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Road to Kapeeka and origin of the crisis at NSSF
Left to right: National Social Security Fund (NSSF) deputy managing director Patrick Ayota, Minister for Gender, Labour and Social Development Betty Amongi and State Minister of Finance in charge of General Duties Henry Musasizi appear before Parliament’s Finance Committee on January 17, 2023. PHOTO/DAVID LUBOWA.
What you need to know:
- The meeting between the NSSF Board and Gen Saleh followed months of a behind-the-scenes power fight at the Fund. In part one of our reporting on the matter, we trace the origins of the fights and the different power centres.
On December 6, 2022, board members of the National Social Security Fund (NSSF) travelled to Kapeeka, about 60 kilometres outside the capital Kampala, to meet with Gen (rtd) Caleb Akandwanaho, aka Salim Saleh.
On paper, Gen Saleh is the coordinator of Operation Wealth Creation, a loosely regulated programme set up for army veterans to distribute agricultural inputs. In reality, he is widely seen as the most powerful person in the country after his brother, President Museveni.
The journey to Kapeeka had started at least seven months earlier, in May 2022, when Gender and Labour minister Betty Amongi declined to approve the NSSF budget as presented by the board. The amendment to the NSSF Act had come into force in January 2022 and expanded membership of the Fund to voluntary savers and firms with fewer than five employees.
Gen (rtd) Caleb Akandwanaho, aka Salim Saleh, the coordinator of Operation Wealth Creation. PHOTO/ FILE
In a May 30 letter addressed to then NSSF managing director, Mr Richard Byarugaba, the minister said the NSSF budget should consider sensitisation and engagement of employers and workers, strengthening compliance of labour laws, establishing a mechanism for monitoring the welfare of workers, including use of an online system, and establishing a corporate social responsibility fund to help low salaried workers impacted by Covid-19.
“This will require some budget allocation under operating funds that will support the joint activities with the ministry in charge of labour, labour unions, federation of employers, private sector, government ministries departments and agencies (MDAs) and Members of Parliament representing workers and those in the Parliamentary Committee of Gender, Labour and Social Development.”
Mr Byarugaba pushed back in a letter to the minister two weeks later. The submitted budget, he said, already included allocations for these activities. In addition, he said a proposal by the minister to reduce the operating budget by Shs23 billion “will significantly erode our ability to deliver on the budgeted 10.5 percent return to the member”.
This letter and a meeting three days later over the budget failed to resolve the matter. On June 16, Ms Amongi responded in a letter to NSSF Board chairperson Peter Kimbowa, the board chairperson.
Once again, she asked the board to rework the budget and pay special attention to “strengthening compliance with labour laws, sensitisation and engagement of employers and workers to scale up the expansion of social security, and engagements of Parliamentarians and other strategic stakeholders”.
Specifically, she asked the Board to carve Shs6 billion out of the Fund’s operating budget to cater for the areas she had identified. It is this money that has since raised controversy, and which will be revisited later.
However, Ms Amongi wasn’t done. In the same letter, she also blocked Shs400 billion that had been earmarked for strategic land purchases in the budget. The minister asked for it to be parked in fixed income investments awaiting submission of a due-diligence report. This, as our reporting will also show, would also emerge as a source of conflict within the Fund.
Ms Amongi kept Shs76 billion meant to build an office complex at Yusuf Lule Road in the budget but deferred approval for the works pending a resolution of a contractual dispute. This, again, would also emerge as a pain-point between the minister and the NSSF managing director.
The minister also pushed for an explanation on a planned staff restructuring exercise at NSSF, as well as plans by the Fund to build a specialised court for the Judiciary to handle social security cases.
By this time, however, relations between the board, the minister, and the NSSF managing director had become frosty, officials familiar with the matter say. They were about to become ice-cold.
Patrick Ayota, NSSF acting managing director
Retirement plans
Mr Byarugaba and the current NSSF acting managing director, Mr Patrick Ayota’s careers were intertwined. They had worked together at Barclays Bank and had been reunited at NSSF when Byarugaba became managing director and Ayota chief finance officer. When Geraldine Ssali, the deputy managing director left in 2017, Mr Ayota was promoted to the number-two position.
Under them the Fund had grown from Shs2.7 trillion in 2012 to Shs17.2 trillion. In 2018/2019 revenues from investments had outstripped collections from members from the first time, and were 29 percent higher in 2021/2022. The effects of the coronavirus pandemic pushed returns to members below double-digits for the first time in a decade in 2021/2022, but the 10-year average return to members outstripped inflation.
NSSF was a quiet, money-printing machine, but not everyone was happy with the performance. In mid-July 2022, weeks after the tug-of-war over the budget, both Byarugaba and Ayota were reminded that they had reached (and passed) the retirement age of 60.
The Board had, on July 1, 2022, recommended to the minister to reappoint the two officials given their relatively good performance. For that to happen, however, they had to officially retire, according to the minister. On July 18, Mr Ayota notified the minister of his intention to retire at the end of 90 days. Two days later Ms Amongi accepted the retirement but based on the Board recommendation, reappointed him on a one-year contract, as long as there was no objection from President Museveni.
But no retirement was forthcoming from Mr Byarugaba. He noted, in discussions with the board chairperson and close associates, that he did not have to retire before the end of his contract at the end of the year.
On July 22, 2022, Ms Amongi wrote to Byarugaba noting his failure to retire, and directed him to stop exercising the mandate and functions of the office of the managing director NSSF with effect from July 26.
Richard Byarugaba
“The deputy managing director who has retired and has been appointed on contract will act as managing director,” the minister noted.
A potential stand-off was avoided by a letter an hour later from Deputy Solicitor General Pius Perry Biribonwoha who advised that Mr Byarugaba’s term of office ended on the last day of his contract – December 1, 2022 – not on his sixtieth birthday. But the writing was on the wall.
President intervenes
President Museveni joined the fray on August 6, 2022, with a letter to Minister Amongi urging restraint and wider consultation. “It is better one consults quietly about these appointments before deciding,” he wrote.
“In the case of NSSF, the present group seem to have done a good job, growing the fund from Shs1.7 trillion in 2010 to Shs17.2 trillion currently. Good performance is not very common in parastatals. Where it occurs, the actors should be appreciated.”
NSSF members line up at Workers’ House in Kampala to apply for the 20 percent mid-term access of their savings on March 7, 2022. PHOTO/file
The President proposed a meeting later that month with the minister, the vice president, the prime minister, the finance minister, and the Attorney General, to discuss the matter further. “I have been told that Mr Byarugaba’s term ends in December 2022. Hence, there is still time.”
At the State House meeting, Ms Amongi reported that the board had recommended new contracts for both NSSF top officials, but she had received several petitions, whistle-blower reports, and allegations of mismanagement directed at the MD. She proposed a meeting so that the President could hear directly from the NSSF Board, which was agreed to.
The action now shifted away from the red-carpeted rooms of State House to the dusty brawl rooms of office politics.
On September 12, the Inspector General of Police received a strange letter from lawyers acting on behalf of Mr Hassan Lwabayi Mudiba, one of the two NSSF board members representing the National Organisation of Trade Unions of Uganda, Notu, and the general secretary of the Uganda Local Government Workers Union.
In the letter, lawyers from Mungoma, Mabonga, Wakhakha and Co. Advocates, a small law firm in Mukono, alleged that Dr Sam Lyomoki, a fellow workers’ representative on the NSSF board, had canvassed him not to support the renewal of Mr Byarugaba’s contract when the matter came up at the upcoming State House meeting.
The lawyers claimed that different people, including another workers’ representative on the NSSF board, had threatened Mr Mudiba with violence. A month later, an officer from the Police directorate of crime intelligence wrote to NSSF seeking to interview key officials.
The Inspector General of Police directed for proactive investigations into the allegations that Mr Lyomoki, Mrs Peninah Tukamwesiga and other persons “from State House” have been threatening the life of Mr Hassan Mudiba to the extent of preventing him from executing his duties as the NSSF board member,” the officer wrote. The allegations against the officials have not been proven and they have not been charged in a court of law. The matter is still under investigation.
Mr Lyomoki admitted that his fellow NSSF Board member, Mr Hassan Mudiba, reported him to Police, an act he described as a trick used to tarnish his reputation.
“ Of course there was something that came up like that but, it was blackmail.We are having some groups within the board and management that are using blackmail to tarnish other people’s image.It is a big challenge I’m seeing,” he said.
On October 20 another 22-page petition from a non-descript group that described itself as workers was sent to President Museveni asking for Mr Byarugaba’s contract not to be renewed.
Less than a month later, Usher Wilson Owere, the leader of Notu trade union who was considered pro-Byarugaba, was ousted from office in a corporate coup, for failure to organise meetings.
Meanwhile, the clock was ticking. The allegations against Mr Byarugaba had not been investigated, his contract was running out, and there was still no slot in the presidential calendar for a meeting with the NSSF board. Eventually a decision was taken to appoint Mr Ayota as acting MD. In the meantime, instead of the President, the NSSF board would meet Gen. Saleh, in Kapeeka.
NSSF Board member Sam Lyomoki.
In her 19-page letter justifying the decision to defer the reappointment of Mr Byarugaba, Minister Amongi mentions the word “Kapeeka” six times and “OWC” eleven times, yet officials at the meeting say the discussion was not directed at the leadership struggle at the Fund.
“The first thing he said was that he did not want to be drawn into our fights,” an NSSF board member who attended said. “He told us he had invited us to discuss ways in which the Fund could play a more strategic role in the social-economic transformation of the country.”
Different views
Gen Saleh had invited Dr Eria Hisali, associate professor at the School of Economics at Makerere University, to make a presentation to the NSSF board. In it, the academic argued that NSSF was investing a lot of “dead capital” in real estate and could do more if it scouted around for more strategic investments, including in labour to create more jobs.
“An example was given of the Kampala-Entebbe Expressway as another type of infrastructure investment the Fund could undertake that could create more value to the country while protecting the interests and giving a return to its members,” another board member at the meeting said. “We were challenged to look at say the Kampala-Jinja Expressway and also at the oil industry and find ways in which the Fund can contribute to developing the country while also giving returns to its members.”
However, Gen Saleh reportedly queried how long it has taken the Fund to complete construction of Pension Tower in Kampala, whose construction, he told the meeting he helped launch when he was minister in charge of microfinance.
The matter is one of the many raised in the minister’s letter following the meeting as being influenced by corruption and appears to have strengthened the minister’s resolve not to reappoint Mr Byarugaba after earlier agreeing to do so in a late-November meeting with the board chairperson.
“However, after our meeting at Kapeeka yesterday, you note that there were serious issues that has been raised on top of all the other issues I discussed with you severally,” she wrote. “In view of the above, the concerns which were raised after the approval of the appointment of MD during the Kapeeka meeting, and other new issues ought to be re-examined by the board and clarity provided before I appoint him as recommended.
“Further, among the new emerging issues, I would like to know whether in the process of making your recommendation, you considered them, or had prior knowledge or information about them, and took them into account when making your recommendation.”
Sources at NSSF say the Board has formed a special committee to prepare a response to the minister’s letter and the allegations contained in it.
Just before Christmas the NSSF Board finally met with President Museveni at State House. The meeting agreed to stay the decision until after the allegations against Mr Byarugaba and the Fund have been investigated fully.
The investigation by the IGG is expected to be completed within two months.
With reporting by Jane Nafula.
In Part II, tomorrow, ‘cracks’ in Pension Tower, defying presidential directives, the Grain Council, and the wheeler-dealing behind what could potentially be the biggest land transaction in NSSF – and the country’s history.
