Roko deal gets nod amid protestation
Left-Right: Roko Construction Ltd transaction advisor Joseph Kibuuka, managing director Mark Koehler, Legal counsel Paul Jacob Batte and director Brigitte Koehler before MPs on July 12, 2022. PHOTO | DAVID LUBOWA
What you need to know:
- A chorus vote that Mr Tayebwa called during Thursday’s plenary session eventually gave the green light for a little over Shs200b of taxpayer’s money to be spent on the acquisition of preference shares in the construction company.
Deputy Speaker Thomas Tayebwa’s handling of a vote on the government’s proposal to acquire 150,000 preference shares in Roko Construction Company has been roundly criticised by the Opposition in the House.
A chorus vote that Mr Tayebwa called during Thursday’s plenary session eventually gave the green light for a little over Shs200b of taxpayer’s money to be spent on the acquisition. The haste with which the vote was conducted and the Deputy Speaker’s admission that he was under express orders of the Executive branch of government to “solve [the issue] today or we allow the company to die” raised eyebrows then as today.
In a tweet, Mr Mathias Mpuuga, the Leader of the Opposition in Parliament (LoP), said Mr Tayebwa “blatantly abused the Parliamentary Rules of Procedure” in the name of giving Roko a new lease of life. The LoP also chastised the Deputy Speaker for “smuggl[ing] the matter onto the Order Paper, playing the roles of Finance minister, chairperson of the Finance Committee and at the same time, Speaker.”
Mr Mpuuga was not alone. After Mr Tayebwa adjourned the House on Thursday, pandemonium ensued, with some lawmakers leaping up to their feet in protest of the decision. The Deputy Speaker was also booed and heckled as some lawmakers openly expressed their dismay.
Tayebwa criticised
Critics have since seized upon Mr Tayebwa’s revelation on Thursday that he “received information...from the Executive” to act swiftly as proof that the independence of the legislative arm of government is under threat. Mr Mpuuga revealed “the Opposition caucus has agreed to challenge the lacklustre manner in which the Deputy Speaker handled the motion.”
The LoP promised to “explore the remedies provided for in the Parliamentary Rules of Procedure before moving to [the] next level.”
The House had stayed the decision on Wednesday, causing Speaker Anita Among to task the government frontbenchers to reconcile the dissenting arguments before the proposal was voted on.
Mr Tayebwa, however, gave no room for discussion on the matters of contention and proceeded to pass the item while it was absent on the Order Paper.
A House majority report on the acquisition contends that Roko is still economically viable, and its closure would have a negative impact on the economy.
“Potentially, it would have a severe macroeconomic impact if Roko is not bailed out. It is in public interest that Roko should be bailed as Roko is still commercially viable to return to its old glory,” the report reads, adding, “Overall, there is a challenge at the moment the construction sector is dominated by foreign companies... At the moment, in Uganda, Roko, is our leading indigenous company.”
Details in the report also show 1,945 Ugandans risk losing jobs should the company that has also been paying on average Shs15.1b in taxes, close.
Finance Committee chairperson Keefa Kiwanuka said the money from the government would create a new line of revenue, get the company facing liquidity challenges back on its feet, and enable completion of major stalled projects, including the new Parliament chambers and the cancer institute.
A minority report, however, questioned the criteria followed to consider Roko.
“It should be noted that in the last three years, a number of companies, irrespective of size, have faced liquidity challenges. For instance, more than 4,200 small and medium sized companies, including schools, have gone under,” the minority report notes, adding, “These 4,200 businesses were making substantial contributions in terms of tax, employment, human capital development and service delivery. Unfortunately, these were never considered for bailout.”
Shadow Finance minister Muwanga Kivumbi also reckons the government would have secured a better deal if it acquired 51 percent equity worth Shs16b “as a condition for the acquisition of preferential shares.”
He added: “…there is a risk that if there is no such condition, government may prioritise the preferential shares. The majority shareholding will require that government has got a stake in ownership and control.”
‘Bailout necessary’
Junior Finance minister (General Duties) Henry Musasizi told the House on Thursday that the Roko bailout is not a selective intervention. He added that the government handles such issues on a “case by case basis.” The government has also previously vowed that Roko “shall pay [it] dividends at a rate of 4.35 percent and also redeem the preference shares.”
The LoP remains unconvinced, and on Thursday, held out Roko’s portfolio to prove that the government had not done due diligence. Mr Mpuuga highlighted 27 lawsuits of default the construction company has in the Commercial Court. He was also equally perturbed that there was no professional report to qualify the proposed Shs207.13b to be enough to salvage Roko.
As of May, Roko’s debts were to a tune of Shs202b, with contingent liabilities from bank guarantees worth Shs130b. According to a document tabled before the House during the first workweek of this month, a new corporate governance and management structure will come into place “to ensure effectiveness and sustainability of the intervention.”
Consequently, the government will have two representatives on the board, one of who will chair the Board Audit Committee.
Mr Mark Koehler is the current managing director of Roko, with Ms Brigitte Koehler, Mr Peter Mugarura, and Mr Derek Claassen, all serving in the capacity of directors.
“The company will immediately restructure management and recruit competent persons to the position of managing director,” the document that was tabled by Mr Musasizi reads, adding that any move to “dispose of or strip the company of any of the assets” will have to be done with “express approval of the government.”
Museveni role
President Museveni is reported to have a soft spot for Roko. Speaking at the funeral of Max Rohrer in 2005, Mr Museveni revealed that he met the Roko co-founder in a foreign country and received a substantial amount of dollars to support the bush struggle.
At the height of its success, Roko operated in Kenya, Rwanda, the Democratic Republic of the Congo and South Sudan. In recent years, its ledger has shrunk to the point that most of its running projects have been entrusted to the care of its subsidiary in Rwanda. The government of Uganda says Roko owes its suppliers just under Shs50b.
