Storm erupts over army Sacco money

A proposal by the leadership of the UPDF’s savings cooperative, Wazalendo Sacco, to transfer Shs6.1b accumulated from dead soldiers and deserters to a pool account instead of giving it out to beneficiaries has sparked controversy.

Highly-placed sources, who we cannot name due to sensitivity of the issue, said both junior and senior commanders sharply differed over the matter with the Wazalendo board chaired by Maj Gen Sam Kavuma, the deputy commander of the Land Forces, during the Sacco’s annual general meeting on March 12.
The meeting was held at the Uganda Military Engineering College in Lugazi, off Jinja highway.

The divisions came to the fore in the meeting during deliberations on the proposal to “create a special reserve fund from which all the abandoned funds by members for periods exceeding five years shall be transferred in accordance with section 55G (1) – (6) of the Cooperative Societies Act 2020.”
The cited law, however, deals with removal and suspension of board members of a cooperative society, not financial arrangements or swapping the holding account of unclaimed monies.
Wazalendo Sacco is 80,189 member-strong, with Shs213b share capital, Shs180.5b in savings and Shs388.4b loaned out to members.

With a total asset value of Shs499.7b, and Shs42.8b profit last year, officials said the Sacco, which has cumulatively disbursed Shs1.4 trillion in loans to members since its founding in September 2005 is the largest in the country.  
All soldiers are obliged to contribute 10 per cent of their monthly salary to the Sacco and can in addition buy shares, each at Shs15,000, beside contributions by civilian staff of the Ministry of Defence.
The Sacco was formed to bring members together and “pool funds (savings) and access loans (credit) at affordable interest rates so that they can engage in productive activities that will help improve their welfare,” according to the preamble of Wazalendo’s 2019 annual report.

During the March 11 to 12, annual general meeting, the management reported that 6,565 members of the Wazalendo Sacco have been inactive for five years and above.
These comprise mainly soldiers who have either died in the line of duty or of natural causes or deserted the Force and their contributions and interests have accumulated to Shs6.1b.
It is this cash that Wazalendo Sacco leaders now want to shift from the account where it is assigned to known owners and next-of-kin to a pool special reserve fund account.
The reason for this is  failure to trace the next-of-kin of deceased soldiers and high costs of maintaining the account on which the Shs6.1b is being kept.

Officials broached the idea at the March 12 meeting, which one source said, surprised and rattled those present.
A Major General, whose name we are withholding, reminded the Sacco board and management that it was inexplainable for the army to fail to trace the next-of-kin when its Chief of Personnel and administration has records of all soldiers who at recruitment are endorsed, among others, by Local Council I chairpersons. 
  
In addition, the UPDF delivers bodies of dead soldiers to their families, meaning the institution has details of the closest relatives of fallen comrades.   
“…how do you now tell us that you cannot trace them (next-of-kin) when it comes to paying their money?” a senior official reportedly asked the Sacco leaders at the Lugazi meeting.  
In a telephone interview on Tuesday, Wazalendo Sacco board chairperson, Maj Gen Kavuma, said there should be no alarm because the intention of the proposal to transfer the funds to a special reserve account is “good”.

“Wazalendo is a custodian of savers’ money. When a member dies, the relatives of the dead member come and claim the money. However, they must come with official documents,” he said, deflecting concerns that moving the money between accounts could create a loophole for its abuse.
Our investigations show that some of the official documents the army asks before giving money of dead soldiers to listed beneficiaries include a death certificate, minutes from family/clan, endorsed by area LCI, a letter of administration, passport photos, a copy of the national Identity Card and an approval from service chief of staff.

Insiders say these requirements, which are approved by the Sacco, create hurdles for accessing money, especially the endorsement from a service chief that most would-be beneficiaries in rural areas do not know or cannot access.
“In our last AGM, we proposed that in an event that the family doesn’t show up, we open a special reserve account where we can keep the money because it is not good to keep such money in a general account,” Maj Gen Kavuma said.

In   its report to the AGM, the management team says to maintain the inactive accounts costs up to Shs474m, which is exorbitant.

Maj Gen Kavuma said the Sacco board has asked the management to show which of the Shs6.1b cash belongs to dead soldiers and deserters so that only money belonging to deserters is moved to the reserve account while savings by fallen comrades remains on the member’s account.
“We did not make any amendment. All we asked was members to make a decision and we have now agreed that management should separate that names so that we can act accordingly,” he said.

Controversy
One of the soldiers who attended the meeting had informed this newspaper confidentially that after the proposal generated controversy, the general summarily said the agenda item had been passed with “amendments”, without specifying the amendment.
In the Tuesday interview, Maj Gen Kavuma said: “Even if we transfer the money for those who have deserted, we shall keep that money for another five years and if the owners do not show up, we shall again come back to the members to ask them to make a decision.”

One of the soldiers said they elected to speak out about the matter in order to bring to the attention of President Museveni so that he can intervene in his capacity as the Commander-in-Chief to stop the proposal to move savings of dead soldiers into an ambiguous account, something that could cause disaffection the rank-and-file of the army.
“I think Mzee (President) should know about this because it is too much. As members, we are forced to contribute and now some people want to eat that money when the families of the dead soldiers are still suffering. No way,” another source said.

In 2016, when the President for the first time attended the Wazalendo Sacco’s annual general meeting, he tasked the army leadership to hold grip of the cooperative and ensure that the savings of the soldiers are not mismanaged.
The Maj Gen Kavuma-led board, which has already served two terms each of two years, also stands accused of overstaying their time after their tenure expired in 2019. 
They, however, stayed on for a year after arguing that they could not organise elections due to Covid-19 outbreak.
At the March 12 meeting, voting of a new board was postponed, again, over the pandemic in a manner that one soldier described as “ironical” since hundreds of soldiers gathered at Bombo early this year to vote army representatives to the 11th Parliament.

Disagreements
Maj Gen Kavuma, without providing specifics, said it has taken long for some of the relatives of the dead soldiers to claim the money because of “disagreements among some of the family members”.
Sources within the Sacco say it is common for members of the board and the supervisory committee to cross to management without due process. 

An example is Maj Arthur Kwezi, who was the vice chairperson of the supervisory committee, which oversees the Wazalendo Sacco board, but snapped up a job as the cooperative’s IT manager before the lapse of his previous tenure.
“How can someone who is supposed to supervise the management team instead join the team without clearly stipulated procedures? This must not happen in an institution that is supposed to be well-organised,” another disgruntled soldier said on condition of anonymity for fear of reprisal by commanders.

The supervisory committee in its 2020 annual report also pointed out salary disparities among the staff of the same appointment, earning differently.
“The cases of people of the same appointment, but earning differently and closed occupation mobility where staff are not given opportunity to compete for internal placements remain a source of latent grumbling. Additionally, the methodology of remunerating staff on strands and levels basis needs to be streamlined at airtight else it’s vulnerable to abuse,” the report says.

The report further added that while according to human resource manual, staff are supposed to be appraised by 15th day of June and December, by the mid-year, appraisal was not done.
“Supervisory committee is of the opinion that in addition to the earlier suggested manpower audit, the board needs to pick interest in fast-tracking the completion of human resource structure. The existing human resource structure and the organisation may not be able to address the current demands,” the report says.