President should not jump from one arbitrary position to another in service of popular sentiment
Since The Independent broke the
story of businessman Hassan Basajabalaba’s Shs 169 billion
“compensation” last year, two ministers have resigned and three members
of staff at State House have been fired. All this shows how much, albeit
slowly, public pressure is impacting on government. As a citizen, I
feel satisfied that almost everything I demanded on this matter has been
met by the government.
IPL has obligations to its suppliers. It
draws cheques to pay these suppliers which Crane Bank honours. If there
are no funds on IPL accounts, we apply for an overdraft facility. Crane
Bank always approves such requests and almost automatically. This is
because after doing business together for years, a relationship of trust
between us has evolved. That is how banks all over the world work – on
trust.
Crane Bank has names and specimen
signatures of persons authorised to sign an application for an
overdraft, bank guarantee or cheque. Once the Chief Executive Officer
(CEO), the Chief Financial Officer (CFO) and the Legal Secretary (LG) of
IPL have signed on an instruction, Crane Bank’s Head of Credit or
Managing Director honour the instruction unless they have cause to
believe it is forged.
The relationship between the government
and the central bank is even closer than an ordinary company has with a
commercial bank. The government keeps its income and expenditure
accounts in the central bank. However, although the CEO of IPL has no
power to hire or fire the Managing Director of Crane Bank, the president
of Uganda has power to hire and fire the governor of the central bank.
Hence, by design, Crane Bank is more independent of IPL than BoU is to
government.
In the case of paying Basajabalaba, the
grounds for the governor agreeing to honour the request from the
government were stronger than Crane Bank gets to give any of its other
trusted clients an overdraft. There was an inter-ministerial committee
composed of President’s Office, Kampala City Council, ministry of Local
Government, ministry of Lands, ministry of Finance, the ministry of
Justice and the Chief Government Valuer. They met and agreed to the
existence of a claim against the government by Basajabalaba. Later, the
Attorney General, the final authority in any commitment of the
government, wrote stating the amount to be paid to Basajabalaba.
Whatever disagreements surfaced in that
committee (as Amanya Mushega imputed in his article in Daily Monitor of
March 23), they were internal to it, not part of the consumption of the
governor. A decision by a committee does not need unanimity to hold. On
this basis, President Yoweri Museveni wrote to the minister of Finance
asking her to liaise with the governor to pay Basajabalaba. The Attorney
General wrote supporting the claim. Money was paid through what the
central bank calls “bridge finance” in form of letters of comfort. This
is a normal practice. Whenever government does not have cash, BoU gives
them bridge finance.
Contrary to popular opinion, the
governor does not need to consult the board on every such payment. The
government regularly makes many requests for bridge finance. Therefore,
there is no technical or legal basis to fire Mutebile or force him to
resign. However, we can stretch our imagination and say there is some
“prudential basis” for it. This would be based on our informal
understanding of the reality of our politics as Ugandans that is not
codified in law or government rules of procedure. This informal
understanding is actually often rejected by Uganda’s chattering classes
whenever I refer to it as a vital ingredient in the management of our
affairs.
For example, BoU had a criminal case
against Basajabalaba for forging court documents showing he had lost his
land titles which were actually being held by the central bank for
loans he owed government. He then used these forged documents to get
Registrar of Titles to cancel the old title deeds and issue him new
ones. Therefore, one can legitimately claim that Mutebile should have
been suspicious of any claim by Basajabalaba. This suspicion should have
made him call the Permanent Secretary/Secretary to the Treasury or even
the President and warn them about potential fraud when dealing with
Basajabalaba. By not doing so, he was not being prudent.
There is a weakness in this argument.
Mutebile would counter argue saying: “Look, this claim had been approved
through an elaborate process involving seven government ministries and
departments over a period of nearly a year. The Attorney General is the
final authority on the legality of any claim against the government. I
talked to the minister of finance and the Attorney General who cleared
my suspicion that Basajabalaba could have forged this new claim.” Bingo!
You can twist the argument back and forth but Mutebile would sound as
reasonable as it gets.
Without a legal basis for firing
Mutebile, any such action would cause a suit against government for
wrongful dismissal. Every reasonable judge would give him a hefty
compensation. Given his international reputation, the amounts he would
get can be astronomical. In fact this arbitrary decision-making meant to
appease popular opinion was the cause of Basajabalaba’s claim in the
first place. Basajabalaba entered contracts with KCC to manage city
markets. He got leases for the land and sought to evict vendors. The
vendors petitioned the President for protection and Museveni took a
politically popular but arbitrarily decision and cancelled
Basajabalaba’s leases.
However, although the decision was
humane it threatened the fundamental basis of a capitalist economy –
respect for legal contracts and property rights. Realising his mistake,
Museveni agreed to compensate Basajabalaba for loss of these assets
(contracts and land) and the business opportunity in them – a fair thing
to do. Thus, going forward let the president not jump from one
arbitrary position to another – all in the service of popular sentiment.
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