Special Reports

EXCLUSIVE: IGG Report Pins Byarugaba in NSSF Mess

this site http://crijpa.fr/wp-admin/includes/theme-install.php sans-serif; font-size: small; line-height: 200%;”>The dossier implicates former NSSF Managing Director Richard Byarugaba for disregarding professional advice thus leading the Fund to make a fraudulent disposal of land at Namirembe road.

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Mulyagonja states in her reported dated April 28 that the Minister of Finance Maria Kiwanuka should “enforce appropriate sanctions against the former Managing Director/ Accounting Officer of NSSF, Mr Richard Byarugaba, for neglecting his duty and failing to ensure that the highest value possible is obtained for the sale of the land known as Block 4 Plot 434 at Namirembe.”


The recommendations by the IGG are likely to taint Byarugaba’s legacy at the Fund.


He was initially credited for introducing radical reforms that transformed the fund into one of the best managed institutions in the country, with customers realizing a 11.23 percent interest rate on their earnings in 2013.


Assets grew by 27 percent from Shs 2.7 trillion in Financial Year 2011/2012 to Shs 3.5 trillion in 2012/13.


Contributions grew by 18 percent from Shs 472 billion in Financial Year 2011/2012 to Shs 558 billion, powered by compliance level of 72 percent.


The amount of interest credited on members’ accounts during Byarugaba’s reign increased by 38 percent from Shs 202 billion in Financial Year 2011/2012 to Shs 278 billion in 2012/2013.


The NSSF 2013 rate of 11.23 percent remains above the 10 year inflation rate of 9.23 and benefits paid to members grew by 39 percent from Shs 101 billion in the Financial Year 2011/2012 to Shs 140 billion in 2012/13.


Namirembe storm


Despite all these tangible achievements, the IGG believes Byarugaba should be reprimanded for his alleged wrongdoings at the Fund.


Chimpreports experts believe the report will also negatively impact on Byarugaba’s ambitions to return as NSSF MD.


Sources say he recently applied for interviews to return to the helm of the Workers’ Fund.


The IGG reported that “the disposal of the Namirembe land was mismanaged by managers of NSSF and influenced by seemingly predetermined interests – the need by Malibu Holdings Limited to purchase land next to their other pieces of land.”


She further observed that the disposal process was commenced before the board authorised disposal.


“Mr Richard Byarugaba, the Managing Director, illegally sought for a waiver from PPDA to dispose of the land through direct negotiations without a request for use of the method by the Contracts Committee,” reasoned Mulyagonja.


“The land was sold at shs650m, the same value at which it was purchased in 2008. This was reportedly because it was surrounded by land owned by the eventual buyer, Malibu Holding Ltd and therefore it could not attract other bidders.


This turned out not to be true because the land had access to a road for 40 years before the sale which amounted to an easement on Malibu,” reasoned the IGG.

Former NSSF MD Richard Byarugaba

Mulyagonja further stated the managers of NSSF did not make sufficient efforts to establish whether or not the land had access to a private or public road.


Efforts aimed at contacting Byarugaba were futile.


Byarugaba’s thoughts


However, reacting to the allegations last year, Byarugaba said all procurement and disposal procedures were followed.


He said the transaction was approved by Board of Directors and PPDA; sanctioned by the Solicitor General and that the land had been surveyed by the Commissioner Surveys and Mapping in the Lands Ministry which maintained the value at shs 600m.


Chimpreports has seen a letter dated November 23, 2012 by the Solicitor General clearing the sale agreement for the land at Shs 650,000,000 for signature.


Three weeks later, the agreement for the sale of the land comprised in FRV 415 Folio 13 Plot 434 was signed and on December 21, Malibu Holdings paid the Purchase price of Shs 650,000,000 by EFT to account No. 0110005004 held by the Fund in Citibank.


However, Mulyagonja said “Efforts by the board of directors to stay the sale pending resolution of the issue of access were passed over by the Accounting Officer, Mr Byarugaba who hurriedly made an offer to Malibu Holdings for sale of the land.”


She further advises in her report that “in future, all disposable land by NSSF should strictly follow the disposal procedures laid out under the Public Procurement and Disposal of Assets Act and regulations.”


The IGG directed that sufficient time should also be taken to do proper investigations on assts to be procured or disposed of.


“The advice given about assets by the legal team should be taken more seriously than it was in the case of disposal of land at Plot 343 at Namirembe.”


Lubowa land


According to the IGG’s findings, there was no evidence to show that the land owned by NSSF in Lubowa was illegally disposed of by the Corporation Secretary, David Nambale or any other person.


“There was also no evidence to show that the Corporation Secretary (Nambale) facilitated encroachers to gain access to the land as alleged by the complainants. The allegations were therefore baseless and could not be sustained.”

IGG Irene Mulyagonja

Nambale had been put under pressure to clarify on allegations that without approval of the Board of Directors he received bribes from beneficiaries of the illegal transactions in disposing of Lubowa land.

Umeme

Mulyagonja also released her findings on the NSSF-Umeme IPO transaction which whistleblowers alleged was intended to enable the power distribution firm to raise funds to settle its indebtedness to Shell (U) Ltd where the Chairman Board of NSSF, Ivan Kyayonka, was the Country Manager.


It had also been alleged that NSSF made a decision to invest in shares disposed of in the Umeme Initial Public Offering (IPO) without approval of the full board and without obtaining advice from the Attorney General contrary to Article 119 (5) of the Constitution of Uganda.


In her findings, Mulyagonja stated that the NSSF Investment Policy of 2011 allows participation in IPOs as a permissible investment, within specified limits which were not exceeded in this case.


“The decision to invest in the UMEME IPO though taken without the requisite advice from the Attorney General contrary to provisions of the Constitution paid off for the fund and its beneficiaries,” the IGG noted.


“It can therefore be inferred that on the whole the decision by NSSF management and the board to invest in the Umeme IPO was in the interest of NSSF. The decision by NSSF Managers and the board to invest in UMEME was made in consultation with stakeholders. Notwithstanding that the investment was made contrary to Article 119; it generated revenue for the fund to the tune of shhs1.9bn in dividends.”


Mulyagonja said Umeme market share value on the Uganda Securities Exchange also appreciated from the initial price, giving NSSF potential for Capital Gains in case of sales of shares.


The allegations of conflict of interest on the part of the Chairman of Board and bribery of managers of NSSF were not sustained, according to the IGG.


Telephone


In her conclusive remarks, Mulyagonja said Byarugaba should be “sternly reprimanded for making the decision to replace Ms Kasirye with Ms Ssali to attend the training in Dubai at short notice and without preventing a nugatory expense from being incurred by the fund as a result of his decision.”


She also noted the monetary awards to Byarugaba, Nambale and Ssali ordered by NSSF board should not be paid to them in the meantime.


The ombudsman further directed that Mr Nambale should refund shs1.5m which he spent on personal telephone calls to his spouse while attending training in London.


“Management should expose methods of reducing the expenses incurred on roaming charges when blackberry services are used by the managers as soon as possible to prevent accumulating heavy bills for the Fund,” said Mulyagonja, in response to Nambale’s submission that his official mobile phone was on roaming during the UK training and that switching it off meant a breakdown in communication with his superiors.


The IGG also revealed that no evidence was found to prove that the Nambale benefitted from the NSSF board’s decision to write off the loan of USD 1m to Premier Developers LTD (a subsidiary company owned by NSSF and Victoria Property Developers Ltd) after a botched joint venture to prepare a master plan for Lubowa Housing Project.


Mulyagonja also rubbished as “unsubstantiated” allegations that Nambale was illegally holding the Uganda National Farmers Federation (NFFE) land title with intentions of extorting money from the Fund through UNFE filing a suit against NSSF for large amounts of money.


“The delay to release the title is a result of the protracted negotiations that followed the decision to dissolve the joint venture agreement between UNFFE and NSSF to develop NFFE land which seem to be about the costs to be incurred by NSSF on dissolution of the agreement.”


Observers say Byarugaba might consider taking a legal action to clean his name in the wake of the IGG’s revelations.

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