NSSF accounts frozen over Shs14b
What you need to know:
- In the case before Ms Mugambe, UTL had demanded that NSSF refunds a total sum of Shs14.3b as contributions and interest for about 985 employees. UTL argued that the employees in question were not entitled to NSSF contributions because they had a separate pension scheme.
- The workers, however, opposed their employer’s reasoning, saying that UTL was keen to use their savings to ease its financial woes. They sued UTL and NSSF in Industrial Court, which is the specialised court that deals with labour issues.
- But as their case was pending disposal, UTL sued NSSF in the High Court, leading to Justice Mugambe’s ruling.
KAMPALA. Workers that Uganda Telecom Limited (UTL) inherited from Uganda Posts and Telecommunications Corporation (UPTC) will lose two-thirds of their savings in the National Social Security Fund (NSSF) should NSSF and its bankers fail to explain away UTL’s claim that the bank guarantees they issued are genuine.
The High Court on Monday issued a preliminary garnishee order that three bank accounts held by NSSF be attached to recover Shs14.2b and costs from NSSF. The order further states that the money will be taxed.
The banks in question are Stanbic Bank, Standard Chartered Bank and Citibank and the NSSF accounts they hold will remained frozen until the issue is resolved.
Mr Richard Byarugaba, the NSSF managing director, told Saturday Monitor that the order, which was issued by the Registrar in the Executions Division of the High Court “does not give UTL access to the Shs14.2 billion, which is now the subject matter of the pending appeal before the Court of Appeal.”
Mr Byarugaba added: “The Fund has filed an application opposing these garnishee proceedings before a judge at the Executions Division, and this morning Court fixed the hearing of this application for Tuesday, April 11, 2017, at 9:00am and also stayed further hearing of the garnishee proceedings until the determination of NSSF’s application.”
Mr Byarugaba insisted that the order that NSSF secured in May last year to suspend the execution of the court judgement awarding UTL the money “is still in force in force and the appeal has not yet been heard and determined.”
NSSF and its bankers will therefore be back in court on Tuesday to offer their defence. This follows an application by UTL for a garnishee order to attach Shs14,239,357,797 that has been fought over for many years.
Following a ruling in May 2016 in which High Court Judge Lydia Mugambe ordered NSSF to pay the contested sum to NSSF, the Fund sought permission to appeal, leading to the two parties entering a “consent to stay execution” on May 27, 2016.
According to the consent, NSSF was to be allowed to appeal the ruling, but after depositing bank guarantees with the court to the tune of the contested sum.
NSSF would also provide UTL with a certificate of compliance showing that the telecom company had paid up its contributions to the Fund, whose absence UTL said was precluding it from competing for public contracts.
“When NSSF was required to issue bank guarantees and a certificate of compliance, they issued documents that were defective. This was in contravention of the agreement we had with them when they were granted the right to appeal,” Mr Andrew Kibaya, a lawyer for UTL lawyers Shonubi, Musoke & Co. Advocates, told Saturday Monitor.
“It got to a point where they (NSSF) did not help us yet it was well within our rights to get the guarantee and certificate of compliance. So that is why we went to court and secured the garnishee on the three bank accounts,” he added.
Mr Byarugaba, however, dismissed the claims as untrue. He said the “ … the Fund, as required by the Court, issued a bank guarantee for the entire decretal sum, which guarantee is still in force and is with the Registrar of the Court of Appeal.”
Mr Byarugaba further questioned “the motives of UTL in ignoring an existing order of stay of execution and the existence of a valid bank guarantee with Court for the sums sought.”
UTL has had financial troubles for some years already, and the government recently seized full control of the company, kicking out the Libyan government, which was the majority shareholder. The government said after the takeover that it is looking for a new investor in the company.
It appears financial considerations pushed UTL’s hand in applying for the garnishee order, and Mr Kibaya seemed to confirm it when he said NSSF’s refusal to provide clean clearance certificates meant that UTL was disqualified from competing for public procurement opportunities.
Mr Byarugaba, who contested this too, however, said: “The Fund issued UTL clearance certificates with the most current certificate valid until June 2017.”