The Independent Uganda: You get the Truth we Pay the Price
By Mubatsi Asinja Habati
Will Museveni step in to save loyal cadre?
Money released by the ministry of Finance and allegedly used by President Yoweri Museveni’s campaign team is at the centre of former Vice President Speciosa Kazibwe’s recent sacking from the Microfinance Support Centre Ltd (MSC), The Independent has learnt.
Finance Minister Maria Kiwanuka suspended the Kazibwe-led MSC board of directors and its Executive Director, Iggy Rwabukuku on June 22 following a request by the Inspector General of Government, Raphael Baku Obudra.
The IGG’s June 20 letter reads in part: “The Executive Director, Iggy Rwabukuku and the purported Chairperson of the Board, Dr Speciosa Wandira stand accused of mismanagement, improper conduct and improper appointment to their respective positions, which accusations are still being investigated by the Inspectorate of Government.”
It is significant that Baku wrote the letter himself, instead of David Makumbi, who is in charge of the investigations.
Kazibwe’s sacking is intriguing because if it ends in a prosecution, she will be the second former vice president of Uganda to be dragged before the courts over alleged corruption. Her successor, Prof. Gilbert Bukenya, is in court over allegations of corruption related to procurements during the Shs500 billion CHOGM in Kampala in 2007.
But much as Kazibwe has been suspended, it remains uncertain that the IGG will prosecute her because of the politics at play in MSC saga.
Election money
Among the key issues being investigated is an allegation that the S’HE Foundation Savings and Credit Union which is owned by Kazibwe corruptly took Shs 10.3 billion from MSC.
There are also allegations that earlier during the election campaigns, Kazibwe wanted to access the MSC money to use in campaigns in Busoga Region. She argued that the money would be replaced when President Yoweri Museveni fulfilled a pledge of Shs 2 billion to Busoga People’s Forum, an organisation headed by Kazibwe.
When the then executive director, Charles Byanyima, refused to comply he was fired. Kazibwe appointed Rwabukuku as executive director although another candidate had beaten him in the interviews and there were allegations of conflict of interest because he was a member of the MSC Board of Directors. Rwabukuku’s academic papers were queried.
On May 26 the IGG summoned Rwabukuku to appear before him with a litany of documents including original copies of his academic papers, copies of a forensic audit report about the MSC Management Information Systems, details of funds MSC received from ADB and the Islamic Development Bank.
But Kazibwe is a confidant of President Yoweri Museveni. She was entrusted with billions of Museveni’s campaign money in the recent election. Even, Rwabukuku, the man she is being accused of using her influence to appoint him to head the MSC, is an NRM cadre.
The Kazibwe saga has also sucked in another NRM cadre, former Finance Minister Syda Bbumba who renewed the board’s tenure at the MSC in spite of her knowledge of the IGG investigations.
Bbumba and Kazibwe were deeply involved in President Museveni’s re-election. It appears, therefore, that only pressure from one of the big funders of MSC, the African Development Bank (ADB), is pushing the IGG to make the right noises about investigating the matter.
MSC was established in 2001 to implement the government grand Prosperity for All programme locally called Bona Bagagawale by giving credit to the “active poor” in the country. Its mandate is to coordinate and distribute money to savings credit and cooperative organisations (SACCOs) at low interest rates. Its main project, the Rural Income and Employment Enhancement Project (RIEEP), is a US$19.1 million project 85% funded by an ADB loan and 15% or US$ 1.8 million by the government. The project was meant to generate a 50% return on capital and create 1.4 million jobs, especially for women but is now threatened by the alleged mismanagement at MSC.
ADB is worried by the alleged mismanagement at MSC because by April this year, it had given it US$7.6 million (Approx. Shs 20 billion) of a US$ 10.2 million soft loan signed in 2009 to fund RIEEP. The total ADF commitment to RIEEP is US$15.3 (Approx. Shs 36 billion).
The Independent broke the story of alleged mismanagement of MSC money in April last year under the headline, “Kazibwe squanders SACCO Shs 300m” (The Independent April 2, 2010). It was followed up by another story: “Dismissal of top Microfinance Support Centre boss sparks probe” (The Independent May 5, 2011).
Concerned about the alleged mismanagement, a six-member strong ADB team between April 18 and 21 met the then Minister of state for Microfinance Ruth Nankabirwa, the Deputy Secretary to Treasury, Keith Muhakanizi, the ADB Desk Officer at the Ministry of Finance, Charles Ogol and the top leaders and board of the MSC. This was a fourth time the bank was sending a team of investigators over the MSC management issues.
In their report, the ADB team found that the Shs 10.3 billion had not been disbursed to Speciosa’s organisation. However it was noted, this conclusion was based on partial information because at the time of the visit, MSC’s management accounts were not ready “because there was a crash” of the records systems and they were being reconstructed. It was found, however, that by April 18, MSC had disbursed Shs 9.3 billion SACCOs.
According to a March 31 MSC Executive Director’s report to the board, Shs 51.6 billion had been disbursed to the SACCOs since January 2009 to March 2011. The MSC has lent money to thousands of Ugandans including President Museveni’s younger brother, Gen. Caleb Akandanwaho aka Salim Saleh who got Shs 300 million from the company late last year, Wamala Growers and Nyakatonzi Cooperative Union got Shs 1 billion loan each recently.
Among the disbursements was a Shs 500 million cheque from MSC to Kazibwe’s S’HE Foundation at the height of the election campaigns on Feb. 9.
At about the same time, Ministry of Finance released Shs 10 billion to MSC in what it termed as revolving fund for the poor on Feb. 11 just 7 days to Election Day. Both Kazibwe and then Finance Minister Syda Bbumba controlled the NRM election coordinating committee, which was among others in charge of the election money.
The NRM election taskforce which Kazibwe headed had reportedly asked MSC to get the money from the ministry of Finance and pass it on to the poor under the Presidential Initiative on Market Vendors and Small Business Operators. The money was to be distributed to market vendors in Kampala, communal metal fabrication sets in Kampala, bodaboda riders in Kampala, wheelbarrow pushers, timber dealers associations, other markets countrywide, milk coolers, tomato factory, hawkers association, etc. The money is said to have been drawn from the January supplementary budget that parliament hurriedly passed.
After the elections, however, the vendors complained to President Museveni that some `hungry people in the ministry and MSC’ made them to sign for huge amounts of money but gave them less than what they signed for. In a May 25 letter, the Deputy Secretary to the Treasury, Keith Muhakanizi, wrote to the MSC director demanding accountability.
MSC replied that it had used Shs 4.8 billion of this money; Shs 4.5 billion was transferred to market vendors and small business operators, Shs 104 million was used on workshops, and Shs 122 million in administrative costs.
However, the market vendors from Kalerwe, Ntinda, Kamwokya, Nakasero, Kiseka, and Nakawa among others claim they did not receive all the said amount of money. The vendors allege that the names of the beneficiaries were not verified and the process was abused.
When, after the election, some board members demanded clarification on the S’HE Foundation on March 31, Kazibwe said it would sign Memorandum of Understanding with MSC. At the same meeting, then MSC Executive Director, Iggy Rwabukuku told the board that, in fact, S’HE Foundation staff had been hired to support MSC in deepening financial outreach.
The accusations
This is not the first time Kazibwe is being accused of corruption at MSC.
Late last year a whistleblower email sent to the IGG, Auditor General, Ministry of Finance and top workers MSC alleged that Kazibwe manages the company like “her personal retail shop”.
“The issue has been the need for Dr Specioza Kazibwe to use company resources for her personal business not related to the company work. She draws millions of shillings in allowances for fake foreign trips from company coffers,” the letter by MSC workers reads in part. Emails from the MSC workers accused Kazibwe of interfering with the managerial work of the company and conflict of interest since she chairs the MSC board.
The latest saga at MSC started on June 17 when Rwabukuku, while acting on directives of Kazibwe, suspended two MSC officials; Company Secretary Dorcas Apita and the Manager Legal Services, Mariam Ndibuuza.
The duo had allegedly refused to implement decisions of the board claiming that, in their opinion, it was illegally renewed. They opted to seek guidance on the matter from the office of Solicitor General after the executive director failed to give them audience. Kazibwe accused them of insubordination and directed Rwabukuku to suspend them. Rwabukuku accused Apita of usurping his powers as executive director by talking to the solicitor general. Their sacking has since been quashed by the IGG.
Details show that Kazibwe had just requested for another 3- year term as the chairperson of the MSC board. Just before her old term expired on May 1, and despite accusations of abuse of office hanging over her, then Finance Minister Sydda Bbumba wrote to Kazibwe as chairperson of the MSC board renewing her and other board members contract except Tim Lwanga, who had become a member of parliament and therefore unqualified to sit on the board. Bbumba’s letter, written 9 days before the expiry of the board, quotes Kazibwe request for renewing her term. “I am writing to acknowledge receipt of your [letter] of April 20, 2011 in which you sought my concurrence to grant another term of office to the current Board of Directors of MSC Ltd,” Bbumba wrote in an April 21 letter.
But the IGG wrote that: “The company secretary and manager legal services are key witnesses in the investigations and any attempt by the executive director to remove them from their offices at this point in time on questionable grounds will not only amount to their being victimised but also deter other staff from giving evidence to the Inspectorate of Government for fear of victimisation.”
The IGG argues that the appointment of the new board by former Finance Minister Sydda Bbumba for three more years was incomplete since the members of the board whom she named were not approved by the MSC General Meeting of stakeholders as required by Article 8(a) of the Memorandum and Articles of Association of the Company. In effect, the said board members were operating illegally as none had ever been formally appointed. As if they were aware of this anomaly, the MSC board meeting of March 31, resolved to convene an Extraordinary General Meeting of Stakeholders in the third week of April. The meeting did not take place.
The IGG contends that the current MSC board was illegally constituted and that the then Finance minister Syda Bbumba did not follow proper channels to renew the board by not seeking the Solicitor General’s advice.
Kazibwe first informed the board on March 31 that she had been summoned to appear before the IGG’s investigations team. But the board meeting resolved that the IGG concerns were similar to those raised by the ADB and “required a collective effort to respond”. Bbumba should have considered the investigations before renewing Kazibwe’s term.
Donors react
Baku’s letter follows the ADB team report which observed that the workers at MSC were “generally unhappy about the process adopted for the recruitment of the executive director. Staff morale in the organisation is generally low. There is the risk of further loss of key staff and a decline in the pace of project implementation if this trend continues”.
The report noted with concern the interference of the board in the management of MSC. It concluded, however, that it needed the IGG’s investigations report into the matter before taking a decisive action on its funding of RIEEP project. Henry Mbaguta, Ministry of Finance’s Assistant Commissioner in charge of Microfinance also said although there have been so many allegations about Microfinance Support Centre, the ministry could not take any decision without the IGG’s report.
ADP said project performance at MSC was affected by the departure of key staff “who would have provided guidance and leadership to ensure continuity”.
Prior to the April ADB mission visit, Kazibwe’s board had fired most of the top MSC’s officials including the executive director, financial manager, internal auditor, principal administrative officer, and the procurement manager.
An official from the IGG’s office who wanted to remain anonymous told The Independent that investigations into the MSC mismanagement are nearing close and the report will be ready soon.
When The Independent sought a comment from Rwabukuku he was away reportedly attending an official short training course in Nairobi. The acting executive director refused to comment. Kazibwe denied the IGG accusations calling them “lies”. She said she is confident the IGG will find her innocent. She has also said only President Museveni can sack her from MSC.
