Russian vehicle tracking deal

How Museveni letter trapped Muhwezi

Kampala, Uganda | THE INDEPENDENT | On Tuesday July 27, the new Minister for security, Maj. Gen. Jim Muhwezi made a humbling return to the headlines of Ugandan news media when he made a statement to parliament regarding the controversial vehicle tracking deal between Uganda and a “bankrupt” Russian company.

Muhwezi was just one month into office but as he made the statement before parliament, many of those listening and watching were unaware that he was possibly the victim of a sternly worded letter written to him by President Yoweri Museveni regarding the deal with the Russian company, M/S Joint Stock Company Global security.

The letter is said to have been drafted by the State House Legal Department headed by one Florence Kiconco who, incidentally, is the wife of one Albert Rugaju; the Uganda representative of the controversial Russian company.

For many observers, however, Muhwezi appearing before parliament barely a month after being appointed to respond to queries over suspected corruption in the deal had a sense of déjà vu.  For them Gen. Muhwezi was already a marked man.

This is partly because Muhwezi was in March 1998 censured by parliament over alleged corruption and influence peddling. Muhwezi, who was Minister of State for Primary Education, was accused of flouting army regulations barring soldiers from doing private business with foreigners and failing to explain his alleged massive wealth.

Later in 2007, Muhwezi who was Minister of Health, two fellow ministers and Alice Kaboyo who is now Minister of State for Luweero Triangle and Rwenzori Region were sued before the Anti-corruption Court over alleged misappropriation of Shs1.6 billion meant for activities of the Global Alliance for Vaccines and Immunisation (GAVI). Muhwezi was acquitted but Kaboyo and one minister were convicted.

Based on such incidents, many observers quickly concluded that “here we go again.”

Muhwezi under pressure

In this case, however, it appears Muhwezi was acting under pressure from President Museveni when he pushed through the Russian deal which had stalled for three years. Muhwezi must have known that Museveni urgently wants vehicles tracked following the June 01, 2021 assassination attempt on the Minister of Works and Transport, Gen. Katumba Wamala.

But Muhwezi’s troubles, it appears, arose mainly out of the strongly worded letter to him from Museveni dated June 13, 2021 which The Independent has seen. Museveni “directs” Muhwezi to conclude the agreement with the Russian company within two weeks.

“Do not waste time with any other group because these were the first to bring this proposal,” Museveni tells Muhwezi.

In the letter, Museveni says he was initially concerned about two things regarding the Russian company; first, whether its technology works, and two the funding for the project.

“On the effectiveness of the technology, read Engineer (Gerald) Lumu’s report. He says that it is effective and anybody trying to tamper with the gadget would be detected,” Museveni writes,“This should have been implemented four years ago. This would have made the work of tracing criminals very simple.”

At this point, it appears, Muhwezi was feeling under pressure. Yet Muhwezi had not yet been sworn-in as minister yet.

As a result, on June 24, just three days after being sworn into office, Muhwezi wrote to the Secretary Office of the President, Yunus Kakande, citing the President’s letter of June 13, 2021 that the agreement with the Russians must be signed urgently.

“Therefore, as the Accounting Officer of the Office of the President, make sure all the processes are expedited before the meeting scheduled for 25th June, 2021 so that we conclude this matter,” Muhwezi wrote.

The Office of the President replied the same day.

“The Draft Agreement should be endorsed as the government position under the ‘pilot Program basis,” said the letter signed by Secretary of the Office of the President, Yunus Kakande.

Citing the outcome of a meeting the same day of “key stakeholders” in operationalising the project, Kakande told Muhwezi that the project needed to be piloted first in the Greater Kampala Metropolitan Area by the investor and at the investors’ own cost.

Kakande’s letter to Muhwezi added in part that: “Since the Financial Model of the ITMS project is an analytical document and is provisional, it should thus be appended with no figure.”

Then about four days after Muhwezi was sworn-in, on June 25, 2021, Prime Minister Robinah Nabbanja also wrote to Muhwezi demanding an update on the project.

“The directive of H.E the President gave you two weeks in which to conclude the agreement with the Russian Company,” Nabbanja reminded Muhwezi.

But on June 28, 2021 Muhwezi also got a letter from Patrick Ocailap; on behalf of the Permanent Secretary /Secretary to the Treasury. Ocailap’s letter communicated a similar position to that of Secretary of the Office of the President, Yunus Kakande. It emphasized the need to pilot the tracking project.

“The pilot shall be treated as a proof of concept of the technology and its adaptability and/or suitability to Uganda,” the letter said.

Faced with pressure from the President on one hand, and warnings from the technocrats on the other, Muhwezi and an inter-Ministerial Committee met the Russians on July 01, 2021 and agreed terms of the agreement.

Muhwezi also agreed with the Inter-Ministerial Committee to move quickly. They formed a smaller committee of police, Ministry of Works & Transport, Security, NEC, NITA, NIRA and Office of the President.

On July 23, 2021, the government of Uganda and the Russian company signed the controversial agreement. And the scandal hit the roof almost immediately.

And four days later, on June 27, Muhwezi was before parliament to explain and try to control the damage.

As he tried to show in his statement to parliament, the deal between Uganda and the Russian company was agreed long before Muhwezi was appointed minister.

Muhwezi’s defense

Muhwezi told parliament the three issues regarding the deal raised in print, electronic, and social media were concluded before he took office.

Muhwezi said the areas of concern were that Uganda has signed a contract with a firm facing insolvency/bankruptcy charges in Russia, that public money was committed without due diligence; meaning without examining the Russian company’s capacity, and that the personal privacy of Ugandans would be invaded when tracking devices are fixed on the motor vehicles and motor cycles they own or drive.

Muhwezi told parliament the Russian company had assured the Uganda government that allegations that it was facing insolvency/bankruptcy charges in Russia were the work of rival firms to tarnish its image. He said, in any case, the agreement with the Russian company provides for termination of the agreement “if a competent court has issued a decision declaring the contractor bankrupt (insolvent) or liquidated.”

“Once we have concrete evidence that the firm has been declared bankrupt, GoU will then invoke this provision,” said Muhwezi who is a lawyer.

Muhwezi explained that no money from the government of Uganda was risked in the contract because the agreement stated clearly that the Russian company will at its own expense, design, install, and operate the tracking system.

He said, under the agreement, the Russians would only be paid a fraction from the money they will raise from traffic offenders identified by the tracking system.

On the issue of intrusion of personal privacy upon fixing tracking devices on every number plate, Muhwezi said the agreement does not offend the data privacy laws of Uganda and is covered under the Data Protection and Privacy Act of Uganda.

Muhwezi explained that due diligence was done on the company.

“On the basis of this report, my predecessor and the above mentioned firm entered into a Memorandum of Understanding to operationalize the ITMS,” Muhwezi told parliament.

According to a briefing document to the new Minister for Security dated June 23, 2021 which The Independent has seen, in December 2018, President Yoweri Museveni dispatched a due diligence team to Russia led by Engineer Gerald Lutu from the National Enterprises Corporation (NEC) which is the manufacturing arm of the UPDF and Noah Baalessanvu from the Ministry for Security to specially eliminate fears noted by the technocrats.

The President directed the team to check whether the tracking system can easily be hacked, is not independent of the Russian state as this would pose a sovereign risk to Uganda, and finally if the Russian company does not exist or lacks experience. The team returned to Uganda on December 24, 2018 and reported that the Russians were well established and able to do the work. But clearly that was over two years ago and that status appears to have changed.

Muhwezi’s mistake

Muhwezi is right to apportion responsibility for the project to his predecessor, Gen. Elly Tumwine. But that is only up to a point. The bigger question for Muhwezi is why he hurriedly, and some would say recklessly, signed an agreement that his predecessors had shelved for four years? Why were questions raised by technocrats; especially from the ministry of Finance, regarding the intricacies of the financial model described as “unnecessary questions” in one of Muhwezi’s memos? Why was the clause of piloting the project first thrown out?

A February 26, 2019 memo from the then-Deputy Attorney General, Mwesigwa-Rukutana to then-Minister for Security, Elly Tumwine, raised some of the issues now causing trouble for Muhwezi.

It pointed out the lack of background information regarding the Russian company and how it was sourced without following even the most basic Public Procurement and Disposal of Assets (PPDA) procedures. It questioned whether legal, commercial, technical due diligence was done on the company. It noted that even basic information about the Russian company such as its operations, address, and legal status etc. were missing.

It also pointed out that, under the current law, motor vehicle registration is the mandate of the Ministry of Works and Transport and not Ministry of Security. This means Muhwezi, as Minister for Security, should not have been the one pushing the deal.

Various correspondences between the political heads and technocrats involved in the project show that from the beginning when he first pushed for JSC Global Security in May 2018, President Yoweri Museveni was in a rush to see the project implemented.

This was soon after the Arua Municipality MP Ibrahim Abiriga was assassinated in June 2018.  By this time, a number of prominent people had been shot-dead assassination style. They included AIGP Felix Kawesi, Maj. Muhammad Kiggundu (2016), Assistant Director of Public Prosecution Joan Kagezi (2016), and DPC Mohammad Kirumira (2018).  Most of the assassins sped away on motorbikes and murder by shooting was seen to be on the rise.

So the Russians were invited to meet Museveni chap-chap in September 2018. In March 2019, an MOU was signed between the government and the Russians and in September 2019, feasibility was completed and awaited approval by the Solicitor General.

Despite Museveni’s rush, however, the technocrats dilly-dallied and left project plans on the shelves between September 2019 and August 2020. No Ministry or department was willing to take responsibility and sign on dealings with the Russians.

According to several documents, the technocrats noted that there was lack of transparency and information sharing around the project. The project’s accounting office; the Secretary Office of the President, Yunus Kakande, was only brought in around February this year despite the project planning starting in 2018.

Many technocrats, apparently, did not see the benefits being proposed under the project; such as gathering real time intelligence, revenue generation, and national vigilance.

The technocrats noted that the proper procurement process had not been followed and that the project was too big for one entity to implement and needed to be broken up so that each ministry or department handles a part under its mandate. They also said the strategic benefits of the project are not clear.

The technocrats wanted Third Party Insurance not to be linked to the project and also noted that implementation of the project requires new laws to be passed by parliament and statutory statements by relevant ministries; including the Ministry of Finance. Enabling the tracking devices to be installed on private vehicles will require a new law. The new system will also have to be connected to the existing CCTV system.

The Russian plan

Under the plan, all of the estimated 3 million motor vehicles and motorcycles on Uganda roads and new ones being added daily would be fitted with digital tracker by 2023. The Russians model assumes that the registered numbers would increase by 20,000 every quarter.

Vehicles and motorcycles would be tracked from day of import till they are off the roads. Where possible, every driver of vehicle would be known and motor vehicle registration would shift from URA to Ministry of works and Transport. The Russians would finance implementation of the project and run it under a Public Private Partnership (PPP) arrangement and hand it to the government after 10 years. The Russians would set up five regional centres starting with Greater Kampala Metropolitan Area (GKMA).

However, even if finally it is implemented, the project could become an implementation nightmare. Firstly, all vehicles will have to be driven to bases of the UPDF’s manufacturing arm; the National enterprises Corporation (NEC) where soldiers will install the hardware or number plates with tracking device. The soldiers will also manufacture and maintain the required hardware and software.

According to the plan, the tracking project will be self-financing using money collected from vehicle owners in new taxes, fees, and fines.

According to the project’s revenue generating strategy seen by The Independent, vehicle owners will pay for the new number plates. All motor vehicle owners will also see the cost of their vehicle annual Third Party Insurance raised by Shs20, 000 to cater for the project.  All drivers seeking to get a renewal of permit will also pay an additional Shs15, 000 disguised as a ‘search fee’ to cater for the project.

Money from fines and penalties will be collected from drivers who breach traffic rules. For example, the Russians propose to install a Video Registration System equipped with multilane radar to detect drivers wrongfully changing lanes – a common problem on Ugandan roads.  Similar equipment will be installed at intersections. The company proposes to develop a Uganda specific Traffic violation detection software to catch offenders. Vehicle owners who tamper with the tracking device will also pay a fine.

All money generated from traffic fines paid by motorists will be shared between the police and the Russian company.  All monies would first go to the Consolidated Fund and expropriated through the Budget to the Ministry of Security to pay the Russians.

The issue of the financing model appeared to be a major concern for the Ugandan technocrats. But in a June 22, 2021 letter to the Office of the President, the Russian CEO, Ivan Shkarban, suggested that there is no final position on it yet.

“The approach hitherto adopted by the government side causes unnecessary bureaucratic delays to the project,” he says.

“It is clear there is a misunderstanding of the financial model we have submitted,” he adds.

The Russians, for example, propose to take up to 70% of income from fines in the early years of the project which should reduce to 30% by year 13. But the Ugandan side wants to give 40% max. It should be noted that traffic fines and penalties are already a major source of revenue for the Uganda police.

The Project has sucked in almost all government ministries, agencies and departments.  According to details seen by The Independent, its meetings were at one point being attended by officials from up to 22 government departments and ministries. They were most attended by officials of UPDF, Police,URA, KCCA, Attorney General’s Office, NITA-U, UCC, and ministries of Security, the Presidency, Works and Transport, and Finance.

The direction of the project only shifted when President Museveni brought in Jim Muhwezi as Minister of Security with express orders to implement the project.

Muhwezi’s plan appears to be a return to the project as a security project and not merely a traffic tracking project as perceived by the technocrats. Handling the project as a security issue appears to have been the initial plan and is possibly the reason why Dr. Mwanje of the Ministry of defense chaired the project’s first Technical Working Group in May 2019.

Muhwezi has proposed that a new formalized Project Management Team should include his Ministry of Security, UPDF, Ministry of Works and Transport, Ministry of Finance, NEC, Police, and NITA-U.  But it appears the project going ahead might not be easy even if the Russian company is not found to be bankrupt/insolvent.

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