By Andrew M. Mwenda
The inside story
On December 4, 2008, President Yoweri Museveni called Finance Minister Ezra Suruma and ordered him to suspend the Managing Director of National Social Security Fund (NSSF), David Chandi Jamwa and his deputy, Mondo Kagonyera. For months, Suruma had been psychologically paralysed and unable to take action. Now he had to and he complied.
Yet in October, Museveni had bulldozed his NRM party caucus from censuring Security Minister Amama Mbabazi and Suruma. The two ministers were the architects of the Temangalo land saga in which NSSF bought Mbabazi and businessman Amos Nzei’s land at Shs 11bn. But the transaction later provoked a parliamentary inquiry after reports emerged that the two ministers had exerted political pressure on the NSSF managers to buy the land in disregard of procurement procedures. Museveni saved Mbabazi and Suruma from censure by influencing NRM party MPs in the House, arguing the two ministers did not commit any wrong in the land deal. So how and why did the president make a move on Jamwa since the NRM caucus had recommended that all those involved in the deal be spared?
Sources close to State House say the president was acting on the basis of a dossier written about Jamwa and his management of NSSF. But insiders say the dossier alone could not have moved the president. The decision was sparked by a series of actions by Ministry of Finance officials who raised serious concerns about Jamwa. The Temangalo saga provided the right context to cause the decision.
For example, on September 5, 2008, the Auditor General (AG), John Muwanga, had written to Jamwa informing him that he had hired an audit firm, KPMG, to audit NSSF’s Temangalo deal.
Jamwa responded with an unsigned letter on the same day saying that hiring KPMG would raise serious conflict of interest. Muwanga was not convinced. He wrote to Suruma on September 19, 2008, complaining about Jamwa’s resistance to the audit. He also informed Suruma that he was commencing his audit on September 22. Since he was resisting the audit, Muwanga asked Suruma to first suspend Jamwa to allow the investigations. Suruma did not reply the AG.
Suruma’s inability to act and alleged personalised supervision of NSSF forced some Ministry of Finance officials to take unprecedented actions to save the Fund. When Suruma travelled abroad in October, Finance officials approached State Minister for General Duties Fred Omach, who was acting. They asked him to write to Jamwa stopping all investments by NSSF except in treasury bills, bonds and commercial bank deposits. Omach wrote the letter on October 10. Jamwa did not reply the letter. Some say he was weighing whether to defy it.
But when Suruma returned to office, Jamwa wrote to him on November 12, asking the minister to rescind Omach’s letter. By this time, however, Suruma was in a state of paralysis and unable to do anything. As with the AG, he did not reply Jamwa’s letter either. Fearful that the problem would not go away, Ministry of Finance officials took the problem directly to Museveni. Jamwa was posing a danger to the Fund, they said, and Suruma was paralysed to make decisions. It is on this basis that the president directed Suruma to suspend Jamwa.
Meanwhile, Museveni had tasked a team at State House to write a dossier on Jamwa and NSSF. The dossier showed that Jamwa was involved in gross financial and personal indiscipline that was putting the Fund’s resources and reputation at risk. For example, the dossier indicated, Jamwa had taken salary advances of Shs 229m from the Fund.
According to his work contract, he was entitled to a gross salary of Shs 18m, a fully maintained official vehicle, medical cover for himself and immediate family and a health club membership of his choice. This left his take-home-pay as Shs 11m per month. The enormous salary advances within only one and a half years as MD raised serious doubts about his judgement and financial discipline.
The dossier shows that Kagonyera too received large salary advances worth Shs127m. With a gross salary of Shs16m plus the same benefits as Jamwa, taking salary advances of that amount was embarrassing.
Museveni was told that Jamwa’s personal conduct was likely to threaten the stability of NSSF. The MD was travelling abroad often. NSSF provides its MD with a credit card which has a limit on how much money on it he can spend. The Fund also has a limit on how much the MD is entitled to spend on the card whenever he travels. The dossier says Jamwa always exceeded not only the limit on him as MD but also the limit on NSSF as card holder. The latter forced the issuers of the card, Visa, to call the guarantor, Barclays Bank, complaining. In turn, Barclays called NSSF raising concerns about over-expenditure on the card.
NSSF paid up to the money officially allocated to the MD for his travels and recovered the balance from Jamwa’s salary. Given that he had huge salary advances which were being deducted off his salary every month, the additional credit card bill was taking a toll on his pay. Sometimes he earned only Shs 1m a month because of these deductions. This, the president was told, created incentives for the MD to make up for this deficit by raising money for personal expenditure from ‘other sources.’ Suspicions were growing that every deal Jamwa would approve, he would have to have a personal ‘commission’ on it in order to make ends meet.
The dossier on Jamwa also queried his personal management. NSSF staff complained that he hardly came to office. They said he appeared in office only twice a week’ on Tuesday evenings and Thursday mornings. Sometimes, he allegedly only came to attend board or management committee meetings. Most of the time he took all his files home and worked from there! The president was informed that he was also often unavailable on phone, always changing his numbers and making it difficult for his lieutenants to reach him.
Sources say that Museveni believed Jamwa’s financial situation rendered him susceptible to compromise. Thus, any NSSF investment and expenditure decisions approved by him became suspect. The case in point was the redesign for the development of the NSSF land on Plot 15A/B and 17 along Lumumba Avenue.
Initially, the design was for the construction of an eight-storey office complex at Shs 36bn. The contract was tendered through competitive bidding and Roko Construction won. However, as construction got underway, Jamwa came with a redesign for a 25-storey complex as the tall tower, and two short towers of 10 floors each with a basement of four floors. The cost of the new structure was Shs 126bn. Later when they included Value Added Tax, the bill went to Shs 155bn.
Many experts say the redesign is a better utilisation of the plot than the initial design. The demand for office space in Kampala has grown rapidly over the years. Estimates show that currently there is office space shortage of 300,000 square metres in the city. This is equivalent to 20 buildings the size of Workers House. Therefore, the decision to use the plot along Lumumba Avenue for more office space was a smart investment decision. The board okayed it subject to approval of the redesign by Kampala City Council (KCC), the Public Procurement and Disposal of Assets Authority (PPDA) and Suruma.
Without re-tendering, Jamwa wrote to the project managers, Arch Design, on May 29, 2008 directing them to proceed with the work. It was a month after this, on July 1, 2008 that he wrote to Suruma seeking his approval as the board had directed. From there, Roko began building according to the redesign. This created suspicion that the financially trapped Jamwa could be involved in something fishy.
Then on October 13, 2008, the building under construction collapsed killing eight people. NSSF had just submitted the redesign to KCC for approval. But government, through the Ministry of Works, set up a committee to investigate the cause of the incident and establish liability.
In this state of affairs, KCC wrote to NSSF saying they could not approve the redesign until the Ministry of Works investigation was concluded. By the time The Independent went to press, the Works Ministry had finished the draft report only waiting for the signature of the Minister John Nasasira. The report, sources say, clears Roko of most of the wrongdoing. But this has already generated a storm. The lawyer for Roko on this matter is Enos Tumusiime who is a brother-in-law to Nasasira. Many people are already grumbling that the report is soft on Roko because of the Nasasira-Tumusiime family connection.
The idea of establishing liability for the collapse of the building is important to all parties. If the liability falls on Roko, then the construction firm has to compensate NSSF for the time lost to the investigation because this pushes the completion date further ahead.
Meantime, a new problem has emerged over the new structure. According to PPDA rules, a contract can be varied up to 25 per cent of its original price. Since Roko was already building according to the redesign, it means that on the cost of the old structure, the highest amount that Roko could spend was Shs 45bn. So it wrote to NSSF saying the amount was enough to finish only the four basement floors and two floors thereafter.
Today, NSSF faces two choices: It can go to PPDA and ask for authority to carry out direct procurement so that Roko can finish the structure without any re-tendering; or it can allow Roko build up to the second floor and open the completion of the structure to competitive bidding. Sources say that Museveni was shocked by these issues and they formed a strong ground for his decision to suspend Jamwa.
The dossier on Jamwa also accused him of having suspicious dealings with a computer company, Comtel. According to the dossier, when Jamwa joined NSSF, he found the Fund in a quandary. It could not process payments fast and was unable to issue statements to its subscribers. An IT system had been installed by Face Technologies of South Africa without doing the finer details on it. So it developed problems. NSSF had decided to call FT back to finish the job, but Jamwa said he had better people in town. That is how Comtel came to do the job.
However, the chairman of Comtel, Ken Lubega, told The Independent that he did not know Jamwa before then. The job was advertised and Comtel bid and won. Comtel came in and did a review at $200,000 (about Shs 390m). The problem, the dossier claims, is that after the diagnosis of the problem, Jamwa extended Comtel’s contract to a phase where they would rectify the problem. The cost of this second phase was $7.1m (about Shs 13.5bn). All NSSF insiders say the work done by Comtel was excellent and saved the Fund from possible disaster.
However, Jamwa’s problem was he did not tender the second phase. State House investigators claimed that he was a secret partner in Comtel, a charge that Comtel denies. Thus, when Comtel recommended that NSSF does a Data Initiative Integrity exercise and Jamwa gave them a go-ahead, the project sparked resistance.
By law companies remit their staff savings to NSSF. However, the Fund was unable to properly record receipt of these monies, calculate interest on them and establish actual subscriber balances. So Comtel asked for $11m to do the job. Jamwa took the costing to the board which okayed it subject to PPDA approval. But that’s when the NSSF was plunged into the Temangalo controversy. The Fund was now forced to subject its contract to competitive bidding. Comtel became concerned about its image and withdrew from the exercise. However, NSSF insiders say Comtel is preparing a bid under a different name. But Comtel denies the claim.
The dossier on Jamwa further alleges that he made NSSF buy land on Plot 87, Lower Churchill Road in Gulu at Shs117m when NSSF valuers had priced it at between Shs 40m to Shs 60m. Jamwa was also accused of buying land on Plot 677 and 678, Kibuga in Najjanankumbi, Kampala. The three valuers sent by NSSF returned price estimates of Shs 120m (East African Consulting Surveyors), Shs 150m (Knight Frank) and Shs 540m (Bageine and Company), a strange discrepancy. Jamwa made NSSF buy it at Shs 400m. There is speculation that land belonged to Jamwa’s in-laws.
With these issues, people have wondered how Jamwa got the NSSF job. He was apparently appointed MD by Suruma after a competitive process. The others included the current MD of National Water and Sewerage Corporation, William Muheirwe, and another, Charles Ocici, of Enterprise Uganda. The three candidates were interviewed by PriceWaterhouseCoopers (PWC). Jamwa came best on all points except for management experience where Muheirwe performed better. The three of them were then interviewed by the NSSF board and again, Jamwa emerged best. It is then that Suruma went to Museveni for approval. He took only Jamwa’s name.
Sources at State House say that Suruma is also the one who suggested Mondo Kagonyera to be considered for Jamwa’s deputy. Museveni was facing a dilemma of where to place Kagonyera after he had lost NRM primaries for Rubabo County parliamentary seat in Rukungiri. Appointing Kagonyera as deputy NSSF MD offered Museveni an escape out of a dilemma over how to keep the old politician within the fold.
At the time, many people questioned PWC for their work. Jamwa had been an employee at PWC, growing to the level of partner. Then he left the audit firm on a mutual understanding. However, reports circulated that there was more to his exit, at such a senior rank, than met the eye. PWC had been the whistle blowers on the misuse of monies from the Global Fund for Malaria, AIDS and Tuberculosis in 2005.
The PWC made an investigation and told the commission of inquiry into abuse of the Global Fund money that Development Finance Company of Uganda (DFCU) bank was colluding with managers of the Global Fund to sell project dollars at below market rate and share the balance. At the time, Jamwa was the PWC auditor responsible for DFCU. It was discovered that he had taken a loan from DFCU, a clear conflict of interest. It means he was indebted to a bank he was auditing. It was alleged that his loan was even being serviced by the proceeds from the foreign exchange-deal the bank and the Global Fund managers were involved in.
According to the dossier sent to Museveni, PWC were reluctant to fire Jamwa openly as that would open a Pandora’s Box by bringing the name of PWC into disrepute. The dossier said that internally, PWC decided to present Jamwa’s exit as a result of ‘a mutual agreement.’ PWC deny this interpretation of events and insist that Jamwa left voluntarily. Apparently, those who prepared the dossier for Museveni did not buy PWC’s defence.
Meanwhile at NSSF, Jamwa faced his first test. When DFCU went into commercial banking, it was forced to sell its 50 per cent stake in Housing Finance Bank of Uganda now named Housing Finance Bank (HFB). NSSF bought this stake. The other partner in HFB was National Housing and Construction Corporation which owned 50 per cent shares.
From the mid 1990s to early 2000s, government sold pool houses and appointed HFB as collector of payments. By 2005, HFB had collected over Shs 30bn for government. Since government was not taking this money, HFB was lending it to customers, but it was reflected as a debt to government on its balance sheet. At the time, HFB was capitalised with only Shs1 billion. In the run-up to the 2006 elections, some people convinced Museveni that these monies be transformed into capitalisation for HFB to increase the supply of mortgage finance.
Since NSSF owned 50 per cent of HFB, it would be forced to match this Shs 30bn with an equivalent amount. If that happened, it would increase the supply of mortgage finance to Ugandans. Since many of the borrowers from HFB are subscribers to NSSF, this would be the most effective way to help them build real savings in the long term. Jamwa refused to put in more money. Instead he insisted that NSSF would also convert money it had lent to HFB into its share capital contribution. Thus, HFB was recapitalised on paper, but there was no new money to increase the supply of mortgage finance.
To increase the supply of mortgage money, HFB approached NSSF and asked for loans from the Fund. Sources in HFB and among other stakeholders claim that Jamwa blocked the move. Others allege that he insisted on getting a ‘commission.’ However, there was no evidence to this effect.
Sources told The Independent that Jamwa was involved in discussions with Suruma to use NSSF money to buy shares in the National Bank of Commerce (NBC) where both Mbabazi and Suruma are shareholders. This claim could not be independently verified.
According to sources, Suruma, Mbabazi and Nzeyi had two plans. The bank was owned 51 per cent by Indians who wanted to sell to Nigerians. But they had to give the first chance to existing shareholders ‘ hence the offer to Mbabazi and Nzeyi. Plan A was to sell land, buy Indians out of NBC and then immediately sell the bank to Arabs who were offering a better price. Plan B was that if the Arabs finally refused to buy, Suruma, through Jamwa, would get NSSF to buy the stake in NBC.
However, to the chagrin of Mbabazi, Nzeyi and Suruma, Jamwa hired auditors who gave an unfavourable assessment of the value of NBC, thus giving him space to refuse NSSF buying a stake in NBC. As it turned out, the Arabs declined to buy the NBC shares, thus sending Plan A into a tailspin. In his letter to Museveni, Jamwa actually cited the pressure exerted on him by Suruma to get NSSF to buy NBC shares.
Jamwa is an enigmatic manager and many who have worked with him insist his outlook and business acumen is what NSSF needed. Indeed Jamwa’s lasting mark will be his aggressive revision of the Fund’s investment portfolio away from the conservative fixed assets to a more risky but higher yielding mix of 50% equities, 20% real estate, and 30% in fixed incomes.
Jamwa’s strategy was to garner an annual return of over 12% on the Fund’s assets. It involved investing abroad. In May 2008, the NSSF announced it had hit the Shs 1 trillion mark and increased the amount of interest paid on members’ savings to 14% from 7%.
In November the NSSF won the 2008 International Social Security Association (ISSA) Good Practice Award Africa for its ‘risk and change management.’ At a ceremony in Kigali, Rwanda, on November 18, 2008, NSSF’s best practices entitled ‘Enterprise-wide Risk Management’ was recognised as a model for Africa in the area of risk and change management.
Projects initiated by Jamwa include a US$1.95 million investment for 20% of the Kampala Serena Hotel, US$12 million in a National Farmers Association project, Shs 16 billion lent to the Uganda Revenue Authority (URA), and Shs 128 billion in the redevelopment of the National Theatre.
Nevertheless, two government agencies, the Auditor General and the Inspectorate of Government (IGG) have been instructed to do forensic audits of the cash advances and three projects undertaken by NSSF under Jamwa. They include a multi-million fleet management deal with Nissan Uganda, the procurement process of the Lumumba Avenue Pension Towers project, and the Comtel deal.