What you need to know:
Issues. A row is brewing over compensating traders whose businesses were affected after violence flared in the flashpoint states of South Sudan between 2008 and later in 2013, when a full-scale war broke out. But there are fears that some of the 10 companies cherry-picked by senior Finance ministry officials roped in the pay dispute did not have a legitimate claim, writes Emma Mutaizibwa.
In May, Parliament approved Shs778 billion to pay traders whose businesses were affected by conflict in the neighbouring South Sudan between 2008 and 2016.
This came on the heels of a mutual agreement between Uganda and South Sudan, which allowed Treasury to clear the debt and treat it as a loan to the government of South Sudan. The money will be paid back within five to 10 years at a six per cent interest rate after the first year.
The memorandum of understanding (MoU) covered 10 companies; Rubya Investments, Kibungo Enterprises, Aponye (U) Limited, Afro Kai Ltd, Swift Commodities Establishment Ltd, Sunrise Commodities, Ms Sophie Omari, Apo General Agencies, Ropani International and K.K Transporters. These companies have already been given at least Shs41b.
It is not clear how officials at the Finance ministry cherry-picked the 10 claimants at the time the President has asked for an investigation into the payment.
But fears are abounding that the funds recently doled out to the 10 firms is suspect and could have ended in the pockets of ‘ghost claimants.’
Among the 10 firms, three were paid and yet their claims were rejected by the Uganda Revenue Authority (URA) audit. They include Rubya Investments Limited, Ms Sophie Omari and Kibungo Enterprises. According to the audit ‘there is no evidence of exports, thus the companies should not be compensated”.
The tax audit conducted by the URA Commissioner General, Ms Doris Akol, reveals a flawed payment to ‘ghost’ claimants.
For one to qualify as a claimant, it is required that they should be registered taxpayers with URA based on their Tax Identification Numbers (TIN).
“For goods to have been exported means that they were declared to URA, processed by URA and exited out of the country by URA,” Ms Akol’s August 7, 2017 letter to Finance minister Matia Kasaija reads in part.
The tax body revealed in detail how this audit was conducted. “Data was extracted from our Asycuda System that was operating in those years before we upgraded to Asycuda World. We advise the ministry to use the said schedule as a basis for recommendation of payments to the above claimants. For ease of reference, we have attached the said letter and the schedule,” the letter adds.
The Automated System for Customs Data (Asycuda) is a computerised system designed by the United Nations Conference on Trade and Development (UNCTAD) to administer a country’s customs.
The decision to pay these companies flies in the face of the URA Commissioner’s audit recommendations and attempts to usurp her powers as the head of the tax body. URA also contests another claim by Aponye (U) Ltd and Afro-Kai Limited, which “appeared to be a duplicate and should not be compensated”.
“Another claim by Aponye (U) Ltd and Afro-Kai Limited for the supply of beans and maize corn was rejected on the premise that Aponye (U) Ltd and Afro-Kai Limited is not a registered company. But since Aponye (U) Ltd supplied Ministry of Defence SPLA, this claim is duplication. Thus the claimant should not be compensated,” writes the head of the tax body.
Of the 157 claimants, URA verified and confirmed that only 22 claimants duly exported goods to South Sudan.
“These claimants are registered taxpayers with URA based on their Tax Identification Numbers (TIN). Therefore, the 22 claimants complied with the customs requirements for exporting goods to South Sudan and URA has customs entries for each of these 22 claimants,” Ms Akol’s letter adds.
URA recommends that “government may wish to investigate further the claims of other claimants whose documentation is insufficient. However, due care should be taken not to mix South Sudanese claimants with Ugandan claimants”.
“Given the increasing number of claimants, government should decide on a cut-off point to the submission of these claims, otherwise they might become endless,” the letter reads in part.
Last week, High Court judge Musa Ssekaana imposed an injunction, which halted ongoing verification process of Ugandan traders who supplied goods and services to South Sudan. Some traders under their umbrella body, Uganda South Sudan Maize Millers and Suppliers in the main petition sued the Finance ministry permanent secretary and Secretary to the Treasury, Ms Keith Muhakanizi, for not including their firms for compensation.
“We respect the rule of law. As Secretary to the Treasury and Permanent Secretary, I respect the rule of law and accordingly I have already respected the court injunction and I will not take action until court has ruled. I am a disciplined officer,” Mr Muhakanizi told Daily Monitor last Thursday.
Among the functions of the Secretary to the Treasury under the Public Finance Act is to promote and enforce transparent, efficient and effective management of revenue and expenditure and assets and liabilities of the vote.
“The circular I issued was that before you pay, you must satisfy yourself that the payment is proper. You cannot go to Parliament or court and say that Parliament appropriated this money for salaries and wages and, therefore, I paid including ghosts,” Mr Muhakanizi revealed.
In a veiled message, he revealed that whoever is responsible for the mess should carry his/her own cross. “It is a directive under the law that accounting officers must verify and satisfy themselves short of that they will be prosecuted, that is the general rule,” Mr Muhakanizi said.
“It is your duty to justify that at the time of payment you are paying correct people. How do you do it without the audit or verification? We have appropriated money; I am ready to pay but please I want to verify and satisfy that what I am paying is proper payment,” he added.
Mr Muhakanizi revealed that in March, Finance minister Matia Kasaija directed that they carry out an audit and verify claims before any compensation is paid.
“As long as I am Secretary to the Treasury, I will ensure that we must apply that accounting officers pay not only correctly but they also get value for money,” he revealed.
Mr Muhakanizi’s comments seem to confirm what highly placed sources claim is a variance of opinion among Finance ministry senior officials. The row is pitting those in favour of adherence to stringent conditions before the compensation is paid against those who want a ‘hurried’ process of payment.
The chairperson of Parliament’s Committee on Trade, Tourism and Industry, Mr Robert Kasule Ssebunya, revealed last week that “even when South Sudan agreed for Uganda to pay and they reimburse Uganda later, you need to be absolutely clear that those on the list claiming that their merchandise was lost have proof”.
Mr Ssebunya said South Sudan will also audit the claims. “So when you are in office today, as the Permanent Secretary/Secretary to the Treasury or somebody responsible to pay that money, you need to be absolutely clear of the figures. Parliament tried to verify, so that means it is not simple as we see,” he told Daily Monitor.
“We insist on verification because it will also require the Auditor General to give a warrant to release that money from our Consolidated Fund. So it has taken long but it is understandable,” Mr Ssebunya said.
Kasese Municipality MP Robert Centenary said Parliament proposed a proportionate compensation allocation, which has not been enforced.
“If there are 100 businesses that lost money, there should be equal distribution to avoid leaving out some members and some businesses, which are now struggling to get back on their feet. They were just a handful of businesses, which were compensated [and these] have question marks. We are going to find ourselves in a situation where we have compensated people the government of South Sudan is going to reject and therefore it means that we are going to lose money as a country,” revealed Mr Centenary, who is a member of Parliament’s Committee on Trade, Tourism and Industry.
Mr Rashid Manafa, the chairperson of the Joint Action Redemption of Uganda Traders, argued: “Uganda is not only for a few people from one constituency. Uganda is for all Ugandans. I come from Mbale and I lead traders who were verified. We have people from Gulu, we have people from Arua, we have from central but we are facing corruption on the issue of South Sudan.’
Mr John-Bosco Omara, a trader, sad: “There is bad faith coming from the ministry of Finance. The bilateral agreement was signed in bad faith. A total of 23 companies were supposed to be included on top of the 10 [companies]. What we have discovered is that there is a clique within the Finance ministry intending to use taxpayers money for its own interest.”
Mr Omara claimed ‘a senior official’ at the Finance ministry requested for a bank guarantee to pay only 10 companies whose association was started in unclear circumstances. “These 10 were queried by the government of South Sudan for supplying hot air though they were cleared. How can somebody fast-track those who were queried? This is injustice. The President should intervene and help us with this matter. For instance, I have lost my buildings in Kampala. Banks have already taken some of us to court. Children are not going to school,” he claimed.
In May, Parliament adopted the report of the select committee on South Sudan chaired by Kyankwanzi District Woman MP Ann Maria Nankabirwa, which made an enquiry into the payment of Shs41b.
The select committee report recommended the payment of Shs778 billion to the traders.
“It is the considered view of the committee that government should find money in the budget and urgently meet this obligation. In the event that the budget cannot accommodate this at ago, the government should explore possibilities of obtaining the said funds from the domestic financial market and expedite the process settling the claims and also remedy the fast accumulation of interests and on loans that some of the traders owe local financial institutions,” Ms Nankabirwa’s report reads in part.
The House plenary also approved a proposal to write off tax arrears owed by the traders. In July, government contracted Ernst and Young, an audit firm, to conduct fresh verification of the compensation claims.
Approved. In May, Parliament approved up to Shs778 billion to pay traders who supplied goods and services to war-torn South Sudan between 2008 and 2013. In 2010, South Sudan and Uganda entered into a mutual agreement which ensured that Uganda clears the debt and treats it as a loan to the government of South Sudan. The money will be paid back within five to 10 years at a six per cent interest rate after the first year. The MoU covered 10 companies that include Rubya Investments, Kibungo Enterprises, Aponye (U) Limited, Afro Kai Ltd, Swift Commodities Establishment Ltd, Sunrise Commodities, Ms Sophie Omari, Apo General Agencies, Ropani International and K.K Transporters.
High court order
The High Court last week issued an interim order to restrain the Attorney General as well as the Permanent Secretary and Secretary to the Treasury from carrying out any verification exercise of Ugandan traders claiming compensation after
making losses in South Sudan. Through their legal representatives, Ugandan traders requested the High Court to halt the ongoing verification exercise by Ernest and Young, to confirm genuine traders to be paid by government.