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Katosi road saga

By Haggai Matsiko

The signature that pinned Byandala

When the Minister without Portfolio, Abraham Byandala was on July 28 called to the Inspectorate of Government offices on the IPS Building in Kampala, he must have suspected something big was happening in the investigations into the Katosi Road scandal.

Four individuals implicated in the scandal had also been summoned to the IGG’s office. These were the former Executive Director of the Uganda National Roads Authority (UNRA), Ssebugga-Kimeze, the former Director Finance and Administration, Joe Ssemugooma, the Legal Counsel, David Luyimbazi, and a former employee of Housing Finance Bank, Isaac Mugote.


Officially, the group was there to record a statement about their role in road construction scam that saw the government hand over Shs24 billion to suspected conmen. In a swift turn of events, they were immediately driven to the nearby Anti-Corruption Court in Kololo and whisked off to Luzira Maximum Security Prison in spite pleas for bail from their lawyers.

Byandala and his co-accused face 24 counts of abuse of office, influence peddling, causing financial loss, disobedience of lawful orders among others.

Although Anti-Corruption Court magistrate Julius Borore had remanded them to Luzira until Aug.11, Justice Paul Mugambe, following an appeal, ruled that the accused appear before court on Aug.3, where they were granted bail.

The case is likely to be heard for a long time. However, details so far emerging indicate that Byandala’s woes started as early as 2013 – with a signature.

Case started with State House

According to sources familiar with the case, early in 2014, a team of State House investigators interrogated several UNRA officials. The interrogation at Okello House which is part of State House Nakasero in Kampala was intense. It started at 2pm and ended at 6pm and involved Ssebugga-Kimeze, Ssemugooma, Baryaruha, Luyimbazi, and one Patrick Muhumuza, the then project manager for the Mukono-Katosi road.

Kimeze was supposed to travel abroad that day but the team of investigators insisted he had to appear before it that day. Working on a tip from an Internal Security Operative (ISO), the team had discovered irregularities about the procurement of the 74km road that was initially supposed to cost Shs165 billion. The road is now being constructed by a whopping Shs250 billion.

Specifically, the team had learnt that the contractor who had been awarded the deal; Eutaw Construction Company, had used a fake bank guarantee worth Shs24.7 billion to secure the same amount from government as the first installment of the total contract amount.

They had also learnt that UNRA officials awarded Eutaw the deal despite information that the entity was a brief case company.

After several hours of grilling, the UNRA team led by Kimeze confessed that they had this information but that Abraham Byandala, the minister of works applied a lot of pressure for the Eutaw contract to be implemented.

According to sources privy to the interrogations, Kimeze told the State House investigators that Byandala made sure he was present to see the contract signed on November 15, 2013.

“He (Byandala) said that I know you do not want to sign but I am going to stay here until you sign,” Kimeze told the investigators. Apparently, Byandala made sure he stood by Kimeze’s desk and was breathing down his neck until the contract between UNRA and Eutaw was signed.

However, Kimeze had following frantic calls from the minister over the matter asked the latter to put his directive in writing. Byandala did. That directive and signature have come back to haunt Byandala.

From the point when Byandala put the directive in writing at the urging of Kimeeze on November 13, 2013, the Katosi Road saga became a yoke around his neck.

When the project kicked off, it was not Eutaw on the ground. Instead the work had been sub-contracted to a Chinese company, Chongquing International Construction Corporation (CICO).

Suspecting corruption in the deal, the State House investigation team wanted to block the commissioning of the project but failed. Several reports they wrote to President Museveni were frustrated and the project could have gone on unhindered. The climax of the duplicity was on July 7, 2014 when President Museveni commissioned the road and allowed photo-ops with so-called Eutaw directors.

At the commissioning, Byandala hailed Eutaw as the first American company to construct roads in Uganda. But it was the Chinese in action. Eutaw had got CICO workers to don overalls with Eutaw stickers. Even the CICO trucks now had Eutaw stickers on them.

Powerful connections

By this time, however, real directors of Eutaw had declined to fly into the country fearing that they could be arrested given that word about the investigation had gone out. The person behind the deal appeared to be Apolo Senketo who passed off as Eutaw’s Country Manager.

Investigations revealed that Senketo is a former chairman of the powerful Uganda North America Association (UNAA). He is also a brother to the wife of Kiryowa Kiwanuka, one of President Museveni’s lawyers, who is also partner of Kiwanuka & Karugire Advocates of Edwin Karugire, the President’s son in law.

This might explain why it was so easy for Senketo to meet the President twice, the Vice President Kiwanuka Sekandi and get Minister Byandala to push through his deal even before proper procurement procedures could be carried out. It could also be partly why the entire group finds itself in trouble.

At the commissioning Senketo, the self-declared Eutaw Country Manager was nowhere to be seen. Instead, his wife, Nakku Senketo, was spotted driving a Nissan Patrol 2013 model that Senketo had previously been driving.

Soon after this, efforts to verify the bank guarantee had taken the instigating team to Housing Finance Bank. Here, they learnt that for the Bank to issue a guarantee worth Shs24.7 billion like the one Eutaw had secured, the bank’s board had to convene a meeting. In this case, however, the board had not sat.

With this information, the investigators contacted one of the board members, Keith Muhakanizi, the Secretary to the Treasury. Shocked that this had happened right under his nose, Muhakanizi instantly wrote to the Inspector General of Government, Irene Mulyagonja, copied in President Museveni, and Byandala himself.

“I have information that a fraudulent transaction involving payment of over Shs24 billion to Eutaw was effected by Uganda National Roads Authority (UNRA). I have also been informed that Eutaw forged an insurance bond purportedly from SWICO,” he wrote in a July 9 letter.

Mulyagonja, who had been thirsty for a high profile case since she was appointed IGG in 2012, instantly went to work. As her investigations deepened, she discovered that she had enough evidence to pin a number of suspected corrupt officials at UNRA and minister Byandala.

She wrote to Public Procurement and Disposal of Public Assets Authority (PPDA) complaining that the award of the contract was done in a dubious manner and that the cost was unrealistic.

Apart from the team of investigators from State House, the IGG, PPDA and Police’s Special Investigations Unit (SIU) were now all investigating the case. At SIU, the officer in charge was a one Nabakoza.

At some point the President’s son in-law, Geofrey Kamuntu, got involved. Kamuntu had organised a meeting that was supposed to be attended by then-SIU boss Charles Kataratambi, UNRA’s David Luyimbazi, and then-minister of State for Works, John Byabagambi and the team of investigators. The meeting never occurred.

Sources closely following his case say it will be hard for Byandala to reduce his culpability in this case.

Byandala accuses colleagues

In the past, Byandala has blamed his woes on a group of ministers who want him out of the job. He has personally singled out Minister for Presidency Frank Tumwebaze and ICT Minister John Nasasira.

Byandala has also tried to link Tumwebaze to the scandal. He told The Observer newspaper in an interview that a company connected to Tumwebaze’s relatives, his colleague John Byabagambi and Richard Kaijuka– High-Tides Ltd—is the one that had connected Eutaw for pay.

Politically, Byandala seemed to have fallen out of favour by making accusations against fellow ministers, who happen to be in President Museveni’s inner circle. Sources say former Vice President Gilbert Bukenya’s woes started after his interview in which he alleged that a mafia wanted to finish him.

Apparently, President Museveni never forgave him and the so-called mafia intensified their efforts to have him booted. Although Byandala was not fired following his mafia revelation, he was demoted to the post of minister without portfolio.

For Byandala and co-accused, matters are not helped by the fact that the project they messed with was a high-stakes kind.

President Museveni had pledged to construct the road during his 1996 election campaigns. Even when the contract was halted, the road had to go ahead at all costs. That is why despite complaints that the contract was awarded to SBI International AG and Reynolds Construction Co. Ltd at a whopping Shs250 billion, it is going ahead.

SBI International has for long been connected to former Prime Minister Amama Mbabazi, who has since fallen out with President Museveni. A source close to the investigations said some ISO operatives had protested the SBI deal but they were ignored because the road had to be done.

While it exploded in 2014, the Mukono-Katosi trouble started in earnest on Nov.01, 2010, when Senketo, who had secured a resolution showing that the directors of Eutaw Construction Company Inc of Aberdeen Mississippi—the real Eutaw—had formed a Special Purpose Vehicle (SPV) to be named Eutaw Construction Company Inc of Vero Beach Florida with the purpose of soliciting and executing civil works in Asia and Africa.

With that document, Eutaw bought seven bid documents and submitted five in December 2010. One of the five was picked as the best-evaluated bidder. But at the time, the government did not have the money to construct the roads. Senketo and his American team said they had secured financing.

They even petitioned President Museveni and held two meetings with him one of which was at his Kisozi Ranch. In February 2012, Museveni directed the Finance and Works ministries to expedite negotiations with Eutaw.

But because UNRA now had the funds, it instead re-tendered the project, a decision that Senkeeto and his American accomplices protested.

At one of the meetings, apparently President Museveni had asked Byandala to follow up on the Eutaw matter.

The case against Byandala

Sources say the IGG, Irene Mulyagonja, has built her case around Byandala’s role in directing UNRA officials to sign the contract when he was fully aware of questions around the contractor.

Byandala publicly exposed his role when he revealed in The Observer newspaper interview that he had relied on verbal advice from the Deputy Attorney General, Fred Ruhindi, to go ahead and direct that UNRA implements the Eutaw contract when he knew there were questions surrounding the company’s authenticity and even before due diligence could be carried out. A source also told The Independent that Byandala did not have the powers to direct UNRA directors to sign the contract. Apparently, the minister can only direct on policy issues and even here, his directive needs to be tabled before parliament and gazetted before the technocrats can implement it.  “The ones he directed say he applied political pressure,” a source who has been involved in the matter said.

The IGG has also built her case mainly around the fact that officials signed the contract without carrying out due diligence.

On December 05, 2013, UNRA wrote to Eutaw headquarters requesting for an appointment for its legal team to travel to the US to verify the documentation. On December 13, UNRA got back a prompt reply dated December 10 in which the verification visit was confirmed for February 11-14, 2014.

The director audit, Peter Kirimunda, was one of the two supposed to make the trip. They did not.

But that did not stop the UNRA Legal Counsel, Baryaruha, from writing a legal note advising that due diligence process could be carried afterwards even when an internal committee had insisted on the team traveling to the US first in compliance with the procurement laws.

Mulyagonja is also looking at how UNRA allowed Senkeeto to use a fake bank guarantee from Housing Finance Bank, executed on November 13, 2013, worth Shs16.528 billion that was later rejected, then withdrawn and replaced with an insurance bond, this time from SWICO with the same face value.

Another bond from Housing Finance was also re-submitted with a face value of more than Shs24.79 billion. Sources say, all these documents turned out to be forgeries.

Despite this, UNRA on December 30, 2013 through Martin Olwa, the Katosi Rd project engineer, recommended that the advance payment could be made to Eutaw. On January 24, 2014, a payment voucher from the Treasury General Account was made with a face value of more than Shs24.79 billion.  With the money, Eutaw officials brought in CICO, which was paid Shs 12.24 billion to embark on the road construction.  The IGG is interested in where the balance about Shs12.55 billion went. By March 2013, even before the road could be commissioned, the Eutaw account was already empty.

In a June 2014 report, PPDA noted that there was no evidence that Eutaw had furnished the entity with the performance security.

PPDA also noted that contrary to procurement regulations, UNRA entered into a contract with Eutaw on November 15, 2013, basing on a bid that had expired on April 8, 2011.

The authority also added that while regulations require that the Evaluation Committee to seek clarification on arithmetic errors during the evaluation process, in this case, the evaluation committee sought clarification from Eutaw on January 11 2011, after the initial Evaluation Report had been submitted to the contracts committee for approval on December 23, 2010.

Apart from this, the report showed that the Accounting Officer (Kimeze) wrote to the Solicitor General seeking clearance of the draft contract document on October 25, 2013 before the expiry of the Notice of Best Evaluated Bidder (NoBEB). The NoBEB was displayed on October 23, 2013 and was due to expire on November 5, 2013.

Apart from this, contrary to PPDA regulations, UNRA officials had gone ahead to negotiate the contract. To make matters worse, the minutes of the negotiations were missing from file.

The PPDA report also showed it had found irregular the fact that Byandala wrote to Kimeze directing him to implement the contract immediately while due diligence was still being carried out by the UNRA Technical team.

Baryaruha had also written to Kimeze advising him that the contract with Eutaw could be signed while due diligence tests were still continuing.

“The Authority notes that it was highly irregular for the Accounting Officer to sign the contract before the completion of due diligence tests contrary to the requirements under Regulation 34 of the PPDA Regulations, 2003,” the PPDA report notes.

As such, PPDA recommended that the Accounting Officer should take responsibility for signing a contract basing on expired bids and should also caution the Contracts Committee for approving negotiations that were irregular.

PPDA carried out a detailed Contract Audit, which according to sources close to the investigations has more harsh recommendations with far reaching implications, including the prosecution of over 20 officials.  On August 29, 2014, the IGG directed the UNRA board to suspend the four UNRA top officials who were close to the deal. The IGG also directed government not to pay until it is ascertained that a valid and binding contract with a genuine contractor exists.

Having assembled her evidence, very few people could stand in the Mulyagonja’s way. Indeed even when Attorney General (AG) Peter Nyombi advised that cancelling Eutaw/CICO contract would expose government to financial loss, his advice was out rightly rejected.  Nyombi’s counsel was contradicted by that of his then deputy, Fred Ruhindi. Ruhindi had advised that by cancelling the contract, government would be doing away with an illegality. As they say, the rest is history. Nyombi was kicked out in a reshuffle and Ruhindi is now the AG.

By this time, the IGG was already armed with a letter from the legitimate American construction company saying it had absolutely nothing to do with Eutaw Construction Company Inc. of Vero Beach Florida neither did it know the individuals who got the money from UNRA. With this evidence, Mulyagonja is keen to have a key victory in court.

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