval from the police human resource management. The officers, who sought approval from police management to get loans from PSAL, were either discouraged or told to secure the same account from Police Exodus “since the interest rates and charges were the same.”
Later, police dropped PSAL payment code, which meant that pay master couldn’t deduct money from officers’ salaries.
The PSAL then discontinued issuance of the commercial loans, and according to Mr Ochom, the number of their clients dropped from 5,000 to 1,000.
Those who deserted the Sacco withdrew their savings while others declined to repay their loans.
The PSAL directors turned to making fixed deposits in commercial banks and investing in real estate to make profits.
Ther efforts started paying off. Between 2013 and 2016, the association’s annual net profits hit Shs400m. They increased significantly in 2017/2018 to Shs561m.
IGP Ochola, who is also a member of PSAL, returned its offices to the police headquarters and donated a piece of land to the Sacco so that they construct their offices.
“As police leadership, we will continue to support the initiatives of this savings scheme and work with them to ensure no worker in need will be left without support,” he said.