How sleepy board, ministers eased fraud in departed Asian properties

A special report by the Auditor General reveals key findings into what MPs have called ‘fraudulent dealings’ at Departed Asians Property Custodian Board (DAPCB), where government officials, including ministers, slept on the job as people took advantage to grab the properties.

Facets of the mess at the Custodian Board include theft of public funds through fictitious compensations of up to Shs1.7b, double allocation of properties, forged land titles, sale of assets without proper valuation and missing documents, among other illegalities. These irregularities have been blamed on ‘a busy board’, which failed to monitor the property transactions.

The board chaired by Finance minister Matia Kasaija claims that unspecified amount of money was paid to undisclosed claimants for properties, which were sold by the Custodian Board prior to receiving repossession claims by original owners.

The MPs have challenged the Board to publish a list of the beneficiaries to confirm whether they did not pay ghost claimants.

Audit queries
The Auditor General queried unpaid compensation claims of up to Shs1.7b which lacked supporting documents. Without the schedule and respective claim files supporting the compensation amounts in question, the Auditor General said: “I was therefore unable to confirm the authenticity of these claims.”

Although Section 5 (1) of the Assets of Departed Asians Act mandates the board to sit at least once every month, the six ministers on the board are always too busy to meet.

Therefore, realising the required quorum to discuss the affairs of DAPCB has become a problem to the extent that at times the Board takes 13 months without meeting.

However, the mess at DAPCB did not start yesterday. It has been long-standing. The February 2011-March 2016 report of the Auditor General, Mr John Muwanga, revealed that the Board chaired by the Finance minister failed to maintain proper books of accounts and annual financial statements were not prepared. As a result, it took the Auditor General 15 years to audit the Board activities.

Probe underway
The MPs on Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) are currently investigating suspected abuse of departed Asians properties. They say this was a deliberate move to cover up the fraud since in the absence of these key documents, the Auditor General would not establish the status of the assets left behind by the Asians after their expulsion by president Idi Amin in 1972.

The departing Asians left behind properties which included businesses, stock and real estate. By law, under the Expropriated Properties Act, all properties that were left behind were vested in the government of Uganda under the authority and management of DAPCB.

Mr Keith Muhakanizi, the Secretary to Treasury, said: “I have always asked myself a question. Why haven’t those people gone to court? The laws are still there. If somebody took a departed Asian property wrongly or a certificate issued illegally, why can’t they go to court? Those who say Muhakanizi and others allocated properties to wrong people should go to court and challenge the decisions we took. The mess they are talking about was not created by Muhakanizi. The board’s failure to sit is not my problem. That board is composed of ministers and that was a mistake. The law was put in place during Obote II.”

Minister Kasaija declined to respond to audit queries. He said he would not talk to Daily Monitor because the newspaper one time offended him but he did not mention when or what the offence was.
The record of revenue collections shows serious cash haemorrhage.

For instance, Shs50.2m cash was not banked and lacked accountability documents at the time of audit. Another Shs15.2m was receipted as cash received but could not be traced in the bank statement. Also, about Shs500m was spent directly from the collection account without authority of the Board.

“It was also noted that Shs292.3m was withdrawn from the bank without explanation as to the nature and purpose of the payments… these actions are not in accordance with best practices in financial management... [inquiry into the use of these funds should be instituted],” the AG report reads in part.
Fake allocations
The AG inspected 139 properties in Jinja Municipality and found that the Board did appoint qualified professionals to value the properties. There was also no complete list of tenants and properties. The AG also discovered cases of duplicated allocation of properties, abandoned properties, irregular disposal of properties, arrears of ground rent and unscrupulous property managers. He says these irregularities have resulted in loss of government properties.

In one case involving irregular allocation of the departed Asian properties, the AG found that plots 36 and 38 on Nile Crescent, originally repossessed by Sikh Saw Mills & Ginners on May 1992, was irregularly allocated to Loyal Small Scale Industries. The original repossession was confirmed by the Custodian Board’s acting Executive Secretary on August 23, 2011. However, there was no minute of the Board authorising this allocation or written communication from the Board chairman to confirm approval. “Unless supported, the allocation remains unauthorised and irregular,” AG observed.
At least 42 properties were dubiously repossessed as per evidence in the October 2013 police investigation report. The report indicated that most of the properties, which were managed and owned by Gandesha, were fraudulently repossessed because there was no evidence that the former owners had returned to Uganda. The Board will be asked to explain this anomaly.

Of the 42 properties, 30 have been fraudulently sold and rights transferred to private individuals by a one S.N. Gandesha while the said properties were still under management of Custodian Board. After S.N Gandesha and company closed unceremoniously in May 2013, other property managers-- BAJ Property management and Property Angels-- claimed to have taken over the property left behind by Gandesha. The circumstances under which they took over the property remain unclear.

At least 28 of these Gandesha assets have since been classified as repossessed, indicating that they are no longer government properties. It is again not clear how these departed Asian assets under police investigation changed ownership.

The absence of a comprehensive assets register has complicated matters.
The Executive Secretary of the Departed Asians Property Custodian Board, Mr George William Bizibu, admitted when he appeared before Cosase that they did not have any information on the current ownership of several plots despite the records indicating that they were compensated by the government.

The fraudsters have exploited this lacuna to acquire government properties in various parts of the country, leading to loss of public funds. Daily Monitor learnt that the original gazette containing properties of the departed Asians disappeared mysteriously.

Custodian Board speaks out
The DAPCB officials told the Auditor General that efforts to trace the original gazette did not yield useful results despite several attempts to trace it from the Government Printer at Entebbe, Parliament Library, Makerere University Library, Attorney General’s Chambers and Ministry of Trade.

Speaking on behalf of the Custodian Board and without explaining what the “busy” ministers did to stop the scam, Mr Bizibu, in a 35-page confidential letter to Parliament on July 4, 2019, confirmed the plunder of properties of the departed Asians.

In the letter, Mr Bizibu highlighted the challenges in management of departed Asians assets and named individuals and companies involved in the scam and how they possessed some of the prime properties in Kampala, Jinja, Mbale and other towns. Although many companies with at least 200 suspicious properties are missing on his confidential list to Parliament, Mr Bizibu named nine.

In 2012, Justice Joseph Murangira of the High Court Land Division ruled against Custodian Board and made it clear that DAPCB was not the owner of Plot 24 along Kampala Road.

The claim to this plot according to the court was “made and created without jurisdiction, irregularly, unlawfully, illegally and therefore, it’s a nullity.”

The MPs have asked Mr Bizibu to explain why he included this particular property in his list to Parliament yet court quashed the ownership.

Explaining the mess at DAPCB, Mr Bizibu said: “The exercise of managing and disposal of properties under the Custodian Board was quite challenging to the people involved because of the time and the volume of literature involved especially where it was not easy to verify some of the documents presented to the board.”

However, he promised that with new technology in managing superior investigations and better sources of information, the challenges will gradually be eliminated. He is optimistic that with the continued support from government departments and agencies such as Land Registration, Police, Immigration and Foreign Services, the verification and analysis of the documents presented will gradually be achieved.

Mr Theodore Ssekikubo (Lwemiyaga) and other MPs called Mr Bizibu’s explanation an attempt to shield the Board from taking responsibility in the mess.
Mr Ssekikubo observed: “Property Services and other companies have claimed over 200 properties in the earlier Custodian Board report. However, in the final report sent to us their names don’t appear.”
Mr Bizibu has recommended to Parliament that the “fraudsters should be prosecuted.” He also said they should provide an account of all proceeds received from the DAPCB properties and district land boards should desist from intermeddling in the affairs of DAPCB.

The MPs vowed to raise the matter in the committee when Mr Bizibu returns and demanded that Mr Kasaija and other Board members (current and former) be tasked to explain their role in the Custodian Board mess.

Mr Kasaija and other ministers are expected in Cosase next week to explain the mess and what became of the Cabinet promise to wind up Custodian Board. Board members include Finance Minister Matia Kasaija, Lands minister Betty Amongi, Attorney General William Byaruhanga and State minister for Local Government Jenipher Namuyangu.

Background

The Asians, after their expulsion by president Idi Amin in 1972, left behind properties which included businesses, stock and real estate. By law, under the Expropriated Properties Act, all properties that were left behind were vested in the government of Uganda under the authority and management of DAPCB.

Although Section 5 (1) of the Assets of Departed Asians Act mandates the board to sit at least once every month, the six ministers on the board are always too busy to meet. Facets of the mess at the Custodian Board include theft of public funds through fictitious compensations, double allocation of properties, forged land titles, sale of assets without proper valuation and missing documents.