PAC report cites fraud, abuse of KCCA properties

Tuesday January 22 2019

The entrance of Centenary Park on Jinja Road.

The entrance of Centenary Park on Jinja Road. Nalongo Estates, which manages the park, is accused of erecting structures that were not approved by city authorities. PHOTO BY ALEX ESAGALA 

By Amos Ngwomoya

Kampala Capital City Authority’s (KCCA) Public Accounts Committee (PAC) report has unearthed incidents of mismanagement of city properties as it sought to establish their status, operations and service delivery.

The 71-page report, a copy which Daily Monitor has seen, was compiled between October 2017 and November 2018 by a five-member committee headed by Mr Bob Kabaziguruka.

It was also copied to Kampala Affairs minister, the Lord Mayor and KCCA executive director.

Section 58 (9) of the KCCA Act mandates the committee to examine the reports of the Auditor General (AG), Chief Internal Auditor and any reports of commissions of inquiry and may, in relation to the reports, require the attendance of any councillor or officer to explain matters arising from the reports.

According to the report, there was no proper handover from the defunct Kampala City Council (KCC) when KCCA took over management of the city in 2011 hence there was no accurate and complete asset register for the institution.

Upon takeover of the city, the report states that KCCA requested the AG to carry out an asset/liability verification exercise for KCCA.
However, from the previous assets recorded in the AG reports, PAC picked interest in the public parks, among other properties.

Centenary Park
The report shows that defunct KCC entered into a 10-year management contract with Nalongo Estates Ltd for Plots 34E and 38E Jinja Road (Centenary Park) on May 16, 2006 to develop, utilise and maintain the park as a recreational area and bridal gardens.


Contrary to the management agreement, the report states that Nalongo Estates illegally erected structures that were not approved by city authorities. The management contract subsequently expired on May 16, 2016 and has not been renewed by KCCA.

“However, Nalongo Estates has not handed over the park back to KCCA although clauses 12 and 13 of the agreement state that at the expiry of the management contract, all the structures in Centenary Park put up by managers shall revert to the council,” the report states.

The report recommends that since Nalongo Estates did not comply with the terms of the previous management contract to maintain the area as an open space with green coverage, KCCA should repossess its property (Centenary Park) and the place be put to its original purpose.

Plots 9A, 9A2 and 9B Kira Road comprising children’s park
The report states that Plot 9 Kira Road was previously leased to Formar (U) Ltd by KCC to construct Children’s Park. However, KCCA later discovered that the company had encroached on the park by 77 decimals.

The report shows that KCCA subdivided Plot 96A into 9A and 9A1 for the park and 9A2 which was also leased to Formar (U) Ltd.

“Formar (U) Ltd breached fundamental lease conditions but was never stopped...[KCCA] went ahead and granted an extension of an extra 15 years,” the report notes.
It recommends that authority should strictly enforce planning regulations and have zero tolerance to encroachment on city public property.
A spot check by Daily Monitor found that private investors and security personnel continue to wield control over Kampala’s recreational parks although they are supposed to be managed by KCCA.

Currently, some of the recreational parks under KCCA’s jurisdiction include Centenary Park, Jubilee Gardens (Sheraton gardens), City Hall Gardens, Constitutional Square, Railway Grounds, Chogm gardens Kiswa Children’s Park, Chogm Grounds at Parliament, Nakawa Business park and Kamwokya Children’s Park.

While such parks should be open to the public, the political leadership wonders why some parks such as Sheraton Gardens continues to be a hired out. Sheraton Kampala Hotel started managing the gardens in 2000 after signing a 10-year tenancy agreement with the then KCC.

Although KCCA terminated the contract in 2013, political leaders at City Hall claim its management is still shrouded in controversy .

Kisingiri Estate
This is a prime KCCA property on Block 4 comprising five plots (325,326,327,328 and 348) behind Mengo Court that previously housed Mengo Municipal Council medical staff.

The report reveals that the property is currently being occupied by army officers in their individual capacities with accumulated rental arrears of about Shs269m since February 2011.

The report recommends that KCCA should open boundaries to demarcate and fence off this area. It also recommends that the land should be changed to the name of KCCA from Mengo Municipal Council.

Encroachment on Plot 137 Block 215 Kulambiro cemetery
According to the report, the land was paid for by the defunct KCC but it was given a duplicate title. KCCA embarked on a process of obtaining orders on this contentious land to secure its interests.

However, the report says matter is now complicated as KCCA and the law firm Sendege and Company Advocates are in an impasse.

Management of KCCA contracts
KCCA as an institution enters into contracts for various services that range from leasing out of its land and properties and management contracts.

In the AG’s report for 2010/11, it was noted that the authority was not appointing contract managers contrary to Public Procurement and Disposal of Public Assets (PPDA) regulations nor was it preparing implementation plans for the various procurements.

The PAC report noted that failure to appoint contract managers breeds lapses in the contracts management resulting into loss of revenue and failure to get value for money in the contracts because of lack of adequate supervision.

For instance, the report states that absence of a contract manager to follow-up on the execution of the lease granted to Formar (U) Ltd for Plot 9B on Kira Road led to the non-fulfilment of the lease terms and encroachment on the children’s park (Plot 9A) without KCCA’s notice.

However, the report states that although a contracts management committee for the current offer was appointed in December 2016, there are still irregularities.

“It seems it is not effective as a number of key terms of the agreement have not been adhered to to-date. For instance, the title for the children’s park has not been transferred back to KCCA,” the report states.
The report further states that no premium was charged for the new lease for Plot 9B yet it was clear that this was afresh application for a new lease thus loss of revenue.

Street parking
According to the report, Multiplex Ltd was awarded a 10-year contract on August 6, 2010, to mnage and modernise street parking in Kampala.

However, key provisions in the contract relating to annual performance reviews and accessibility to contractors’ systems have been neglected to date yet they form a critical basis for the continuity of the contract and rates used in determining the contract sum.

As a result, the report states, KCCA is losing revenue because of lack of approach on lost parking spaces.

The report recommends that KCCA management should engage with the contractor to ensure contract provisions are fulfilled as agreed. For instance, KCCA’s July 31, 2018, internal audit report, a copy of which Daily Monitor has seen, revealed rot in the city street parking venture.

The contract states that Multiplex Ltd would be remitting a monthly revenue of Shs140m to KCC now KCCA. The audit faulted Multiplex Ltd for untimely remittance of fees as per the contract, causing stagnation of KCCA operations.

“Untimely remittance of fees doesn’t only affect the authority’s service delivery but leads to accumulation of arrears which may turn out to be uncollectable should the contractor cease managing the street parking,” the report reads in part.

The contract states that the company is supposed to deploy its employees with at least 350 hand-held metres to capture all transactions.

However, the report reveals that some of the transactions are done manually thus KCCA cannot ascertain the actual amount Multiplex collects and establish their continuous claims of low revenue collection.

In the first contract with KCC, Multiplex was supposed to remit Shs140m monthly. But in August 2017, the contract was reviewed and the monthly remittances were increased from Shs140m to Shs1.8b due to the increment in the parking fees and adjustment in the number of parking slots.

Loss of weighbridges
According to the PAC report, the AG report for 2011/12 indicated that two weighbridges were stolen by the then KCC officials from the garbage collection site in Kiteezi and sold in Rwanda. To date, the report says, there is no functional weighbridge to measure the quantities of garbage delivered at the landfill.

Although the office of the KCCA executive director and police had pledged to work hand in hand with the former KCC Town Clerk of Kawempe Division to lead them to the perpetrators who sold the weigh bridges, the matter has since stalled hence no effort to recover the stolen weighbridges.

The report recommends that the executive director directs the legal department to follow up the matter and apprehend those involved in the scam so as to recover the weighbridges.

Legal costs
According to the report, KCCA continues to bear huge costs in legal cases, a burden to the performance of the authority.
For instance, for the previous six years, Shs47.7b has been incurred in legal costs in the various financial years.

The report states that although the PAC team had requested for the legal case files to review and ascertain the substance of the payments, the former executive director, Ms Jennifer Musisi, denied them access, citing confidentiality. Access was granted to only three files.

The report adds that from the three reviewed case files, KCCA took long to refund premiums paid by clients even when the errors made were immediately identified.

For example, Jima Properties Ltd paid only Shs136m in 2005 for application and grant of lease for the land. However, the total liability to KCCA was Shs1.9b in 2015.

The committee noted that even when advised to refund the premiums paid immediately, KCCA did not take action until the award by court.

“The committee did not observe real efforts from the legal department to save KCCA resources. In most cases, they seemed more interested in having compensations and settlements paid to other parties. KCCA did not appeal the decisions even in instances where they could have had a good cause,” the report reads.

According to the report, there were avoidable costs which should have been handled administratively without taking recourse to court.

The report recommends a review of all the contingent liabilities in relation to the legal costs, evaluate the risks and work towards having all the high-risk cases closed as soon as possible.

Cash office operations
KCCA’s cash office falls under the supervision of the director for treasury services. According to the report, the cash office made various irregularities which could cause financial loss to KCCA.

For instance, the report states that when the committee members requested for copies of cash books for comparison purposes, the hard copy provided was different from the one earlier provided to the internal department.
The report further says there was a deliberate provision of wrong information pointing to possible fraud in the cash department.

It also states that the internal audit, which was earlier carried out, found there were payments with no acknowledgement, some payments were made without the director’s authorisation, payments made without the director’s receipts and poor management of cash security deposits.

“There are other questionable payments in cash such as an amount of Shs46m paid out as facilitation to MPs on October 26, 2018 yet MPs are supposed to be facilitated by Parliament hence this payment is questionable,” the report states.

Mr Peter Kaujju, KCCA’s director of public and corporate affairs, acknowledged the report was made and promised to get back to us. However, he had not gotten back to us by press time.

Kampala Lord Mayor Erias Lukwago acknowledged receipt of the report and said it would be tabled before KCCA Council on February 7 for debate and resolutions. Kampala minister Beti Kamya could not be reached for a comment as she was reportedly attending Cabinet at State House in Entebbe.

The Undersecretary in the ministry, Ms Monica Edemachu, said when reports are brought to the ministry, the minister analyses them and gives guidance where necessary. “At times when the reports are either from Parliament, we go as a team and respond to the issues raised. But for a matter from within, the minister gives guidance,” she said in a telephone interview.