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Museveni’s hand in CMI land scares investors

By Obed K. Katureebe

When President Yoweri Museveni donated the 12 acre Plot 1 Kitante Road in Kampala to Kenya to build a high commission, he effectively kicked city tycoon Sudhir Ruparelia off a prime plot for the second time. The Independents Obed K. Katureebe reports how Museveni’s decision is scaring investors, local and international.

The saga started sometime in mid October 2008, when President Yoweri Museveni’s Principle Private Secretary (PPS), Ms Amelia Kyambadde, rang the minister for Regional Co-operation, Mr Eriya Kategaya. Honourable minister, Kyambadde said, I have been instructed by the president to inform you that the land on which the offices of the Chieftaincy of Military Intelligence (CMI) are located, is to be allocated to the Kenyan government.

The land originally was a Mulago hospital “Doctors Mess” under the Ministry of Public Service. The government kicked the doctors out in early 90s and brought in army officers who had been thrown out of Republic House [current Bulange] and Basiima House on Kabakanjagala road in Mengo, when the two properties were returned to Buganda kingdom.

Mr Kategaya was privy to negotiations between Uganda and the Kenyan government for land on which to build a depot in Mombasa. In exchange, Uganda promised Kenya land in Kampala to build a High Commission office complex. During this process, some powerful individuals convinced Museveni that the land commonly known as Kitante Courts be given to Kenya.

But when Kategaya moved to implement the president’s directive, he was told that the land in question belonged to Speke Hotel Ltd of businessman Sudhir Ruparelia. Kategaya was informed that Speke Hotel had already been issued with a land title. Apparently Sudhir had been allocated the land under the instructions of Museveni. The president’s directive had been communicated to the Uganda Land Commission (ULC) by then minister of Lands, Water and Environment, Kahinda Otafiire on May 02, 2006.

Competition for prime land in Kampala has heated up with privately-owned plots fetching billions of shillings. In contrast, however, President Museveni has been dishing out prime public land for free to so-called investors. Some of Museveni’s giveaways have attracted public criticism.   Â

Aware of this, Kategaya on Saturday, October 25, 2008, held a meeting in his office with Foreign Affairs minister, Sam Kutesa; Defence minister, Crispus Kiyonga; state minister for Defence, Ruth Nankabirwa; an official from the ministry of Lands and another from the Attorney General’s chambers to resolve the matter. The meeting was informed that Sudhir’s title was a forgery because it was backdated.

According to sources at the meeting, some officials said Museveni’s instructions were given in a meeting at State House on September 18, 2006 and then communicated by the minister of Lands, Daniel Omara Atubo, to ULC on September 22, 2006, and the title was issued on October 30, 2006. But the land lease Sudhir has was backdated to begin in June 2006.

Nankabirwa, who had studied the documents at the Defence ministry carefully tried to explain that there was no mistake but she was ignored. The meeting then agreed Sudhir’s title be cancelled and instructed the officials from the Attorney General’s chambers to find a legal way to do so. Under Ugandan law, only a court of law can cancel a title.

It is here that the story becomes a muddle of contradictory presidential instructions which many observers say are increasingly placing the security of property rights in Uganda at high risk. Apparently, when Otafiire wrote his May 2, 2006 instruction to ULC, it was a follow-up to a meeting at State House where Museveni had allocated 15 acres of land belonging to Shimoni Primary School and Teacher Training College to Kingdom Holdings of Saudi Arabia, owned by Prince Al-Waleed, one of the richest men on this planet. But the allocation had hit a snag.

Flashback: Sometime in September 2005, the government of Uganda decided on a Kampala re-development plan. According to the plan, the government offered prime land occupied by its institutions to investors to put up multi-million dollar investments, largely hotels and shopping malls. Businessman Sudhir Ruparelia through Speke Hotels Ltd immediately applied for the Shimoni land on October 13, 2005. After paying ground rent of Shs 158 million, ULC gave them a five-year lease on March 24, 2006. ULC required Speke Hotel to develop a hotel and shopping mall and relocate the schools at a cost of Shs 4.5 billion.

In the same month (March 2006) when Shimoni was allocated to Sudhir, the Executive Director of Uganda Investment Authority (UIA), Maggie Kigozi, took Prince Al-Waleed to meet Museveni. Government had been trying to woo the Saudi prince to invest in Uganda’s hotel industry. Al-Waleed said he needed eight acres to build a hotel. Museveni asked Kigozi where they could get such land. Kigozi named Shimoni land. Museveni agreed. However, later when they sought to implement the decision, they found that the land had already been offered to Speke Hotel. It is on this basis that an emergency meeting was held again at State House to resolve the problem at the end of April 2006.

The meeting was attended by among others Museveni, Kigozi, Otafiire and the Chairman of ULC, Mayanja Nkangi. In a heated meeting, Otafiire asked Kigozi why she was advising the president to allocate land without consulting him as the minister responsible. Finally, Museveni said he as president cannot give an empty commitment to a foreign investor. Museveni reasoned that Sudhir is a local investor. We can discuss this with him, Museveni said, but I cannot be embarrassed before a foreign investor.

When the CMI land was suggested, Museveni gave his approval since it was under the ministry of Defence. Someone noted that Shimoni was 15 acres and in a more prime location as compared to Kitante Courts with only 12 acres but Museveni told Otafiire to inform Sudhir of the changes.

Initially, Sudhir refused the new offer and threatened to go to court. However, Otafiire advised him not to refuse a presidential request. On May 2, 2006 Otafiire wrote to Nkangi communicating the president’s directive that ULC cancel Sudhir’s title for Shimon and issue it instead to Kingdom Holdings of Prince Al-Waleed. In the same letter, Otafiire communicated the presidential directive that Speke Hotel be given CMI land.

Accordingly, on May 10, 2006, ULC wrote to Speke Hotel giving them CMI land which they accepted immediately. On May 29, ULC gave a five-year lease for the land to Speke Hotel and informed them that the ground rent they had paid for Shimoni would now be transferred to the new offer. On June 2, the two sides agreed that the premium for CMI land should be Shs 3 billion and should be used to relocate CMI. ULC requested Speke Hotel to negotiate with CMI the details of vacant possession of land.

In 2007 Mulago Hospital, after securing a US$ 30 million grant, petitioned President Museveni and the Speaker of Parliament to allocate the CMI land to it to build a National Heart Institute. Currently, heart patients are referred to either India or South Africa, and such operations require not less than Shs 50 million. Mulago Hospital Director, Dr Stanley Ddumba, told The Independent that Mulago’s request was rejected.

Unknown to everyone, the then permanent secretary in the ministry of Defence, Brig. Noble Mayombo (RIP) had been approached by a group of Libyan investors in partnership with a Ugandan property mogul to take CMI land for redevelopment. When he heard that Sudhir had been offered the land, Mayombo immediately wrote a letter to the minister of Defence instructing him not to negotiate with Speke Hotel. He also wrote to CMI Chief, Col. Leopold Kyanda, instructing him not to vacate the land. Mayombo then went to Museveni saying that he had investors willing to pay Shs 20 billion instead of Sudhir’s Shs 3 billion. Museveni immediately put a halt on the process of issuing a title to Sudhir who already had a lease offer. The president said that before the title is issued, the matter be discussed.

Then on September 18, 2006, Museveni called another meeting at State House to resolve the problem. Otafiire had left the Lands ministry and Omara Atubo had taken over and Amama Mbabazi had left Defence to Crispus Kiyonga. All other stakeholders attended. During the discussion, Museveni was informed that it was legally impossible to take the land from Sudhir without government paying a hefty price for it. Museveni issued fresh instructions that Speke Hotel be given the title, a directive Atubo followed with a September 22 letter to Nkangi copied to Kiyonga.

Thus on October 30, 2006 ULC issued Speke Hotel with title to CMI land and backdated the beginning of the lease to June 2, 2006 when the offer had been given. If Sudhir thought the matter had been resolved, he was wrong. When Speke wrote to CMI to negotiate relocation and attached a memorandum of understanding, CMI refused. Instead, Sudhir was later to receive a December 15, 2006 letter from Museveni to ULC saying that Speke should pay Shs 20 billion premium for the land.

Under Ugandan law, the premium for any land is set by ULC which had already reached an agreement with Speke Hotels to pay Shs 3 billion to relocate CMI. Besides, all these lands – Shimoni, Nakasero UBC headquarters and others had been given at below market rates as an incentive to investors to develop high-value properties thereon. The president’s letter created gridlock; Speke Hotels now owned the land but could not get vacant possession to re-develop it.

Meantime, the permanent secretary in the ministry of defence, Ms Rossette Byengoma appeared before parliament and told legislators that CMI land was worth Shs 20 billion. “CMI is ready to vacate the premises provided Speke Hotel pays the full amount,” she said, “In spite of writing to him, Sudhir has refused to pay the full market price for the land.”

In a letter to Byengoma, Sudhir’s lawyers Nangwala, Rezida & Company Advocates told the permanent secretary they had never received her letter whereupon she replied immediately attaching the letter she had alluded to.

In his reply, Alex Rezida informed the defence PS that only ULC has the authority to decide the terms of the lease. He added that ULC is a constitutional body supposed to act without instruction from anyone adding therefore that Defence had no power to impose its own terms on the lease. It is on the basis of this reply that when Byengoma later reappeared before the Public Accounts Committee of Parliament (PAC) that she claimed Sudhir had threatened to evict CMI.

As the battle between Defence and Sudhir for CMI land intensified, the Defence ministry constituted a committee to establish whether Speke Hotels got the land legitimately. The investigation was based on allegations that Sudhir had colluded with ULC to backdate the lease offer. The Defence investigation concluded that Sudhir’s title was forged.

Meantime, after the Kategaya meeting which allocated the land to the Kenyan government, Sudhir began to work – meeting individually with Kategaya, Kutesa and Kiyonga to explain the history of the land allocation. It is not clear how far successful he was. However, on October 30, Sudhir’s lawyers filed a suit in the Land Division of the High Court seeking to evict CMI from the land.

Over the last two years, there has been many presidential directives, or instructions from the Inspectorate of Government, Parliament, or the Auditor General’s office cancelling legal rights to property already allocated to specific individuals or companies without the due process of the law. Analysts say that contradictory presidential directives are likely to scare investors from Uganda as the directives create a feeling that the state in Uganda does not respect property rights. In fact, Ugandans who asked not to be named, say they had secured partners abroad to come and invest in Uganda but each time news comes of a cancelled government contract by the IGG, a cancelled land title on a presidential whim, a cancelled tender by the Auditor General, the foreign investors withhold plans to bring money into the country.

When contacted for comment, Lands and Housing Minister Daniel Omara Atubo said: “I think Sudhir’s choice of going to court to seek the injunction won’t help him much. Besides it might be a tall order. Let him seek an audience with the president and the issue will be sorted out administratively. After all it is President Museveni who had donated the very land to him.”

The Chairman Land Commission Mayanja Nkangi said he had said enough on this matter. Repeated attempts to get Sudhir to comment failed.

As the courts decide this matter, the security of property rights in Uganda stands in precarious balance. The question before the courts is: are people who buy, acquire government property secure in their ownership of title?

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