Numbers rule as Obote foundation dissenters lose battle

The Milton Obote Foundation (MOF) has a new board of governors. This followed an ill-tempered general assembly meeting on Tuesday during which some members walked out in protest as former chairman Ignatius Barungi shook off a challenge from the majority of board members and convinced the majority of assembly members.

On Mr Barungi’s side was Mr Chris Opio and Prof Patrick Rubaihayo. The trio was outnumbered in the board by former Chwa County MP Livingston Okello-Okello, Prof Faustino Orach-Meza, Ms Miria Obote and Mr John Okumu.

With Mr Barungi no longer in charge of the board following a fallout resulting from disagreements over a botched loan deal, it was probably time for the board to sign out of the eleventh floor of Uganda House. Luckily for them, their three-year term had almost elapsed.

And the Tuesday meeting, dramatic as it was, was probably a suiting climax to weeks of plotting and counter-plotting as the two camps looked to cancel out each other in what one camp calls a fight for transparency and the other says is about control.

If it was about control, Mr Barungi came out on top. Mr Nelson Ofwono, his favoured candidate for the board chair position, won comfortably.
“It was unfortunate; what happened was mob justice,” said Okello-Okello, “We are not going to let this matter go like this.”

Setting the scene
The MOF secretariat had, on March 9, advertised in the papers that the general assembly would sit on March 31 to, among other things, elect new members of the board of governors.

But the governors opposed to Mr Barungi’s leadership still thought that the election of a new board would not take place on that date.

They argued, citing MOF’s Articles of Association, that members who intend to become governors must be nominated, have their names published in the papers and wait for 60 days to elapse before the election takes place.

This did not happen ahead of the Tuesday election but, according to Mr Peter Walubiri, because of good reasons.

Mr Walubiri says were the proper procedures of electing MOF governors to be followed, there would be a vacuum because the term of the former governors was due to expire on April 16 yet the earliest the election of new governors would have taken place was April 25.

That way, he says, the assembly would have had to extend the term of the former board by some weeks to avoid the vacuum, in the process suspending some sections of MOF’s Articles of Association.

Alternatively, Mr Walubiri says, the assembly would decide to elect new governors and cut short the term of the former board by a few weeks, which would also have to be done by suspending some sections of their Articles of Association.

“The majority of the members thought that it was cheaper and more sensible to hold the elections then rather than later,” he said.

The power game
Mr Walubiri is the chairman of the three-member board of trustees, whose principal duty, he says, is to protect the immovable property of MOF. MOF owns Uganda House, a prime plot adjacent to it, a building in Industrial Area in Kampala and other properties across the country.

He backed Mr Barungi’s insistence on holding the meeting on Tuesday, he says, because “it was the only logical option”.

“There was paralysis in the old board,” Mr Walubiri says, “They failed to approve accounts because they raised issues that some money had to first be recovered. But accounts are not a vehicle for recovery of debts ... if they (accounts) state the correct position of the company’s finances, they have to be approved.”
Mr Walubiri adds: “What were the members to do if the governors could not work together but were just running to the media to manage the affairs of the company?”

MOF’s accounts were not approved by the board because, members argued, the money that had been wrongly paid to Mr Mahmud Bharwani had to first be refunded.

During the assembly meeting, BVL & Co, MOF’s external auditors, classified the company’s accounts as “qualified”, refusing to pass them as okay. The reason was that some money still had to be recovered from Mr Bharwani (Shs361m paid to him without documentation and Shs236 paid to him in excess as interest on a Shs3.9b loan).

The power of numbers
The assembly resolved to proceed with electing a new board, anyway, and tasked it to recover the said monies by the end of June.

There were heated moments during the assembly when Mr Barungi rose to present what he called the “Governors’ Report”, which four of the seven disowned. Mr Okello-Okello and Prof Orach-Meza say they suggested that since the majority of the governors had not seen the report and therefore could not own it, its title should be changed to “Chairman’s Report”.

This suggestion, also, was defeated by the numerical superiority of Mr Barungi’s camp in the assembly.

Mr Barungi’s side seems to have mobilised well ahead of the assembly, and their ranks were further swelled by the six new members of the assembly who were added only in October.

Mr Okumu, our sources say, attempted to challenge the membership of the six in the assembly, saying their admission to the assembly was irregular. During that meeting in October, Mr Barungi was away and could not chair and therefore designated Mr Opio to chair the assembly on his behalf.

A member of the assembly objected to Mr Opio chairing, saying according to their rules, the person to chair in the absence of the board chairman is to be elected during the assembly and not designated by the chairman.

Mr Walubiri says this issue was resolved then in the October assembly and that the member “did not press the matter further”.

But Mr Okumu maintained that the member who raised the objection, Mr Mangeni Aurra, was just overruled by Mr Opio and that therefore the admission of the six members was null and void based on this argument. Mr Barungi overruled him.

Having attempted to pull all the stops in vain, Mr Okumu, Prof Orach-Meza and Mr Okello-Okello left the meeting and did not participate in the voting. Ms Obote stayed for the whole duration of the meeting and, according to a member who attended, “would vote on some issues and abstain on others.”

Mr Okumu, the only member of the old board who was eligible for re-election to the board because he had served only one term, was also in the running, albeit in absentia. Having learnt late that the elections could take place on Tuesday contrary to what he had thought earlier, he had filled in nomination forms the day before the assembly meeting.

But the tide, it seems, had so turned against his camp that he seemed to stand no chance of winning. He polled nine votes in absentia, which were not enough to return him as a governor. He, together with the other board members, however, remains members of the assembly.

What is not very clear, however, is why the majority of the assembly members turned against the individuals who said they stood for accountability within the party. Mr Walubiri thinks he knows the answer:

“Mistakes were made and it seems that some money went to people who should not have got it and needs to be returned to MOF,” Mr Walubiri says, “But some of our colleagues failed to focus on recovering the money and turned the issue into a personal war.”

Mr Walubiri says the Okello-Okello report “was doctored”. “Everybody who they say they talked to for the report has denied ever having given them information.”

Mr Okello-Okello, however, says their report “was thorough, scientific and carefully done”.
Another of Mr Barungi’s key triumphs is that the report, which on February 26 was adopted by the board in a split decision of four to three, may not be kept as a record of MOF since the minutes of that meeting were not approved.

The board meeting that was supposed to approve the minutes, the one of March 26, broke off prematurely because the minutes of February 26 were not presented for adoption as the day’s agenda showed. Three of the four members present blocked the meeting then, but they never got another chance for another board meeting to adopt the minutes.

So Mr Barungi and company signed out and in came Mr Ofwono and his team – Hamza Sewankambo, Rebecca Ereemye, Matia Kisembo, John Yuma, Franklin Mugizi and J R O Elangot. Mr Okello-Okello, Prof Oraxh-Meza and Mr John Okumu say they remain aggrieved and that they will do something about it.

The Background

Three weeks ago, Sunday Monitor broke the story that sharp allegations of fraud contained a report produced by a three-man team led by former Chwa County MP Livingston Okello-Okello had divided Uganda House. The other committee members were Prof Faustino Orach-Meza and Prof Patrick Rubaihayo.

In the report, titled “Irregularities associated with sourcing of $1.5m as equity fund for the Plot 10, Kampala Road Project,” board chairman Barungi, board member Chris Opio and former general manager C. D. Mindra are accused of conniving to smuggle sections into board minutes and basing on that to draft a board resolution authorising them to borrow money and mortgage MOF properties.

The three are further accused of mismanaging the borrowing of Shs3.9b from Mr Mahmud Bharwani. MOF borrowed the money and placed it on a fixed deposit account in Diamond Trust Bank, having paid all the interest due to Mr Bharwani for the 12 months in advance.

The Shs3.9b was repaid to Mr Bharwani in seven months but no attempts were made to recover from him the interest for the remaining five months.
Mr Barungi admitted that mistakes were made in handling the loan to Mr Bharwani but he, together with Mr Opio, denied any wrongdoing. He said MOF would move to recover from Mr Bharwani Shs155.7m i.e. five months interest or 162 days to be exact ... which had been paid to him in advance.”

The report concluded that sections were “smuggled” into the minutes of the board meeting held on July 18, 2013, and suspected “a conspiracy to smuggle the inserts into the minutes behind the back of the Board”.

“Testimonies received by the select committee showed that the inserted sections were drafted by management, edited by governor Chris Opio and approved by chairman board (Mr Barungi). This was meant for the minutes to rhyme with the resolutions that were already drawn up, signed and registered,” the report said in part.

The committee concluded that since “the resolutions were based on fraudulent minutes, the resolutions are themselves fraudulent”.

It recommended, among other things, that “the implicated officials should apologise to the board of governors and to the board of trustees of MOF in writing and reconsider their membership of the Foundation.”

The committee further suggested that a forensic audit is “instituted immediately to cover the last three financial years for both MOF and UHIL (Uganda House Investments Ltd)” and that MOF should be delinked from Mr Bharwani.

MOF and UPC

MOF, founded in 1964, was supposed to have a symbiotic relationship with the Uganda Peoples Congress and support its social-democratic agenda.

A number of people think this is not happening to the anticipated degree and there has been unending debate about the relationship of the two bodies, which resulted in a consent judgement some years back.

Even then, however, some people still feel that MOF does not cooperate with UPC enough. One such people is Olara Otunnu, president of UPC. Contacted for this article, Mr Otunnu said he had no official information about the developments in MOF.

As UPC president, he is debarred by MOF’s rules from taking up a leadership position in MOF and there doesn’t seem to be a requirement on the part of the MOF leadership to share information with UPC.

During the press briefing at which Mr Otunnu announced that he would not seek another term as UPC president, he said: “The current state of relations between the party and Milton Obote Foundation is highly unnatural,” he said, “We have lost the history, logic and purpose of this relationship. There is need to objectively and soberly examine this state of affairs, to trace the history and purpose of this special relationship and to restore it to its natural symbiotic logic and level.”