What you need to know:
- Last Friday, the Inspectorate of Government released a report of its investigation into allegations of mismanagement, abuse of office, and corruption at the National Social Security Fund (NSSF) against former Managing Director, Mr Richard Byarugaba, and other officials. In this third installment of this series, we relay findings on foreign trips, minister’s directives and Yusuf Lule Road project.
Continued from yesterday: Poor planning for activities sunk NSSF into losses - IGG
Recommendations in respect of the sale of land at Bakuli
Mr David Nambale, the former Corporation Secretary, should refund the sum of Shs1,570,623 which he spent on personal telephone calls while he was attending a training course in the United Kingdom. The said amount should be deposited in the Inspectorate of Government Asset Recovery Account (Account Number – 003030088000007) in Bank of Uganda.
2.1.6 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.
It was established that there was an increment in the budget for trips from Shs1,227,251,000 during the FY2017/2018 to Shs3,924,090,000 during the FY 2022/2023. The investigation sampled various trips to establish whether they took place and the purpose for the trips. These included the East Africa research trips, which are conducted every year and they involve a team from the Investment Department and the Managing Director travelling to Kenya, Rwanda and Tanzania to conduct market assessment of the region where the Fund has investments.
In 2017, a team of six people were facilitated to conduct this activity for 10 days at a total cost of $47,700. The days further increased to 18 in 2018 and 21 in 2022 at total costs of $67,110 and $77,070, respectively. The team could have also been reduced to four people.
ii) In February 2022, a joint team from NSSF and the Judiciary visited the SSNIT and Judiciary of Ghana to benchmark the successful implementation of the special social security courts system at a cost of $81,794. The team comprised seven officials from the Judiciary headed by Justice Flavian Zeija, the Principal Judge and the seven officials from NSSF headed by Mr Richard Byarugaba, the former MD. The visit was facilitated solely by NSSF. There was no plausible justification for having such a big delegation for the benchmarking visit.
iii) In August 2017, Mr Byarugaba and CIO, Mr Gerald Paul Kasaato received a total of $7,282 as facilitation to attend to the invitation by the Eastern and Southern Trade Development Bank for an institutional round table on August 29, 2017 and an AGM on August 31, 2017 in Mahe Seychelles.
However, Mr. Kasaato did not travel as he had other critical assignments to do during that time. He did not refund the money that had been advanced to him.
iv) In September 2018, Mr Byarugaba was invited by the Africa Investor as a distinguished speaker at the Sovereign Wealth and Pension Fund Leaders’ Summit held in New York on September 24 and 25, 2018. A total of $15,363 was advanced to him and the Chief Investment Officer as per diem, air tickets and visa fees for this trip. The hosts of the summit did not facilitate the trip and the cost was borne by the Fund.
v) In January 2022, a team of nine NSSF staff members received a total of $71,422.47 to travel to Cairo, Egypt and Riyadh, Saudi Arabia to do due diligence on Dar Al-Handasah Consultants in association with Creations Consult Ltd that emerged the best evaluated bidder for the consultancy services for feasibility study, design and construction supervision of the proposed one-stop government office campus at Bwebajja. This team facilitated to undertake the due diligence was unnecessarily big.
vi) The contract between NSSF and Intrasoft International S.A in joint venture with Sybyl Limited for the supply, installation, testing and commissioning of the PAS provided that the offsite training cost, per diem and flight of the training for 25 participants were to be met by the vendor. The training took place in Greece at the vendor’s premises between June and September, 2022. The vendor paid Per Diem based on its domestic rates which were below NSSF Per Diem rates.
The vendor’s Per Diem rates for each participant per day were €30 ($32) for each of the first three days and €20 ($21) for each of the rest of the days spent by the participant. However, the NSSF international travel Per Diem rate was on average $490 per day.
The Fund paid per diem top up amounting to $152,236 or Shs548,049,600 for the 25 participants. It was noted that the Per Diem rates for offsite training were not specified in the contract between NSSF and Intrasoft SA, a loophole that led to Intrasoft SA determining the Per Diem rates for the participants based on their domestic rates in Greece. The PAS contract between NSSF and Intrasoft SA was not clear on the Per Diem rates which led to the Fund spending an exorbitant sum of $152,236 on Per Diem top up for the 25 participants which could have been avoided.
vii) In July 2018, NSSF facilitated Ms Jesca Ruth Katongole, Secretary, Ministry of Finance Planning & Economic Development to attend an ESAMI training on “Improving Interpersonal Relations at Work”. The training was conducted in Lusaka from July 16 to 27, 2018. NSSF spent $6,530 on her per diem, air ticket and training fees. It was irregular for NSSF to pay for her training, yet she was an employee of Ministry of Finance, Planning and Economic Development.
viii) In August 2022, a team of 84 staff from the Human Resource and Administration Department travelled to Copthorne Hotel Deira 4 Hotel, Dubai for team building. The total payment by the Fund for the Dubai trip was Shs339,837,575. This included payments for the hotel, expenses in Dubai as well as transport to and from Entebbe. NSSF budgets for Shs2,000,000 for each staff member for team building every year. Each Department decides on how best to utilise their team building budgets. In this particular case, the Human Resource Department utilised its team building allocations for two FYs, namely 2021/2022 and 2022/2023.
There was no evidence that the MD and his cohorts like the Head of Investments used the budget as a means of siphoning funds through exorbitant trips. The overall expenditure on trips was within budget for all the financial years under review.
i) The NSSF management should adopt a system where staff requesting for funds for foreign trips where the activity dates are not specified, attach activity plans to their requisitions justifying the number of days requested for and indicating what they intend to accomplish. Before approval of request for funds, the approving authority should review the activity plan and the justification.
ii) The NSSF Managing Director should review the team composition for the East Africa research trips with the aim of reducing the number of staff that travel for the research tour.
iii) The team should make a refund in respect of the trips where they spent less days than what was paid for. In regard to 2019, the team should refund funds as follows; Mr Richard Byarugaba (Shs8,430,300), Mr Gerald Kasaato (Shs5,989,545), Mr Muhammad Kasumba (Shs7,246,610), Mr Ibrahim Buya (Shs7,246,610) and Mr Keneth Owera (Shs5,434,958).
In regard to 2022, Mr Byarugaba should refund Shs8,072,819 for spending 17 days out of the 21 days paid to him.
The said amount should be deposited in the Inspectorate of Government Asset Recovery Account (Account Number – 003030088000007) in Bank of Uganda.
iv) For future foreign bench-marking and due diligence engagements, NSSF should facilitate an optimal number of participants that would not compromise the objective of the activity but at the same time not cost a lot to the Fund.
v) Mr Gerald Kasaato, the Chief Investment Officer of NSSF and Ms Achieng Faith should refund $1,620, in per diem received by the latter on behalf of the former since he did not undertake the trip.
vi) In instances where the officials of the Fund are invited to attend events abroad, it is recommended that management of the Fund carries out a cost benefit analysis of the event before a decision is made to attend the event.
vii) NSSF management should manage savers’ funds responsibly and should not undertake reckless spending that can be avoided.
viii) The management of the Fund together with the Board should revise the budgetary allocation for team building among the staff of the Fund since the allocated sum of Shs2,000,000 per staff, per annum, is on the higher side and a wastage of savers’ funds.
2.1.7 Whether the MD refused to implement the Minister’s directive to amend the NSSF budget to include Shs6 billion for purposes of strengthening compliance and enhancing partnerships and collaboration through stakeholder engagements
In accordance with Section 29(1) of the NSSF Act, CAP 222, the NSSF Board recommended a proposed total budget of Shs2,267,700,000,000 for the FY 2022/2023 on May 13, 2022 and it was submitted to the Minister for approval.
On June 16, 2022, the Minister of Gender, Labour and Social Development informed the Chairman that she had approved the budget subject to amendments. The amendments were deferring Shs400,000,000,000 and Shs115,000,000,000 meant for strategic land purchases and the Yusuf Lule road project, respectively. She also directed that Shs6,000,000,000 be provided from the operations budget for strengthening compliance and enhancing partnerships and collaboration through stakeholder engagements.
However, the former MD declined to amend the budget to provide for Shs6,000,000,000 on grounds that those activities had already been provided for in the original budget.
The NSSF Act, Section 29(3) expressly gives the Minister the powers to approve or disapprove the budget. It states that “The Minister shall, upon receipt of the annual budget or any supplementary budget, approve or disapprove the budget or may approve it subject to such amendment as he or she may deem fit”.
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.
The Minister of Gender Labour and Social Development should develop regulations to operationalise section 29 of the NSSF Act since the Minister’s powers under the section can be excessive.
2.1.8 Whether the Managing Director attempted to defy the President’s directive in regard to the Yusuf Lule road real estate project.
It was established that the NSSF advertised a pre-qualification notice in March 2020, inviting suitably qualified bidders to submit applications for prequalification for the design and construction of the Yusuf Lule commercial development project. Twelve bids were received but only four bidders met the prequalification criteria and were invited to bid.
The Evaluation Committee recommended China Railway Construction Engineering Group Co Ltd as the best evaluated bidder with a total evaluated bid price of Shs198,558,921,170.98. This was way above the Shs123,600,000,000 that the Fund had budgeted for the project and the tendering process was cancelled.
In September 2022, H.E the President directed that M/s SMS Construction Co. Ltd be engaged to undertake the construction of the commercial development on Yusuf Lule road. The negotiations with China Railway Construction Engineering Group Co. Ltd were halted and the initial procurement process cancelled. Bid documents were issued to M/s SMS Construction Co. Ltd on December 16, 2022. The firm submitted the technical and priced bid on January 30, 2023. At the time of the investigations, the bid was yet to be evaluated.
While NSSF was in the process of procuring a contractor for the Yusuf Lule project, the Managing Director received a directive from President of Uganda 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. Therefore, there is no evidence that the MD attempted to defy the President’s directive.
To be continued tomorrow