Top govt official, URA named in rice scandal

Political interference by junior Trade minister Harriet Ntabazi, inside connivance by government agencies and a number of corrupt transactions cost Uganda billions of shillings in rice trade revenue, it has emerged.

A no-holds-barred report by the parliamentary Committee on Tourism, Trade, Industries and Cooperatives says Ms Ntabazi is guilty of political interference, abuse of office and corruption. The report recommends that the minister take political responsibility and the appointing authority must also take note of her conduct. 

It has also asked the ombudsman to investigate the corruption allegations levelled against the minister and others, who were believed to be in cahoots with her.

The committee, in its report, says Ms Ntabazi assigned a private association—the Rice Agribusiness Development Foundation (RADFO)—as the apex body through a letter dated December 23, 2021. 

While presenting the committee report during a plenary on August 10, Mr Mwine Mpaka, the committee chairperson, said in no uncertain terms that Ms Ntabazi exceeded her powers and issued orders that have distorted trade order in the rice trade.

“The minister irregularly and without lawful authority instituted RADFO as the apex body in the rice sub-sector without involving the rice traders and associations. The actions of the minister are disruptive and do not encourage trade order in the rice trade,” Mr Mpaka said.

The said apex boy was faulted in a high profile corruption after it emerged that the company imposed a charge of Shs230,000 on every tonne of rice imported into Uganda. This was after RADFO started operations. Following complaints from traders, this charge was reduced to Shs180,000.

RADFO immediately took over manning of the Ugandan exit gate at Mutukula via the border with Tanzania, and no rice importing truck was allowed to exit without clearing with it. Reports from the border point indicated that this disrupted the normal flow of trucks and necessitated security intervention. 

The report further states that the company operated using coercive means. At times, the report added, the company’s operatives manhandled traders who dared to disregard their orders.

Protectionist or extortionist?

Mr Moses Ssekandi, the secretary general of RADFO, informed the committee that the fee of Shs180,000 per tonne of rice was introduced to increase the price of imported rice and protect local farmers. He further revealed that between January 1, and February 28, RADFO collected Shs1.7b.

The report, however, notes that the money paid (Shs180,000 per tonne) was neither receipted nor banked. A document the report describes as “fictitious” was instead purported to be clearance from the apex body. 

While the company only declared receiving Shs1.7b, it was discovered that it collected up to Shs17.8b.

The committee report reads thus: “Upon request of the Committee, Uganda Revenue Authority (URA) submitted a special print out of the companies that imported rice from Tanzania, between January 1 and May 22, when RADFO was actively operating at the border, a total of 99,131,312 kilogrammes of rice were imported.”

It further adds: “The Committee observes that the collections amounted to Shs17.8b as opposed to a figure submitted by the RADFO secretary general. This discrepancy, which amounts to about Shs16b, shows how RADFO extorted very huge sums of money from rice importers and indirectly denied the government huge sums of revenue.”

The report says although RADFO received money on behalf of the government—“since they were exercising purported powers of the Ministry of Trade”—the company didn’t deposit the funds arising from payment of Shs180,000 into the consolidated fund. 

It adds that instead, the funds collected were received and receipted by RADFO and shared as follows—Shs100,000 was allocated to the directors of the different companies that were members of RADFO; Shs40,000 to clearing agents; Shs30,000 for RADFO administrative costs; and Shs10,000 for brokers.

“The Committee further observes that the mode of collecting and sharing the charges imposed by RADFO was irregular since it was imposed on traders who were not members of RADFO,” the report reveals, adding, “In addition, the charge was collected in a manner unknown under the law since the funds were collected by persons who were not authorised under the law and deposited on personal accounts contrary to the specific provisions of the Public Finance Management Act, 2015.”

Ntabazi speaks out

Ms Ntabazi has denied the allegations of corruption and political interference. She says private sector entities were put at the apex body to enhance proper self-regulation, create stability and trade order in the sector, especially at the borders.

She further adds that RADFO’s terms and reference barred it from collecting any money from rice traders on behalf of the government.

“The decision of government to assign RADFO as an apex body was not a selective or one person’s decision. It was a collective decision by all members, including the rice associations…The terms and reference of RADFO were never to collect any money from anybody and it wasn’t written in the letters that I wrote,” Ms Ntabazi says.

The Committee and Parliament, however, rejected this reasoning and said she must be held responsible for occasioning losses to the government. The ombudsman has been invited to take up the issue. The Committee also said other government agencies—including the Uganda National Bureau of Standards, URA, agriculture units and clearance agencies—were in cahoots with RADFO at the border points.

The committee in its report was unsparing in its criticism of Ms Ntabazi and RADFO for distorting trade between Uganda and Tanzania. Basing on what it called “a recognised principle of law that a person to whom a decision making power has been delegated to” shoulders the blame, it concluded that the buck stops with Ms Ntabazi.

“The committee, therefore, finds that the delegation of the functions of the Ministry of Trade to RADFO was irregular since the minister was exercising delegated powers of the Executive, which she could not delegate,” the report says.

Faulting Ntabazi

The report particularly refers to directives contained in a letter dated April 21, to the commissioner of Customs at the taxman wherein Ms Ntabazi directed URA to cease “clearing VAT exempted rice imports, save for rice imported by the 15 companies that were part of the court order.” 

“The committee finds that the minister acted unfairly when she issued directives to URA to stop rice imports without affording rice traders a fair hearing considering that most of the traders had obtained permits and had imported rice using the very permits the minister had directed,” it states. 

The committee report also says the directive issued by the minister to URA “was ultra-vires to her functions” since she has no mandate over tax matters. It further contended that arbitrary orders expose the government to unnecessary litigation.

Recommendations

The committee recommended that the ministry responsible for trade should, with immediate effect, withdraw the illegal, irregular, unlawful, unprecedented, illicit letter designating RADFO as the apex body in regard to the rice trade, and that Ms Ntabazi’s actions are tantamount to abuse of office, corruption, facilitating corrupt transactions with agents, bribery, influence peddling, conflict of interest which are all crimes provided for under the anti-corruption Act of 2009. 

“The Inspectorate of Government carries out further investigations with the aim of prosecution of Ms Ntabazi. The appointing authority should take appropriate action against Ms Ntabazi. The minister should take political responsibility for her actions. Parliament should, therefore, take appropriate actions against the minister in respect to her conduct above,” the Committee recommends.  The Committee also recommends that civil action be instituted against RADFO with the aim of obtaining compensation amounting to Shs17.8b “which was illegally, unlawfully, illegitimately, dishonestly, fraudulently and unpatriotically collected from the traders/ importers.”

The taxman has also been asked to carry out a forensic audit on all companies that have been importing rice, collecting withholding tax and not remitting it with a view of recovering it and against the Customs Union regulations and the EAC treaty.

Elsewhere, the Criminal Investigations Department of police has also been asked to carry out investigations by, among others, retrieving the video footage of URA officials and government officials—including security officers—who participated, facilitated and aided RADFO’s illegal activities.