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

Friday, January 13, 2012

The paradox of Power.

How politicians and civil servants use Museveni as a cover to make payments to claimants from which they earn huge commissions

At the height of his power, Marshal Mobutu Sese Seko of Zaire appeared as if he was in complete control of the country and its people. Yet beneath this veneer lay an ugly reality: Mobutu was entrapped. Having personalized power, or created a myth thereof, evoking his name became a key to unlock access to power, privilege and wealth – but equally a cover for public officials to swindle public resources without taking personal responsibility.

A common story goes like this: Mobutu would ask his personal secretary for US$ 1m. The secretary would instead tell the State House comptroller that Mobutu had asked for US$ 2m. The comptroller would inform the governor of the central bank that the president wants US$ 3m. The governor would withdraw US$ 4m, pocket US$ 1m and pass on the rest to the other officials each of whom would nibble off their cut until Mobutu actually received the US$ 1m he had asked for – only 25 percent.

President Yoweri Museveni may be in a similar trap. The ongoing parliamentary investigation into the compensation of businessman Hassan Basajabalaba worth Shs 146 billion is a perfect example. For an entire week, every minister, governor, attorney general and top civil servant who appeared before the committee said they acted on the “president’s instructions.” Although this defense seems true, it is an excuse not an explanation for their behavior.

The background: Basajabalaba claims that he got sub-leases and management contracts for three markets – St Balikudembe, Shauriyako and Nakasero; and a lease to redevelop Constitutional Square. Museveni revoked these leases and contracts arbitrarily because vendors in these markets complained to him. But this had no force of law since only a court can revoke a title or contract. Indeed, the government disregarded court orders allowing Basajabalaba to evict these vendors. Yet Museveni’s action was consistent with the way many in Uganda’s chattering classes would want the country to be run i.e. by pandering to public sentiments rather than to laws, rules and regulations.

If Basajabalaba holds legitimate leases to these properties, I would defend his right to fair and just compensation. I have talked to a number of real estate moguls and dealers in Kampala and the estimated value of the above properties at market prices can go up to US$ 150m. Secondly, if one factors in the business opportunity foregone when government revoked the leases, Basajabalaba’s claim can easily exceed US$ 300m. This is because the business opportunity contained in the possession of an asset must exceed the value of that asset for anyone to feel attracted to invest in it. Thus, in asking for US$ 70m, Basajabalaba is actually being modest.

However, there is an audit report by KPMG to the Auditor General which shows that the leases and contracts Basajabalaba had were given illegally. If this is true, then Basajabalaba has no claim. And this shows that corruption in Uganda is not limited to the NRM but is a problem of the wider bureaucratic and political class. At the time these contracts and sub-leases were given to Basajabalaba, KCC was actually being managed by mayors from the opposition and an opposition dominated city council.

Before I read the KPMG report, I had almost been convinced that Basajabalaba had a legitimate claim. However, I felt that compensating him was very costly to the taxpayer. In a chance meeting with the president, I proposed to him that the government should let Basajabalaba retain his titles but put conditions on the leases or in a city development plan or policy. Under such lease conditions or city policy, Basajabalaba would be required to develop modern shopping malls whose standards would be set by KCC and this re-development would be given a specific timeframe e.g. seven years.

I proposed that part of the conditions on the lease or city policy should require Basajabalaba to sell space to existing vendors giving them first right of purchase. The government would place the necessary amount of money in Housing Finance Bank and DFCU as long term mortgage finance for vendors to borrow and buy condominium stalls in the new shopping malls. This would be a win-win solution for everyone - government, Basajabalaba, taxpayers and vendors.

I felt that the president liked my idea yet it never got anywhere. I was suspicious this proposal would never be accepted by the political and bureaucratic players in this country because it would have taken control of the money from their hands to banks. This would have minimized potential for corruption. In today’s Uganda, nothing works unless individuals within the system are going to profit from it.

There is a mistaken belief in this country that Museveni can order any minister or bureaucrat to pay and they oblige out of fear. I used to hold it too. However, the reality is different as I discovered. Over the years, Museveni has issued very many instructions to the ministries of finance, justice, local government, lands etc to pay different groups and individuals. The claimants have never been paid. Instead, civil servants easily frustrate him by hiding behind procedures. None of them has been fired for not paying.

Question: why was Basajabalaba’s claim processed quickly including giving him a central bank guarantee so that he can borrow from commercial banks? It seems very likely that Basajabalaba did not take home the entire Shs 146 billion. Instead, it is possible that many officials in Bank of Uganda, the ministries of lands, local government, finance, justice and officials of KCC pocketed something in exchange for their collaboration.

Only two people tried to stop this payment - the PS/ST finance, Chris Kasami and his deputy Keith Muhakanizi. They tried to insist on an audit before payment. However their requests fell on deaf ears as the payment was rushed for a central bank guarantee.

Basajabalaba was paid, not because Museveni directed, but because the president offered the best cover for others to make commissions. All these ministers, governors and civil servants are using the excuse of “orders from above” to hide behind the president’s directive as a protection against their own complicity is abusing public funds. Like Mobutu before him, the predator has become prey. Museveni may think he is in charge. Actually he has lost control over runaway theft by government officials.


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