Fresh queries over car deal with Russian firm

Officials in the Finance ministry had earlier raised red flags about the bonafides of a Russian firm at the centre of plans to install tracking devices on all cars in the country.

Highly-placed sources told this newspaper that the failure to navigate this hurdle and seal a deal with M/S Joint Stock Global Systems was one of the reasons former Security minister Gen Elly Tumwine was fired in the last Cabinet reshuffle.

It has since emerged that the firm is facing bankruptcy proceedings and has not managed a project of this magnitude anywhere in the world.

New Security Minister Maj Gen Jim Muhwezi last Friday signed a contract with M/S Joint Stock Global Systems to install the devices as one of the measures to fight crime in country.

Experts now warn that the 10-year contract falls foul of Uganda’s procurement law that renders a firm facing bankruptcy-related litigation ineligible for government contract.

Information hoisted on a Russian website that tracks business conduct shows that that another Russian company sued M/S Joint Stock Global Systems in the Arbitration court in Moscow last September, seeking declaratory orders of bankruptcy against it.

A short document in the Russian arbitration court registry indicates the case was accepted and is currently ongoing – despite majority of the details undisclosed.

The idea of tracking all vehicles and motorcycles emerged  in 2018 after the assassination of Assistant Inspector General of Police Felix Kaweesi and, before him, more than a dozen high-profile government officials and Muslim clerics.

In an address to Parliament in June of that year, President Museveni indicated his government would pursue Closed Circuit Television (CCTV) surveillance backed with digital beacons on vehicle and motorcycle number plates.

Later that year, according to minutes of meetings at the Office of the Prime Minister shown to this newspaper by a source knowledgeable about the matter, officials of M/S Joint Stock Global Systems were introduced to a technical working committee of Ugandan government officials.

State House sources told this newspaper that a team of security officials traveLled to Russia to conduct due-diligence on the firm.

“They discovered that it was a briefcase company but because they were soldiers, they feared to contradict the commander-in-chief who had assigned them and wanted the matter resolved urgently,” a source familiar with the matter said. They asked not to be named because of the sensitivity of the matter.

“[Gen] Tumwine tried to push the matter through Finance but the officials there said the firm was suspect and the nature of the contract would be challenged in Parliament,” the source added. “That failure sealed [Tumwine’s] fate.”
The former minister could not be immediately reached for comment.

The contract, whose details remain privy to only top security and government officials, has now been tossed up for public scrutiny following the reports of bankruptcy litigation, which remain undisputed, meaning M/S Joint Stock Global Systems could potentially use undisclosed earnings from Ugandan deal to settle its dues and get a fresh lease of business life.

The firm is currently listed in Russia as a Small and Medium Enterprise employing only 10 people, which is at variance with many companies that have executed similar large-scale government contracts.

In 2015, the government contracted SGS for verification and standardisation of vehicles and part of the documents that the company submitted included its record of work, number of employees, in their hundreds, and a record of readiness to execute works, none of which the Russian firm submitted before the contract signing.

Leaked documents online seen by this newspaper indicate that the company will need three months to implant at least 1,000 digitally-surveilable number plates. Unless the company bolsters its capacity to ramp up installation of the digital tracker chips, it would, at the current levels inked in the contract, only be able to attach the surveillance devices to 4,000 vehicles a year or 333 a month or 11 per day.

At that rate, M/S Joint Stock Global Systems would take about 575 years to install the digital trackers on Uganda’s 2.3 million registered cars.

Security Minister Maj Gen Jim Muhwezi, who initially announced the sudden contracting of the Russian firm, promised over two days to respond to this newspaper’s inquiries about the circumstances under which a foreign company facing bankruptcy litigation ended up a favourable company for a major security-related contract, but did not do so.

We were unable to reach officials of the Russian company because the auto-response when we called the cellphone number that they indicated in documents filed to Uganda government, was “not registered on the MTN network”.

The revelations raise questions about the due diligence conducted by government agents and the influence of the deal brokers over them.

When Daily Monitor first published the story, Uganda Law Society and rights activists raised questions about potential breach of privacy of motorists and were concerned the collected data may intentionally be misused by people with access to it to victimise surveillance victims.

Scholar Solomon Asiimwe, a lecturer of security studies, argued that an accompanying law should be enacted to authorise the government to conduct the planned surveillance and safeguard collected data by providing that only courts can allow the government to use such data.

The increased investment in surveillance systems, most of it done using domestically borrowed money with high interest rates, also runs counter to the institutional Human Security plan drawn up in the National Development plan that calls for increased investments in social infrastructure and food security as a long-term plan of reducing crime.

The firm
The firm [M/S Joint Stock Global Systems] is listed in Russia as a Small and Medium Enterprise employing only 10 people, which is at variance with many companies that have executed similar large-scale government contracts.

Background

Uganda commenced a journey of data enabled investigations for crime in 2018 after the brutal assassination of AIGP Felix Kaweesi and, before him, more than a dozen high-profile government officials and Muslim clerics.