Inside multi-billion cooperatives saga

In a bid to expedite payments for war loss compensations to cooperatives, the Cabinet in 2016 constituted an inter-ministerial committee dubbed the “verification committee.” The committee was mandated to study and analyse the claims of cooperatives, ascertain the value of the assets and property lost, evaluate the current position of the cooperative unions/societies, ascertain the exact number of properties, livestock destroyed and lost and determine the claimants’  package for compensation, among other roles.

The House committee that conducted the inquiry established that there were two verification committees—the inter-ministerial committee constituted by the Cabinet, and a second constituted by Trade Ministry Permanent Secretary (PS) Geraldine Ssali. The committee further established that although the inter-ministerial committee did its work, it was rendered redundant by the establishment of a parallel verification committee.

The House committee established that PS Ssali had in a March 21, 2022, letter assigned Mr Robert W Mpakibi, assistant commissioner for cooperative development; Mr Moses Magumba, senior cooperative officer; Mr Ambrose Mugweri, cooperative officer; Ms Marias Kamukunda, cooperative officer; Mr Rogers Okambo, cooperative officer; and Ms Scovia Tusubira, training officer, duties to verify war debt claims in respect to a select number of cooperatives.

In a separate meeting, still on September 21, with some members of the new verification committee, the committee received confessions from Ms Tusubira and Ms Kamukunda that it was PS Ssali who, in a “pool appointment letter”, assigned them duties to verify war debt claims for specific cooperative unions.

The House committee report themes this action as usurping the powers of the inter-ministerial committee.

Findings

The committee also found that the verification team set up by PS Ssali lacked the required technical competencies and attributes to conduct verification exercises on war loss claims submitted by cooperatives “which is why they have failed to conclusively verify any cooperative to date.”

 “That there were no clear reasons or justifications given by Ssali to disregard the existence of the inter-ministerial committee established by Cabinet and instead opting to constitute a parallel one for similar purposes and objectives,” the report reads in part, adding, “This action of creating a parallel verification committee for the same purpose appeared suspicious to the Committee on Tourism, Trade and Industry.”

The committee found that there were no criteria or policy guidelines for the verification committee regarding the selection of claims to verify. It also discovered that there was no avenue for redress for any cooperative after the verification committee had concluded its exercise. Some cooperative unions were found to have colluded with certain officials of the verification committee to inflate the claims.

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It was established that the verification exercise was not necessarily a prerequisite for the payment of claims. As an example, cooperatives such as Banyankole Kweterana Cooperative Union, Bwavumpologoma Cooperative Union, and South Bukedi Cooperative Union were paid without undergoing the verification process

Madira query

The committee found that M/S Madira & Co Advocates, a  law firm that was hired by the union to help it sort some of the legal, social and economic problems that it was facing at the time requested for Shs871,430,100 yet the sum of the total cost as indicated in the requisition was Shs960,604,100 “thus rendering the entire document as submitted to the Committee suspect to fraud.”

While M/S Madira & Co Advocates had already been paid Shs673m for execution of legal works and services, it was also getting additional Shs5m per month as retainer fees.

“The committee in its considered opinion, sees this as an anomaly. For example, while the average cost of the union to have an annual general meeting is about Shs19.5m, M/S Madira & Co Advocates meets the Union Board and Management at a cost of Shs110m,” the report notes

It adds: “The Committee has reason to believe that the Union concocted these figures to make accountability for the monies they paid to M/S Madira & Co. Advocates.”

The committee found that Okoro Coffee Growers Cooperative Union was not among the cooperatives listed within the ministerial policy statement and budget estimates for the Trade ministry for FY 2020/2021 as outlined in their ministerial policy statement submitted to Parliament in March 2020. Moreover, despite being included in the national budget to receive Shs1b, Okoro Coffee Growers Cooperative Union has never undergone verification by the inter-ministerial committee to establish the authenticity and actual value of their claim up to the present date.

Coaching witnesses

The committee subsequently asked the secretary manager to contact the Trade ministry official to confirm the claimed communication. The secretary manager asserted that the official had called him three days before his committee appearance, purportedly to provide coaching on what to say. The call was initiated in the presence of committee members, and the Trade ministry official did, indeed, answer and respond.

The ministry official was then summoned through the Criminal Investigations Department (CID).

“On appearing before the committee, the official was informed of his involvement in coaching witnesses appearing before the committee to which he first hesitated but after further interrogation, the official from Ministry of Trade confessed to have called a member of Okoro Coffee Growers Cooperative Union, and indeed he had told him not to reveal his names,” the report notes.

It adds: “The committee was then moved to inquire into his conduct and motive above, to which he confessed that he was indeed a beneficiary of the money from the said union with his other colleagues of the verification committee.”

He further informed the committee that he was working under the instructions of Mr Leonard Kavundira, a principal cooperative officer from the Ministry of Trade, Industry and Cooperatives, and also chairperson of the verification committee at that time when he acknowledged that he was paid (amount concealed for protection of the witness) for delivering the money.”

The witness, according to the report, agreed to testify on behalf of the state in case of a criminal prosecution. Their identity was concealed “for his personal security.”

West Mengo growers

Mr Musa Bagaala, the acting accountant, informed the committee that the Executive Committee of West Mengo Growers Cooperative Union, had decided to engage M/S JM Musisi Advocates for the purpose of pursuing compensation. This agreement was reached on November 4, 2022. However, he further apprised the committee that the union leadership was persuaded by Mr Mawanda Michael Maranga, the Igara County East lawmaker, to seek another lawyer who could assist them in pursuing the claims. Mr Mawanda recommended M/S Mungoma Justin & Co Advocates.

The secretary-manager of West Mengo Growers Cooperative Union, Mr Lubega Moses Kitaakule, additionally conveyed to the committee that Mr Mawanda assisted them in drafting an agreement in which the lawyers he recommended would cover the costs of recovering the compensation. He informed the committee that the agreement they were compelled to sign stated that out of 705 members, 288 members attended and resolved to engage M/S Mungoma Justin & Co Advocates.

However, Mr Lubega clarified that the total membership of West Mengo Growers Cooperative Union Limited does not amount to that number. He further asserted that the union never conducted such a meeting, and the agreement was a fabrication orchestrated by MP Mawanda.

According to the testimony of Mr Bagaala, quoted verbatim in the report, Mr Mawanda told them that in order to complete the deal together with his team, the union had to pay Shs2b. 

“We told him that as a union, we did not have it. Then he said if I provide it, will you pay it back when the money is out? We said ‘yes’ because we had heard that we were going to get Shs14b, which we did not expect. For someone to say that I will take Shs2b—of course, all these were not in writing but verbal,” Mr Bagaala testified.

Mr Bagaala provided additional information to the committee, stating that he was aware the Union had received Shs2b in two equal installments on November 19, 2021, and May 3, 2022, facilitated through Mungoma Justin & Co Advocates. At a date he could not recall, Mr Bagaala, along with Mr Lubega, met in Mr Mawanda’s office at the parliamentary buildings, where Mawanda suggested Shs50m as a token. Subsequently, he urged them to visit M/S Mungoma Justin’s law chambers. Mr Bagaala informed the committee that lawyer Mungoma escorted them to Kenya Commercial Bank (KCB) on Kampala Road, where each of them signed for Shs25m. He admitted that he and Mr Lubega did not thoroughly review the documents they signed to receive the aforementioned funds.

Mawanda response

Despite attempts, the committee was unsuccessful in arranging a physical interaction with Mr Mawanda. Nevertheless, the lawmaker submitted a written memorandum. In this submission dated October 11, he declared that payments related to compensation for West Mengo Growers Cooperative Union were received by M/S Mungoma Justin & Co Advocates. Accompanying his submission to the committee were payment vouchers clearly indicating transactions involving Mungoma Justin & Co Advocates.

“Notwithstanding the above accountabilities as submitted by Hon Mawanda, the committee is perplexed at how the honourable member, who is neither a beneficiary, a shareholder in West Mengo Growers Cooperative Limited nor a partner in M/S Mungoma Justin & Co Advocates, would have access to such accountability documents,” the report notes, adding, “Whereas the Committee tried to reach out to M/S Mungoma & Co Advocates to no avail; in his submission, counsel Justin Mungoma stated that he was informed by Hon Mawanda that he was required to appear before the Committee on Tourism, Trade and Industry in regard to submission of evidence on war loss compensations. He submitted payment vouchers, receipts and acknowledgement of receipts, Board Resolution, among others on Monday, October 16, 2023.”

The committee observed that there was no written agreement between M/S Mungoma Justin & Co Advocates and West Mengo Growers Cooperative Union Limited, but it was counsel Mungoma’s verbal submission that the law firm would retain Shs2b as legal fees out of the Shs14b that the union had claimed as compensation.

“The committee found that payment vouchers submitted by Mr Mawanda and lawyer Mungoma were neither received nor acknowledged except for the Shs50m, which the members of the board admitted to have received in cash from counsel Mungoma Justin from KCB Bank,” the report reads.

The committee has recommended that M/S Mungoma Justin & Co Advocates be referred to the Uganda Law Council for professional misconduct. They also asked CID to conduct investigations into the circumstances under which Mr Mawanda got involved in the war loss compensation payments.

This publication attempted to contact officials red-flagged by the report, but they were all unavailable by press time.