About me.

Andrew M. Mwenda is the founding Managing Editor of The Independent, Uganda’s premier current affairs newsmagazine. One of Foreign Policy magazine 's top 100 Global Thinkers, TED Speaker and Foreign aid Critic



Monday, April 8, 2019

Uganda’s storm in a teacup


How our MPs invented a scandal around Uganda Airlines’ shares and our chattering elites joined the chorus
Those who can make you believe absurdities can make you commit atrocities,” Voltaire
Last week, our parliamentar- ians alleged that some unscrupulous ministers had stolen government shares in Uganda National Airlines Company Limited (UNACL) by registering them in their private names on the shares allotment form. A “vigilant” committee of parliament “unearthed” this fraud. Parliament went hysterical with the deputy speaker, Jacob Oulanyah, saying he would have fired the ministers if he were president. On traditional and social media, pundits outdid one another denouncing this blatant theft.

Yet for all the hysteria, there was actually only a minor clerical error on the forms that did not affect the substance of owner- ship of UNACL. MPs and other Ugandan elites exhibited a degree of ignorance that makes one worry about democracy in our country. Socrates described 5th century Athenian democracy as “empowered envy.” The democratic assembly sentenced him to death by drinking hemlock because he always questioned the self-righteous claims of Athenian elites. Increasingly, I find myself in the same position.

I wrote in this column last year that the revival of Uganda Airlines is a good idea that has been introduced into a wrong country. Ugandan elites are not interested in the good of their country, but in proving their biases. So mistakes in the airline will not be an opportunity to reflect and reform the way it is run but a chance to grandstand and score political points in order to win cheap popularity.

Last week, our MPs and pundits sunk to their lowest level. They claimed that because the share allotment form reflected the names of the ministers rather than the ministries as owners, the airline shares had been stolen. They ignored the fact that UNACL is registered as a public company. Therefore there is no chance in hell that a private person can own its shares.

A background: at incorporation of UNACL on January 30, 2018, the company was given 2m shares and only two shares were proposed pending allotment of all the shares at a later date: one share by each of the two shareholders the ministry of finance and ministry of works. This is normal. The real allotment was filed on July 11, 2018. Here the form provides for name of shareholder, address and particulars of allotment. On name, it says Matia Kasaija and Monica Aruba; address, it gives ministry of finance and the ministry of works and on shares one million shares for each.

Ideally, on name of shareholder, it should have said “minister of finance, Matia Kasaija, and minister of works, Monica Azuba.” The clerk omitted the title of ministers. But this was not fatal because the memorandum of incorporation and articles of association describe the objectives of the company, the share capital, the owners, the shareholding and the value of the shares. These documents state clearly that the subscriber is government of Uganda through the ministries of works and finance; and were signed by both Kasaija and Azuba in their official capacities as line ministers.

Therefore legally there was no risk to government losing the shares because the ministers whose names appeared on the registration documents are the same per- sons who appear on the allotment form. If the ministers later, after leaving their current jobs claimed ownership, the claim would not stand because the articles of association and memorandum of incorporation clearly show the subscribers; and they also clearly show that they signed in their official capacities. Even a third grade lawyer in a third world country would see this.

If Kasaija and Azuba tried to sell shares to anyone, the buyer would have to go to the registry to transfer the shares. The registry would tell him/her that they bought air because UNACL is registered as a public, not private, company. 

So when the minister said there was a clerical error and amended the documents by adding the title of “minister” to the names of Kasaija and Azuba, it was not meant to change anything of substance but to satisfy the emotions of MPs and our chattering elites.

The MPs and the cacophony of shrill alarms they raised ignored the fact that under the Company’s Act, the registrar of companies has powers to rectify errors on documents. What if the share allotment forms had indicated any other name other than that of a person who has a relationship with the ministries of finance and works? That would have been a big error, though not a fatal one, that cannot be rectified by the registrar. But even here, that person would not “steal” the shares (by claiming them) because he would have to explain how he got them! You cannot own some- thing you did not buy and have no sale agreement for.

The other issue was Gad Gasatura who was appointed chairman of the board but the company did not notify the registrar of companies. So the issue was: in which capacity was he signing company documents? This was later rectified. But delaying to inform the registrar does not nullify appointments; it only causes the registrar to impose penalties for the delay. The MPs reached the height of absurdity when they asked why a company registered last July could have its documents certified in March 2019. Really? I will not honor this stupidity even with a comment.

Ugandans are angry and frustrated at their government – often for the wrong reasons. This has led a large section of the punditry to always look for an opportunity to vent their spleen at those holding power. It has gotten worse because in the event of no scandals, they are beginning to invent them – like this alleged theft of UNACL shares. Yet this mistrust in government is most likely going to cause more failure rather than promote success.

The failure of a nation is sometimes (in Africa, most of the time) attributed to corruption and ineptness of leaders. Yet all too often nations fail because of the collective delusions of their societies. Uganda is in crisis because its elites, suffering from acute psychological insecurity and guilt, seek meaning through exaggerated hostility to state action, even though backed only by ignorance and emotions.

Uganda airlines will fail not because the government is corrupt and incompetent but because Ugandan elites are suspicious of the state. Our democratic institutions like parliament and the press, which are meant to give citizens opportunities to check government, actually make us hold the state hostage to our emotions and delusions.

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amwenda@independent.co.ug

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