Monday, November 17, 2008

Ugandan parliament investigates sale of Uganda Telecom to Libyan government

The Monitor

MPs query Shs25b sale of UTL to Libya

Yasiin Mugerwa

Parliament has asked the Ministry of Finance to explain the sale of Uganda Telecom Ltd to a company owned by the Libyan government at a price that MPs say was below market valuations.

The Parliamentary Public Accounts Committee is investigating the Shs25 billion sale of a majority stake in the formerly government-owned telecommunications firm to the Libya African Portfolio (LAP) Greencom in 2006.

The Parliamentary Committee has questioned the transaction on grounds that the sale of shares in the firm to the Libyans in 2006 was done secretly and below the market value. The chairman of PAC, Mr Nandala Mafabi, on October 22 wrote to Finance Minister Ezra Suruma and queried the sale of the firm without advertising for bids or carrying out any independent valuations before completing the transaction.

“The sale should have been transparent by calling on investors through advertising, this was not done putting Ugandans at a disadvantage and big loss,” Mr Mafabi said in his letter to Dr Suruma. “The Public Accounts Committee is preparing a report to Parliament about the illegal sale of UTL to a private company (Libya African Portfolio (LAP) Greencom) at a price below market value and in an untransparent manner.”

Mr Mafabi’s letter gave the minister 15 days to explain the transaction but Kawempe South MP Ssebuliba Mutumba, who is Mr Mafabi’s deputy, told Daily Monitor yesterday that the ministry was yet to respond to the anomalies, days after the deadline expired on November 10.

Mr Keith Muhakanizi, the Deputy Secretary to the Treasury was yesterday reluctant to discuss the matter but promised to give details of the transaction to this newspaper today.

LAP Greencom took over UTL in 2006 after acquiring Ucom, a company incorporated in the British Virgin Islands. Under the arrangement, the Libyan company would take over majority 69 per cent of UTL share holding, leaving the government with only 31 per cent to be sold on the stock exchange.

The Public Accounts Committee, however, says the sale flouted public procurement procedures. “This UTL scandal is worse than NSSF-Temangalo land deal,” Mr Mafabi said, referring to the recent investigation, by a separate parliamentary committee, of the National Social Security Fund’s controversial
purchase of more than 400 acres of land from Security Minister Amama Mbabazi and businessman Amos Nzeyi.

“We are talking about over Shs25 billion at stake. The Ministry of Finance illegally sold a public company to Libyans without following the law, they disregarded all the rightful procedures to their advantage and this was wrong.”

The Parliamentary Committee had earlier rejected an explanation by the Secretary to the Treasury, Mr Chris Kassami who wrote to it, saying that in August 2006, UTL had identified a need to invest $86 million to cope with the “ever increasing competition”. “These funds could not be raised from internal sources as the company was making losses [loss of Shs3 billion in December 2005 and a loss of Shs7 billion in December 2006],” Mr Kassami said in his July 15 letter.

Daily Monitor investigations show that although the Privatization
Unit, which is in charge of privatising government parastatals, had approved an equity injection by the governmentof $12.9 million (about Shs25.2 billion) to recapitalise UTL, officials in the Ministry of Finance rejected this on the grounds that the money was needed for the Energy Fund.

The Fund was set up to address the effects of the energy crisis but records show that Parliament had already appropriated
money from the budget to cater for the Fund, raising questions about the justification from the Finance Ministry officials.

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