Muhakanizi, IGG disagree with ex-spies over Shs30b

Secretary to the Treasury Keith Muhakanizi

What you need to know:

Standoff. Retired spies, supported by the Attorney General want Secretary to the Treasury to pay them without any conditions. However, Mr Muhakanizi has told them that unless they present accountability for the initial Shs10b paid to them in 2014, they should not expect further payment


A row has erupted between the Secretary to the Treasury, Mr Keith Muhakanizi, and former intelligence operatives of the Internal Security Organisation (ISO) who are demanding payment of Shs29 billion for their retirement benefits.

The retired spies are supported by the Attorney General and have told Mr Muhakanizi to pay them without any conditions.

However, Mr Muhakanizi has defiantly told them that unless they present accountability for the initial Shs10 billion paid to them in 2014, they should not expect further payment.

About 1,000 former spies represented by three officials: Mr Bernard Kamugisha, Mr Jamal Kitandwe and Mr Jeff Kiwanuka under their organisation Uganda Veterans of Internal Security Organisation (UVETISO), sued the government in 2005, seeking payment of Shs72 billion in retirement benefits following their retrenchment in 1995.

However, President Museveni entered out-of-court negotiations with them and the claimed amount was reduced to Shs39 billion.

Mr Muhakanizi, who is also the Permanent Secretary ministry of Finance, last year paid the former intelligence operatives Shs10 billion for which he is demanding accountability before the balance is paid.

Mr Muhakanizi’s decision followed an investigation by the Inspector General of Government (IGG) which established that initial payment of Shs10b had been abused and only a few of the bona fide claimants had benefitted from the money.

Subsequently, the IGG directed ministry of Finance not to release more funds until UVETISO submitted satisfactory accountability for the first payment.

On two occasions on October 14, 2014 and February 10, 2015, Mr Muhakanizi wrote to the former spies to submit accountability for the first batch of funds they received or else forget about the balance.

However, through their lawyers Matovu and Matovu Advocates, on February 15, 2015, the operatives told off Mr Muhakanizi, saying he should fulfil his work as a government paymaster and has no right to ask them for accountability.

“The duty of accountability of clients is not for you, therefore with all due respect your letter is misplaced,” UVETISO lawyers wrote to Mr Muhakanizi.

The former spies in May 2014, signed a Memorandum of Understanding (MoU) with the then former Attorney General Peter Nyombi, which was also signed by Mr Muhakanizi, for government to execute payment.

According to the MoU the government would fulfil its obligation in three installments: Shs10 billion during the 2013/2014 financial year and the remaining Shs29 billion would be released in 2015/2016 and 2017/2018.

However, the IGG Justice Mulyagonja in August 2014, after receiving a complaint from a whistleblower that the first batch of the money had been abused, halted release of more funds until her office had completed the investigations into the alleged irregularities.

The former operatives through the Attorney General, petitioned the High Court for orders to stop the IGG investigations. Justice Stephen Musota stopped the investigations but the IGG had already compiled the report of findings.

The IGG released her report in December and blamed Mr Nyombi for “misadvising” himself and the government on the MoU with the retired spies. The report says due to Nyombi’s “ill-advice”, only 117 of the 1,078 legitimate beneficiaries received some payment of about Shs300m out of the first batch of Shs10 billion.

The IGG noted that a group of “well stationed” officials in government, state attorneys and others took advantage of UVETISO and pocketed most of the money, which was wired to an account in Crane Bank.

About 70 per cent of the Shs10 billion, the report states, was paid to attorneys. Usually lawyers are entitled to 10 per cent of the claimed sum.

“The refusal to consider a proposal of the minister (of Finance) to have the fees of the advocates paid separately from the judgment debt led to the advocates taking undue advantage of their indigent and uninformed clients,” the IGG states in her report.

“Not all former employees of ISO entitled to terminal benefits were aware of the formation of UVETISO association, neither were all of them members of the association, and not all former ISO employees authorised UVETISO to receive terminal benefits from government on their behalf,” the IGG further states.

Subsequently, the IGG instructed the Director of Internal Security Organisation, Brig Ronnie Barya and the Auditor General, Mr John Muwanga, to conduct a forensic audit on the actual beneficiaries before more funds could be released to the former intelligence operatives and after UVETISO had presented accountability for the first Shs10 billion.

The IGG further pointed out that the three UVETISO executives, who represented the retired operatives, withdrew Shs4.9 billion which was dubiously shared and they could not explain how or whether it was given to the intended beneficiaries.

In December 2014, shortly after releasing the report, UVETISO petitioned the High Court, seeking fresh orders to nullify the IGG investigation report and to compelled ministry of Finance to release their balance immediately.

Muhakanizi defiant
However, the defiant Mr Muhakanizi told Saturday Monitor on Friday government will not release any more money until the former spies submit the required accountability.

“For us we shall follow the law in any circumstances,” Mr Muhakanizi said.

Several groups of ISO workers, this newspaper understands, have been trooping the IGG’s office seeking redress. They had been told it is the IGG who blocked their payment and was responsible for the plight.

Justice Mulyagonja told Saturday Monitor that she has nothing to do with the payment of the balance for the former operatives.

“My work was to investigate, which I did. They tried to block the investigations but I issued a report and I think the findings are clear,” Ms Mulyagonja said.

“A good number of beneficiaries are deceased or survived by widows and orphans, who are not aware of UVETISO, and if they are to benefit, the responsible bodies have to first conduct a physical verification of the former ISO employees,” she added.

Twists and turns
Now, the IGG has also petitioned the Court of Appeal, challenging the earlier decision of the Nakawa High Court, which denied her to be part of the suit in which the UVETISO, through the Attorney General, sued her office. The IGG has been granted the permission to appeal Justice Musota’s ruling.

The IGG contends that her office was not given a hearing and the orders against her were made without her defence. The IGG petition is dated January 15, 2015.

The appeal is pending hearing. On January 30, UVETISO also filed a separate petition at the Constitutional Court, challenging the IGG’s orders that stopped payment of their balance. A date is yet to be set for the hearing.

Another group of former spies led by Jasper Mayeku on behalf of 198 others has also filed a petition in the High Court, challenging the MoU between government and UVETISO regarding the payment of their retirement benefits.

The numbers
Money former ISO operatives are demanding for their retirement benefits.
Money so far paid by the government.