Former NSSF MD Byarugaba, co-accused ordered to refund Shs5b

The former National Social Security Fund (NSSF) boss Richard Byarugaba has been found culpable for orchestrating a web of irregular payments and unethical practices during his tenure at the Fund.

An Inspectorate of Government (IG) report seen by Monitor found that Mr Byarugaba made “costly management and financial decisions”, which enabled losses at the Fund.

READ: I cried following NSSF allegations, says Byarugaba 

The Inspector General of Government (IGG) has ordered that Mr Byarugaba together with NSSF’s Finance Director Stevens Mwanje refund more than Shs5 billion lost by the Fund as a result of their actions. Failure to do so will lead to the prosecution of the duo.

“Mr Richard Byarugaba and Mr Stevens Mwanje should refund a total of Shs4,400,854,827 in equal instalments for the loss occasioned to the Fund when they authorised irregular payments to staff who exited under the voluntary early retirement programme within a period of six months,” the report states, adding that the money should be deposited in the IG Asset Recovery Account with the central bank.

IGG Beti Kamya ruled that the Shs4.4 billion payment that Mr Byarugaba and Mr Mwanje authorised was “not backed by law and outside the provisions of Section 87 of the Employment Act, and Section 23.12 of the NSSF Human Resources Policy Manual, 2017.”

In a 61-page report into the allegations of mismanagement, abuse of office and corruption by Mr Byarugaba, the ombudsman recommends that the powers of the Gender, Labour and Social Development minister over the NSSF budget be clipped.

Further, Ms Kamya says Mr Byarugaba engineered the resignation of two board members, a move that cost NSSF more than Shs687 million.

She has directed that Mr Byarugaba and Mr Mwanje refund the money. Condemning the duo to costs, the IG investigators found that both Mr Byarugaba and Mr Mwanje should have advised the minister that the only way the Board could be reconstituted was if a vacancy on the NSSF board occurred.

The Shs687m that Mr Byarugaba and Mr Mwanje are required to refund was paid to Mr Fred Bamwesigye and Mr Julius Bahemuka outside the law.

Mixed scorecard
Mr Byarugaba ran the Fund for a decade until December last year when he was compelled to leave office, following allegations of corruption, among others, by Labour minister Betty Amongi.

In the report, Ms Kamya credits Mr Byarugaba for registering “remarkable growth of accumulated contributions and net worth from approximately Shs1.7 trillion to approximately Shs17 trillion.”

She also adds: “Although [Mr Byarugaba] made some costly management and financial decisions, they pale compared to the robust (strong and healthy) status of the Fund during his administration, which happens to be the core mandate and key performance indicator of the Fund’s chief executive officer.”

ICYMI: Road to Kapeeka and origin of the crisis at NSSF 

In March, a parliamentary select committee recommended Mr Byarugaba alongside his former deputy—who is the current NSSF boss—Patrick Ayota, be investigated with a view of possible prosecution for abuse of office, corruption and conspiracy to commit a felony.

The House report recommended that minister Amongi resigns “with immediate effect” for alleged abuse of office. Both Ms Amongi and Mr Byarugaba poured cold water on the House report. Attempts to speak to Mr Byarugaba on the findings by the IGG were futile by press time, but in an interview with Monitor in March, he said he was waiting for the findings of the investigation by the ombudsman.

Refunds
The current NSSF management has also been directed to initiate the process of recovering the irregular 10 percent contributions made to the current Board members totalling Shs103m.

Several individuals, including Mr Byarugaba, have also been directed to make refunds to NSSF in respect of the trips where they spent less days than what was paid for. In regard to 2019, for example, Mr Byarugaba has been asked to refund Shs8.4m.

In regard to 2022, Mr Byarugaba should refund Shs8m for spending 17 days out of the 21 days paid to him. Others ordered to make refunds are Gerald Kasaato (Shs5.9m), Muhammad Kasumba (Shs7.2m), Ibrahim Buya (Shs7.2m) and Keneth Owera (Shs5.4m). 

Mr Gerald Kasaato, the NSSF chief investment officer, and Ms Faith Achieng have been directed to refund $1,620 (about Shs5.9m) in per diem received for a trip neither took.

Mr David Nambale, the former NSSF corporation secretary, has been directed to refund Shs1.5m, which he spent on personal telephone calls while he was attending a training course in the United Kingdom.

All funds are to be deposited on the Inspectorate of Government Asset Recovery Account.

Prosecution
The IGG has recommended that several people “who fraudulently accessed their benefits from NSSF by misrepresenting that they had joined the public service whereas they had not, should be prosecuted by the Office of the Director of Public Prosecutions (ODPP) for false pretences and uttering false documents against NSSF, contrary to Sections 304 and 351 of the Penal Code Act (Cap 120)” be prosecuted.

These include Ms Jane Nabbuto Kavuma, Mr Eddy Muleme, Mr David Mwebaza, Mr Bylon Ayesigyeruhanga, Mr John Byaruhanga Ruremire, Mr Kiirya Nkenga Muzamiru, Mr Samuel Karuhanga, Mr Henry Butele, Ms Faith Nabakooza, and Mr Innocent Katungi.

Key takeaways from the ombudsman’s report

The report absolves the Richard Byarugaba-led management of corruption regarding the acquisition of land in Nakigalala, Wakiso District at an exaggerated price of Shs400b. The report concludes that the estimated cost of Nakigalala land in the FY 2022/2023 budget remained Shs250b as it was in the budget of FY2019/2020 to 2021/2022.

KALINAKI: Hon. Amongi, I have some questions about the things going on at NSSF

The report concludes, however, that the minister had legitimate concerns to claim that the land at Nakigalala had ownership disputes.

Whether Byarugaba took bribes and commission through waiving of NSSF contributions of workers.
Mr Byarugaba waived the penalty of Uganda Railways Corporation by 94 percent upon intervention from the then Finance minister. Tororo Cement penalty was not waived because they had not applied for the waiver. The penalty for UBC was not waived because they had not yet paid the outstanding amounts of members’ contributions. It is, therefore, not true that he waived members’ contributions or arbitrarily waived penalties as alleged.

Whether the MD rejected initiatives to scale up registration of new members in industrial parks (especially Kapeeka). There was no evidence to support the allegation.

Whether previous recommendations by the IGG in respect of the sale of land at Bakuli were not implemented.

There was no evidence. The directive was to be implemented by the Finance minister. The MD had no direct role in implementation of the IG recommendations in respect of the sale of land at Bakuli.

Whether the MD and his cohorts like the head of investments used the budget as a means of siphoning money out of NSSF through exorbitant expenditure on foreign trips

There was no evidence. The overall expenditure on trips was within budget for all the financial years under review.

Whether the MD refused to implement the minister’s directive to amend the NSSF budget to include Shs6b for purposes of strengthening compliance and enhancing partnerships and collaboration through stakeholder engagements.

The minister is empowered under Section 29(3) of the NSSF Act to amend the budget. Therefore, the minister was within her right. The refusal by the MD to implement the minister’s directive was an act of insubordination, which can be handled in accordance with the NSSF disciplinary policies.

Whether the MD attempted to defy the President’s directive in regard to the Yusuf Lule Road real estate project

While NSSF was in the process of procuring a contractor for the Yusuf Lule project, the MD received a directive from the President to award the contract to SMS Construction Co Ltd in support of Ugandan companies, which the MD complied with. The process to procure SMS Construction Co Ltd is ongoing. 

Whether there were irregularities in the procurement of the Pension Administration System (PAS) and whether there was a systemic failure that was not addressed.

There was no evidence. However, the system experienced issues when it first went live. During the stabilisation phase of the project, most of these issues were resolved by the vendor and the NSSF team.

Whether NSSF launched a sham smart card which did not offer any value to members and whether the said smart cards were printed at an exorbitant cost.

The smart card project was not a sham. However, the project failed due to poor project management, lack of project risk management and control.

Whether NSSF invested significantly in point of sale machines that later failed.
NSSF should always conduct thorough feasibility study and market assessment before sanctioning the implementation of IT projects. In addition, continuous monitoring and evaluation of IT projects is key to the success of IT projects.

Whether NSSF staff were conniving with masquerader claimants for the Lubowa Housing land
There was no proof of connivance between NSSF staff and the claimants. The ownership disputes are being handled in courts of law.

Whether a kickback was paid to the MD and the investment team of NSSF during the purchase of MTN and Quality Chemicals shares by NSSF. There was no evidence to confirm the allegations.

Whether Mr Byarugaba received gratification from Symbion in form of redesigning his house in Mbuya in exchange for the contract of the proposed development of Yusuf Lule Road plot
There was no evidence.