House coffee deal probe report leaks

Legislators on the parliamentary Committee on Trade have recommended that the agreement the Government of Uganda (GoU) entered into with Uganda Vinci Coffee Company (UVCC) to add value to the country’s green beans be cancelled, a draft report Saturday Monitor has seen shows.

The leaked report—confirmed by one committee member—states in no uncertain terms that the deal inked this February violated a raft of legal provisions. The violated provisions cited include: Articles 2, 79 and 152 of the Constitution of Uganda; the Income Tax Act Cap 340; the Value Added Tax Act Cap 349; the Excise Duty Act, 2014; the National Social Security Fund Act Cap 222; the Uganda Citizenship and Immigration Control Act Cap 66; and Local Government Act Cap 243.

READ: Faces behind Uganda Vinci Coffee unveiled

“The agreement executed between GoU and Uganda Vinci Coffee Company Limited is unconstitutional, illegal, void, ab initio [from the beginning] and unenforceable at law,” the reports reads in part.

“The government is directed to terminate this agreement and report to Parliament within six months from the date of adoption of this report,” it further adds.

Once cancelled, Parliament recommends that a fresh process of negotiations can be done by the government.

The report—concluded on April 28—contains conclusions arrived at after the said committee interrogated, among others, key witnesses within Uganda’s coffee fraternity either directly or indirectly.

It comes after a week-long session held at the backend of April.

While the lawmakers spoke candidly during that period, most of them refused to go on record when we sounded them out about the leaked report.

Kasaija, Ggoobi fate

According to the draft report, lawmakers on the trade committee have also ruled that GoU officials who took part in the deal be punished.

Finance minister Matia Kasaija signed the agreement on behalf of the GoU, with Mr Ramathan Ggoobi—the Secretary to the Treasury—acting as a witness.

“The officials who committed government to such illegalities should be penalised as a deterrent mechanism to stop similar occurrences in future,” the draft report states.

It also adds: “The Attorney General, Mr Kiryowa Kiwanuka, failed to carry out an appropriate legal due diligence in exercise of his statutory functions.”

The three officials have separately and jointly defended the deal, citing the need to add value to the country’s coffee crop in order to create more jobs at home and reduce the loss of foreign exchange.

Efforts to get comments from Mr Kasaija and Mr Ggoobi were futile as both did not respond to our calls or text messages.

Attorney General Kiwanuka said via telephone: “I haven’t seen the report. Once I have seen it, I will respond.” .

As an immediate follow-up, the draft report recommends that Uganda Development Corporation (UDC) be capitalised to enable it “invest in soluble coffee plants.”

It also calls for a review in the legal provisions so that fair competition is provided for in future to guard against creation of monopolies.

“There is an urgent need for a competition law to promote vigorous competition and prevent anti-competitive business practices,” the report states.

The investigation by Parliament—the draft report goes on to note—established that UVCC representative, Ms Enrica Pinetti “signed as a witness and no one signed on behalf of UVCC.”

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“The committee notes that under the article and memorandum of association of UVCCL, it is only a director, a secretary or a person appointed by the board, who has the right to authenticate any document affecting the company,” the draft report reads, adding: “This means if this agreement was to bind UVCCL, it had to be signed by the director, secretary or any other person authorised by the board.”

Stalling for time?

After the committee concluded its meetings with witnesses, the chairperson, Mr Mwine Mpaka, used his Twitter account to confirm that the report was ready for tabling.

“The parliamentary Committee on Trade has concluded investigations into the coffee agreement and will be ready to present its findings and recommendations on May 3, 2022. We appreciate all stakeholders who supported us during this investigation,” Mr Mpaka wrote in a tweet.

However, the matter never made it to the House’s Order Paper this past week. This compelled some lawmakers to nudge House Speaker Anita Among and her deputy, Mr Thomas Tayebwa.

Opposition legislators, including Mr Francis Mwijukye (Buhweju County), Mr Ibrahim Ssemujju Nganda (Kira Municipality) and Mr John Baptist Nambeshe (Manjiya County), who also doubles as the Chief Whip, were particularly vocal on the matter.

In one of his responses to the House, Mr Tayebwa intimated that he needed more time to further appreciate the details of the report before he could lead debate on the report from an informed perspective.

It is worth noting that in the course of the investigation of the matter, President Museveni—also National Resistance Movement (NRM) party chairperson—caucused with his party’s legislators in Kololo, Kampala. Attempts to drum up support for the deal were reportedly mixed. There was no meeting of minds at the heated sessions. The NRM caucus spokesperson, Mr Brandon Kintu, later revealed that a team of technocrats would be instituted to probe clauses in the deal that did not sit well with the lawmakers.

Genesis

It appears that the draft report’s title—‘Report of the Sectoral Committee on Tourism, Trade and Industry on the Investigation of the Alleged Unfair Terms in the MoU (Memorandum of Understanding) Between Government of Uganda and Uganda Vinci Coffee Company Limited’—is not the only mouthful going forward.

READ HERE: Ugandans cite bad taste in coffee deal

When we exclusively published the contents of the coffee agreement early last month, it became apparent that a hornet’s nest had been stirred.

On April 12, Ms Among instructed the Mpaka-led committee to conduct a fact-finding mission on the details of the coffee deal. This came shortly after Mr Abed Bwanika (Kimaanya-Kabonera) raised the matter on the floor of Parliament. Mr Bwanika demanded a thorough scrutiny of the clauses in the deal.

The probe committee was consequently tasked to “conduct a cost benefit analysis of the deal and also examine the process that government premised upon to award the Italian investor Enrica Pinetti the tax exemptions.”

During the week-long probe, the committee interfaced with petitioners, Ministry of Finance officials, the Attorney General, Public Procurement and Disposal Unit, as well as the Uganda Coffee Development Authority (UCDA).