The storm at Uganda Airlines

Wednesday May 05 2021
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It will be interesting to know how the investigations at Uganda Airlines will return. PHOTO/COURTESY

By Dorothy Nakaweesi

A storm has been brewing at Uganda Airlines – albeit silently. Last week, the lid was blown off. 
For now, it is difficult to predict how things will end, but what we are sure of is, there is a problem. 

Reading from details that Daily Monitor has seen and sources that requested anonymity to speak freely, the problem seems to be wider mix of both politics on one hand and corruption on the other.  

On one hand, is the supervising role that seats with the Ministry of Works, with a seeming extension to State House and the presidency, while on the other is the board that is fighting for control with management of the Airline. 

All these seem to be interested in having the last call. But what is clear it has ended up in a pull and push game that seems to have no end in sight. 
On April 27, Works Minister Katumba Wamala sent seven Uganda Airlines top managers on forced leave in a letter that did not clearly state the reasons for the suspension. It only pointed to need to “pave way for investigation into serious allegations raised against their conduct of business”.  

Those suspended included Mr Cornwell Muleya, whose contract as Uganda Airlines chief executive officer had just recently been extended up to September 2022, Mr Paul Turyacayisanga, the finance director, Mr Joseph Ssebowa, the head of human resource, Mr Harvey Kalema, the manager ground handling and operations, Mr Bruno Origi, the director safety and compliance, Mr Moses Wangalwa, the head of procurement and assets disposal and Mr Alex Kakooza, the first captain, who the letter instructed not to undertake any flight functions until he is “cleared”. 

The suspension came as a surprise to many but what is clear,  it was ordered by President Museveni, who, acting on information, was privy to a number of issues that were not going on well at the Airline. 

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“I am writing in connection to a meeting you held yesterday [April 26] in the office of the Minister of Finance with shareholders of Uganda Airlines to discuss pertinent issues concerning the company. The issues were raised in a letter dated April 21 written to me by the President,” Gen Katumba wrote in the April 27 letter addressed to Uganda Airlines chairman Perez Ahabwe. 

The same issues were referenced in an April 26 letter by State Transport Minister Joy Kabtsi, who had invited the management of the airline and the board to do some explaining but none of those who had been invited turned up.

Being the Transport state minister, Ms Kabtsi supervises the airline but it is not clear why those who had been invited did not turn up.     

However, from the look of things the issues seem to be deeper than meets the eye, involving governance, which touches on friction between the board and the airlines’ management, corruption and influence peddling, growing list of outstanding payments due to suppliers and failure by government to remit budgetary and capitalisation allocations as and when they should be.

Whereas Mr Muleya declined to be drawn into discussing these issues yesterday, a January 27 brief that was prepared for the President seems to give a clear picture. 

The brief sought to offer “the correct status on the issues facing the company [Uganda Airlines], from the perspective of the chief executive officer’s office”.
It is not clear what had prompted the brief to the President, but is obvious  there had been concerns raised, some of which touched on the inner workings of the airline and an alleged media attack, which sought to cast the airline in bad light.  

In the brief, the board is accused of having no experiencing in aviation and pushing for the promotion of self-interest instead of concentrating on safeguarding the interest of the Airlines. 

Thus, the brief notes, some board members have been drawn in unhealthy tendencies with some trying to interfere in management functions such as procurement and staff recruitment. 

“In accordance with corporate governance principles, the board should limit itself to structures, strategy and policy, and not interfere in day-to-day management issues,” the brief notes and  highlights how some board members have met members of the management team with a view of finding ways of invoice loading and other money-making schemes. 

Whereas Mr Ahabwe did not respond to our request to clarify on the matters raised above, a board member who requested anonymity to speak freely, told Daily Monitor that some of the allegations were not true save for a few, which included corruption among some of members of the management team.

“As the board, we were only involved in recruitment the chief executive officer.  The rest are just claims,” the board member said.   
For instance, he refers to an issue that was also pointed out in the brief in which a former commercial director was accused of fraudulently hiring a company in which she had interests. 

We have omitted the names of the former commercial director for legal reasons as she declined to tell us her side of story and we could not immediately verify the claims. 

However, the brief and the board member name the company as Abbavater, and go on to claim that it had been introduced to the airline by the commercial director, whose employment at the airline was never confirmed after expiry of the six-month probation period. 

The brief accuses the former commercial director of hiring a company that had no capacity to market an entity such as Uganda Airlines as well as inflating invoices in favour of the company and irregular payments.

For instance, the brief points to a particular invoice, which was approved by the former commercial director with a contract price that had been inflated by about $232,000 (Shs851.4m). 

“The former commercial director at one point authorised the over invoicing of an amount of $232,000 (Shs851.4m) for this agency [Abbavater] (invoice raised and approved $404,000 (Shs1.48b) when the actual costs were $172,000 (Shs631.2m). These were some of the reasons why the individual was not confirmed to the position after the probation period of six months,” the brief to the president, notes.  

It also points to a growing rate of budgetary and capitalisation shortfalls that have now grown to Shs133.3b in arrears, which therefore had required government to allocate Shs218.9b for quarter one operations but only Shs117.6b was allocated living a shortfall of Shs101b.

Whereas the above could have been some of the reasons for the suspension of top managers, it is difficult to ignore the performance issues that were raised by the Auditor General.   

Uganda Airlines, during the 2019/20 financial year, according to the Auditor General, grossed Shs102b in losses, which had sharply risen from Shs15b that had been posted in the 2018/19 financial year. 

What they say

''You cannot have a board full of aviation experts only. You need a mix of professionals. For any organisation, you need people who understand accounts and  corporate governance. They have to understand the business they are heading and I think the Uganda Airlines board is one of those,'' Ms Monicah Azuba Ntege, former Works minister

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Ms Monicah Azuba Ntege, former Works minister.

''In my opinion, we need to strengthen the board. The entire board has no experience in aviation. Some members want to go beyond their role. The board wants to interfere in management. Define the role of the board and also understand the role of the minister to avoid past mistakes,” Captain Mike Mukula, aviation expert 

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Captain Mike Mukula, aviation expert.

editorial@ug.nationmedia.com 

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