Auditing agencies unearth Shs10b OPM scam

Two government auditing agencies have unearthed serious irregularities in procurement of relief items by the Office of the Prime Minister (OPM) worth Shs10b.

Two forensic audits by the Office of the Auditor General (OAG) and the Public Procurement and Disposal of Assets (PPDA), dated September 7, 2021 and April 12, 2022, respectively, put senior OPM officials on the spot for allegedly causing financial losses to the taxpayer.

Copies of the findings seen by this newspaper point to alleged forgeries, collusion between some officials and suppliers, and failure to adhere to key critical procurement regulations.

Our analysis of a cache of official documents of the contentious procurements, which dovetails with findings by government auditors, shows that contracted companies supplied items without a contract specifying quality, leading to delivery of substandard items.

The auditors found some OPM officials culpable of undertaking contracts with values exceeding Shs200m without the Solicitor General’s clearance, contrary to the rules.

The OAG is the supreme audit government institution mandated by the 1995 Constitution to produce reliable and high quality reports while the PPDA on the other hand is a parastatal responsible for regulation and supervision of procurement and disposal of government-owned assets.

Mr Keith Muhakanizi, the OPM’s Permanent Secretary, said he was yet to receive copies of the two forensic audit reports from the PPDA and OAG.

He, however, confirmed that some of the bureaucrats he supervises had either been interdicted or charged in court over allegations of mismanaging last year’s Shs10b procurement.

Those interdictions were lifted after six months in line with provisions of the Public Service Commission Regulations, 2009, the PS said, because investigations were incomplete and that he feared litigation by the accused.

“Once I get the two forensic audit reports, I will then seek further guidance from the Auditor General on the course of action to take. I will look for those reports and then forward them to the prosecutors,” Mr Muhakanizi said.

Prime Minister Robinah Nabbanja lifted the lid on the alleged fraudulent contracts during a July 20, 2021 trip to Kasese District to assess the destruction caused to life and property after River Nyamwamba burst its banks, displacing dozens of families.

She discovered that government officials had given displaced persons poor quality foodstuff, including maize and beans, and non-food items such as blankets, mosquito nets and tarpaulins.

In a July 22, 2021 letter, the premier directed then head of State House Anti-Corruption Unit, Col Edith Nakalema, to investigate the questionable procurement.

Col Nakalema tasked police detective James Tweheyo to do the needful, but he instead reached out to OAG and PPDA to conduct forensic audits.

Some of the officials were interdicted and charged with, among others, corruption and abuse of office.

They included Godfrey Kaima, the then accounting officer, Cyprian Dhikusooka, the principal disaster management officer, and procurement officer Kizito Mugerwa.

Others were Rose Nakabugo, the then acting commissioner disaster preparedness and management, Principal Assistant Secretary Daudi Bukomoko, and Martin Odongo, disaster management officer. But Mr Bukomoko was struck off the charge sheet.

The then head of Procurement and Disposal Unit (PDU), Ms Agnes Katembeko, was interdicted but not charged then. However, she was charged on Friday before the Anti-Corruption Court and released on bail.

Mr Muhakanizi could not explain why Ms Katembeko wasn’t charged then, but noted that this doesn’t mean that she can’t be charged if there is fresh evidence.

Auditors observed that the OPM incurred a financial loss of Shs780m as a result of payment for non-food relief items that did not meet the Uganda National Bureau of Standards (UNBS) quality standards. They attributed this to poor supervision and negligence by the contract manager.

However, Mr Dhikusooka, who was the contracts manager for the procurement of food items, told auditors in the report that he cannot be held responsible since there was no contract outlining specifications for him to enforce.

On March 17, 2021, the First Deputy Prime Minister, Gen (Rtd) Moses Ali, wrote to the Finance ministry, seeking Shs51b to respond to the effects of floods and landslides in various parts of Uganda.

Cabinet had earlier approved at least Shs66b under Minute 345 (CT2020)99 for purchase of food and non-food relief items. However, Finance minister Matia Kasaija in an April 20, 2021 response informed Gen Ali that his ministry could only avail OPM Shs10b for relief support in addition to Shs15b earlier disbursed.

Mr Kaima, working as an acting accounting officer, submitted a breakdown of the expenditure of Shs10b to Mr Kasaija as follows: food(Shs7.6b), non-food relief (Shs1b), fuel and lubricants (Shs599m), inland travel (Shs578m), advertising and public relations (Shs42m), allowances (Shs93m), and maintenance of vehicles (Shs67m).

The OPM was to buy 2 million kilogrammes of maize flour, each at Shs2500, 10,000 pieces of tarpaulins at Shs37,000 per piece,10,000 pieces of blankets, each at Shs30,000, and 8,000 pieces of mosquito, among others.

Our investigations show that Finance ministry deposited Shs10b on OPM’s Contingency Fund Bank account number 000030088000063 held at Bank of Uganda on April 22, 2021.

No contracts

Auditors found out that there were no binding contracts between the OPM and the suppliers.

Even Local Purchase Orders (LPOs) issued by Mr Kaima to the suppliers didn’t have specifications upon which they would use to buy items. Besides, the LPOs were issued after items had already been delivered to OPM stores.

 “There were no binding contracts made with the providers before supplies were made, which was irregular. This should have been enforced by the head procurement and disposal unit for the endorsement of the accounting officer to ensure that all procurement was undertaken with valid contracts in place,” the Auditor General’s report states.

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This anomaly is further corroborated by the PPDA report, which states the May 21, 2021 LPO number 2438 for the supply of tarpaulins worth Shs369.5m  by Canaan Construction and Supply Ltd, was not signed by the supplier and it did not contain any specifications and terms and conditions.

The report shows that the batch of blankets picked from Kasese and OPM stores failed the test parameter of weight aimed at assessing the mass per unit area despite the fact that the items were certified by Kenya Bureau of Standards (KEBS).

However, Ms Immaculate Asingwire, the managing director of Emax Supplies Logistics Uganda Ltd, which supplied the blankets, told auditors in that there were no specifications attached to the bid document and the LPO issued for the blankets.

“The company is not aware of any complaint about the quality of blankets supplied. A sample for the blankets was not provided prior to supply because it was not a requirement at the bidding stage,” the Auditor General’s report quotes her as having said.

The blankets supplied by Ms Asingwire’s company were measuring 127cm x 130cm, with a brand name Motomoto. However, the dimensions were not stated in the bid document since the specifications were not issued to the company, but the company had supplied similar blankets to OPM.

LPOs issued to the suppliers of relief items copies of which Daily Monitor has seen have no specifications.

Auditors noted that this was contrary to Section 76 (3) of the PPDA Act, 3003 which states that an award shall be confirmed by a written contract signed by both the provider and the procuring and disposing entity.

Mr Kaima declined to speak to us for this story when contacted last week, saying he was unable to discuss a matter before court.

The reports also faults Mr Kaima for awarding contracts to suppliers beyond the Shs200m threshold without the Solicitor General’s approval.

He wrote to the Solicitor General on May 6, 2021 seeking clearance of the contract for emergency procurement of blankets.

By this time, the contracts committee had already awarded the contract to Emax Supplies and Logistics Ltd.

However, Ms Brenda Namukasa, writing on behalf of the Solicitor General, responded on August 2, 2021, informing Mr Kaima that his request had been rejected because there were no signed minutes of the contracts committee meeting.

“This is to inform you that we are unable to clear the draft contract because the full copy of signed contracts committee minutes approving procurement was not attached for consideration,” she wrote. Our analysis of the documents from the OPM shows that the contracts committee led by John Kalule awarded the contract to Emax Supplies and Logistics Ltd on May 5, 2021, a day before Mr Kaima wrote to the Solicitor General to seek clearance.

Mr Kaima had also issued commitment letters to suppliers of both non-food and non-food relief items on May 7, 2021.

“This letter serves as a commitment to procure the above supplies. However, you will in due course be notified online with an electronically-generated Local Purchase Order as evidence of the transaction and to proceed with your payment,” Mr Kaima noted.

According to the forensic audit reports, he told auditors that the contracts that required clearance by the Solicitor General had not been submitted probably due to negligence by some officers whom he didn’t specify.

When asked about Mr Kaima’s revelation, Ms Katembeko said the letters were supposed to be delivered by one Mugerwa Kizito, a procurement officer from the PDU, to work with Mr Kaima and submit the letter to the Solicitor General for approval.

“The truth is that when a procurement is received, the head of PDU sends it to an officer and this officer makes sure that it follows all regulations including submitting that contract to the Solicitor General. In that particular case, I told Mugerwa Kizito, who was handling that procurement, to forward the contracts to the Solicitor General, but he did not,” she said.

Mr Mugerwa in a separate interview denied having been asked to take the draft contract letters to the Solicitor General for approval.

“The letter was sent to the Solicitor General on May 6, 2021. However, on May 6, the bidders had not yet submitted their bids. They submitted on May 7 and the evaluation committee to which I was a member sat on May 7. So how do you say you drafted a contract and sent it for clearance on May 6 when the bids were not yet submitted? Does that make sense? It doesn’t add up. The good thing is that we are in court and the truth will come out,” he said.

No evaluation report

According to the PPDA report, the OPM’s contracts committee awarded them to suppliers before the evaluation committee could sit and undertake the required evaluations, which was contrary to the requirements by the procurement regulations.

The evaluation committee is, among others, mandated to evaluate the bids using the criteria stated in the solicitation documents, prepare evaluation reports and recommend in the report which bidder should be awarded the contract.

The PPDA report shows that the contracts committee sat on May 5, 2021 while the evaluation committee sat two days later.  Auditors noted that the contracts committee ought to have relied on a valid evaluation report for its sitting on May 7, 2021.

The Monitor has seen a copy of a purported May 5, 2021 document for the approval of the evaluation report, contract award recommendation and draft contracts for the supply of relief items.

The approval was based on the contracts committee minute OPM/05/CC 42/20-21.

Under this purported report, Emax Supplies and Logistics Ltd was recommended for the supply of 10,000 pieces of blankets at Shs298m, Hek Ventures Uganda Ltd to supply 8,000 pieces of mosquito nets at Shs112m while Canaan Construction was to supply 10,000 pieces of tarpaulins at Shs36m.

It was signed by Ms Katembeko, chairperson contracts committee John Kalule and the secretary contracts committee, Ms Annet Musinguzi.

However, Mr Dhikusooka told auditors that he and his committee members sat on May 7 to make their report and not on May 5 as claimed by the contracts committee.

Additionally, he opined that there was a notice of best evaluated bidder on May 7, 2021 and there was none after May 10 2021 as claimed by the contracts committee, the auditors reported.

An analysis of documents shows that the contracts committee had recommended the same three companies which the contracts committee had earlier awarded the contracts.

Mr Kalule neither received nor replied to our messages. An investigator privy to the matter said the officials in the procurement unit could have leaked the information about prices to the suppliers so that they could quote lower prices and win. We couldn’t independently verify this claim.

Though the evaluation committee had recommended the procurement-by-quotation method as stated in the bid, the contracts committee instead used a restricted bidding method.

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Ms Katembeko told Daily Monitor that she couldn’t be held responsible because she only signed as a head of procurement, adding that the actual contract was awarded by the contracts committee. She also said they used the restricted bidding method of procurement because there was an emergency and people urgently needed relief items. Asked why the contracts committee where she sat as a secretary awarded contracts to suppliers without approval of the valuation committee, Ms Musinguzi said it is false.

“That is a mere allegation. Allow me to call you back please,” she said.

Ms Musinguzi later called us back and said she couldn’t discuss the matter since it is still in court. She has since been transferred to the Ministry of Health as the head of human resource.

When contacted on Friday, Mr Dhikusooka too declined to speak to us, saying the matter was still in court.

Forgeries

The reports show that there was presentation of different bidding firms to give a false impression of competition during the evaluation process and yet they belonged, or were related, to each other. For instance, a review of bid documents shows that Wanja Trading Co. Ltd and Shy (U) Ltd, who bid for the supply of maize flour, had Mr Yunus Serwanja and Ms Shakira Nalwanga as directors. The companies also had the same postal address of 28411.

Both companies were awarded the contract and each supplied 70,000kg of maize flour at Shs175m.

Additionally, delivery notes for Dirsma Enterprises, Mazaka Grocery and Haban Enterprises, which supplied maize flour and beans worth Shs220m, were all signed by Dalaus Katongole, suggesting he, his company and employer supplied the goods.

Besides, Ostrich International Ltd bid to supply 30,000kgs of beans at Shs120m, but was instead awarded and paid Shs75m for 30,00kgs of maize flour which is different from the amount in the bid. At least four firms were awarded contracts without evidence of submission of bids.

Whereas the purpose of the procurement was to provide relief items for flood affected persons across the country, auditors found out that according to the OPM Stores Ledger, most of the food was distributed to districts in the north, staff of the OPM and other individuals.

Irregular payment

It was found out that acting head of procurement Katembeko through an internal memo to the OPM’s accounts officer Joweria Kemanzi, requested for payment of Shs7b to the 38 firms that supplied maize flour and the 18 that supplied beans, stating that the service providers had duly offered the services and documents were verified.

This is corroborated in July 29, 2021 accounts by Daudi Bukomoko, then for Mr Kaima, to police detective Justus Twinamatsiko.  He noted that Ms Katambeko told him that all audit queries had been addressed so he could go ahead and process the payment.

Mr Bukomoko repeated the same statement during an interview with Stephen Ojalla from the Office of the Auditor General on February 23, 2022.

However, Ms Katembeko said all the issues were cleared by the internal auditor after verifying the procurement file which she sent her.

We were unable to speak to the OPM’s Senior Internal Auditor, Ms Faustah Nakabembe, to verify this claim.

M0SQUITO NETS

Auditors also found out that the mosquito nets delivered by OPM to Kasese were substandard as per UNBS, according to the Auditor General’s report.The nets from both locations failed on the mesh count and grammage besides failing the labelling requirement. The nets didn’t also bear company name and country of origin details, among other required labelling.

However, an audit verification exercise conducted in the OPM stores in Namanve on August 23, 2021 found that the mosquito nets issued from OPM stores in Namanve to Kasese flood victims were round shaped and had been delivered from an earlier procurement by M/s Double Way General Supplies Ltd.

The mosquito nets from HEK Ventures, which were procured in May during an emergency procurement for disaster victims, hadn’t been supplied to the OPM by the time Ms Nabbanja visited Kasese. Both reports by PPDA and OAG state that the nets which the Prime Minister rejected during her visit to Kasese, were supplied by M/s Double Way General Supplies Ltd and not HEK Ventures.

Other opm scandals

• In 2012, this newspaper broke a story of how bureaucrats in the OPM spirited away in excess of Shs60b pooled by donors to rebuild war-scarred northern Uganda.  The exposé prompted development partners to freeze aid toUganda, pending prosecution and administrative action against those culpable, and wide-ranging reforms in public finance management.

 • In December 2018, the IGG  interdicted three senior OPM staff for allegedly inflating the price of a 0.241-acre plot on Sir Apollo Kaggwa Road in Kampala from Shs800m to Shs1.1b.

 • In 2018, a joint government-United Nations High Commissioner for Refugees’ investigations found that officials had inflated the number of refugees in the country by 300,000 to 1.4 million.