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

Tuesday, April 2, 2013

Tullow's alleged bribe to Museveni

It is very unlikely that Museveni would trade US$ 404m to the treasury for a private bribe of $50m. Here is why.

Press reports that Tullow Oil discussed to bribe President Yoweri Museveni with a private cash payment of US$50 million for his 2011 re-election campaign in order to circumvent paying capital gains tax worth US$ 404 million have generated heated debate in the country. Although the emails refer to an inside suggestion among company executives, Museveni’s critics, hungry for any mud to smear on him, now claim that the President actually took the bribe.

In doing this, Museveni’s critics are actually giving his tenure significant credit. If Museveni took the Tullow bribe, this would be a good sign. It would mean that our nation’s public finance management system has been institutionalised. It would mean that President Museveni cannot dig into the state treasury to withdraw funds for his private use. It would mean that there are sufficient controls on how he exercises power over the treasury – hence the need for him to secretly negotiate a private payoff at the price of public revenue.

Yet this is not the case. For the most part, Museveni has overriding control over the treasury even though there are constant struggles to restrain him. Like we saw in the last campaign, he has the political leverage to withdraw large sums of public funds to inject into his campaigns. 

He may, as he did in 2011, mask this expenditure in form of payments to LCs, compensation of veterans, financing for agricultural extension services, building electricity lines, resurfacing some roads etc. However, many of these activities are conveniently employed during the campaigns to bolster his electoral fortunes.

Therefore, Museveni cannot take a bribe from oil companies to help them avoid their tax obligations to the state. This is not because he is the paragon of virtue but because of the way he has structured his relationship with the state. The President sees Uganda as his country, a father in charge of the family estate.

I have argued before that he has to some extent personalised the state even though this is under constant contestation. For the most part, he treats the national treasury as his personal bank account and withdraws public funds to serve his political purposes. It is therefore illogical that Museveni would trade a tax windfall to the [his] treasury for a smaller private bribe.

Besides Museveni has little appetite for personal material aggrandisement. He has very simple tastes even though he prefers the grandeur of an emperor. Therefore, he is not the type to be looking for money to buy precious real estate in London or to invest in the New York stock exchange. To this extend Museveni is largely an honest public servant. 

He is contented with his two ranches in Rwakitura and Kisozi, seeing them as the epitome of material achievement. This fact was brought home at the funeral of Eriya Kategaya. In rejecting the claim that Kategaya died poor, Museveni counter argued that Kategaya had two farms in his village with some cows on them.

If our President had grand ambitions for private wealth acquisition, he would have been more successful in fostering the creation of public wealth. Just assume a President who steals money from the public purse and invests profitably on the London stock exchange or prime real estate in Hong Kong for his private gain. Such a thief-president would probably closely monitor the performance of his stock and the property market. It is very possible that this experience would give him the insight on how to make smart public investments.

This is best reflected in the private fortunes of the leading Kenyan political families – Kenyatta, Moi, Kibaki, Njonjo and others – and equally the public investments the state in Kenya has made. The state in Kenya owns shares in some of the largest and most profitable private businesses in Africa – Safaricom, Kenya Airways, KCB, Uchumi, Kengen, etc. It is possible the state in Kenya invests wisely because its leaders are investors as well.

This is not to say that Museveni is not interested in money. Rather he is interested in economically unproductive albeit politically profitable uses of money. For example, our president does not see money as an end in itself but only as a means to an end. The end is political power and the influence it gives him to achieve his goals – personal and social. So our president’s interest in money is not geared to realise an economic but a “political return” on investment.

This is because Museveni sees money as an important political resource. If he takes public funds, it will not be to buy a holiday home at the French Riviera but to rent political support. This means that if he needs money, it must be in the hands of the state whose institutions he has sufficient control over to ensure it is used to effectively to reproduce his political power.

Therefore, the forms of corruption that Museveni indulges in are not personal but political. He may hire 71 ministers, appoint 120 advisors, create 114 districts, establish 150 commissions and semi-autonomous government bodies and retain a large retinue of assistants. This is political patronage. He may also equip the army beyond national security needs – if only to realize his dream of imperial grandeur. Today, with Ugandan troops stabilising Congo, pacifying Somalia, engaged in South Sudan, this dream has come true.

However, all these expenditures allow him to perform some governmental functions, sometimes to achieve a measure of internal social integration within our ethnically diverse society, maintain stability; but it also helps him hold and reproduce power. 

However, although this form of political corruption privileges trade in private goods among elites (official jobs and unofficial opportunities to profit through corruption) at the expense of public goods and services to the citizen, it is largely, if not entirely, paid for through the public purse, not private funds. Museveni therefore needs public, not private funds to retain his power and can therefore not cheat the taxpayer by colluding with Tullow to circumvent its obligations to the state.

What actually happened? I suspect that someone close to the president lied to Tullow. He probably asked for US$50 million claiming it is for the president’s campaign when he wanted it for himself. The real story is: who was this person? That is the question.

1 comment:

Unknown said...

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