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Uganda Ministry of Defence in Contracts Plunder

Media Forums Uganda Police State Uganda Ministry of Defence in Contracts Plunder

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    Ministry of Defence

    The Ministry of Defence is embroiled in a fresh procurement scam involving a little-known businessman and Uganda Defence officials through collusion and outright plunder in a series of contracts, including the Shs76 billion project at the army’s training school at Kaweweta.

    Daily Monitor has seen a cache of documents of the Uganda People’s Defence Forces’ (UPDF) internal investigations, which indicate that the businessman Eria Mubiru and his companies J2E Investment Corporation Limited, Roester Construction Corporation and some Defence officials have fleeced the Defence ministry of billions of shillings in inflated and dubious contracts.
    Mr Mubiru’s companies are accused of fraudulent procurement, presenting fake profiles of employees to win contracts, concocted books of accounts, tax evasion and failure to execute works paid for.
    In the army’s investigation documents, the UPDF accuses its own officers of collusion with Mubiru’s companies to fleece ministry of Defence.
    Following several queries about the Infrastructure Development project at Kaweweta Recruit Training School, the army launched an investigation and released its report on October 22, 2015.
    The report states that Phase One of the project was awarded to J2E Investment Corporation at Shs2.2b under the Bid Acceptance on March 11, 2010.
    However, the report says, the works were meant for Bihanga Training School in Ibanda District and it’s not clear how they were transferred to Kaweweta RTS.
    Kaweweta training school was commissioned on September 14, 2012 and the same year, Mr Mubiru’s company supplied furniture worth Shs700m without a valid contract or purchase order.
    “The justification given that the recruits were about to pass out was insufficient to clearly support it, especially where there were no specifications availed to the end users to base on before receipt (of furniture). Such a loophole shows no value for money,” reads the army’s report signed by former deputy Chief of Defence Forces Lt Gen Charles Angina.
    Gen Angina team says in some instances the companies started work before the bidding opened and would be awarded contracts half-way the project to formalise the process.
    The J2E was also awarded Phase Two of Kaweweta project at Sh26.3 billion and received advance payment of 88 per cent of the contract sum, but the works stalled with “no cause for delay by the contractor.”
    The same company, under a separate bid, was awarded another contract worth Shs6.4 billion for emergency water works at Kaweweta. The works were meant to start on July 30, 2014, but did not. The excuse given was that the works would disrupt the training of recruits, but the same company was contracted again for Shs3.6b to build a parade ground at Kaweweta and received Shs2.6b in advance. Again the works did not start and in the meantime works for the project’s Phase Two and Three were running concurrently.
    “The contractor began works without a contract. In a letter dated November 29, 2013 to Commander Engineering Brigade, the Joint Chief of Staff (JCOS) instructed for urgent initiation of the works to provide critical infrastructure requirements,” the probe report further states.
    On February 4, 2015, the UPDF Engineering Brigade wrote to the Defence ministry’s Permanent Secretary through the Joint Chief of Staff, showing the costs for critical works in Phase 3, estimated at Shs21.9 billion.
    “This was in conformity with the Engineering Brigade estimates prepared in January 2015 and received by the Contracts Committee on June 22, 2015. This raises concern why they took long to be delivered,” the investigators noted.
    On July 3, 2015, the Ministry of Defence used restricted domestic bidding and issued bidding documents to four contractors. They were approved by the Contracts Committee on June 30, 2015, but out of the four, J2E Investment Corporation was rated the best and lower bidder at Shs28.6 billion.
    However, the investigations found that the bid was Shs6.7 billion above the reserve price set by the Engineering Brigade.
    “…and in the circumstances that no service provider seemed to have met the bid reserve price of the Engineering Brigade, the best course of action was to advertise again putting into consideration the market and financial conditions prevailing in the open market,” Gen Angina observed.
    His report further states that instead, on August 19, 2015, the Contracts Committee rejected the Engineering Brigade’s revised bill of quantities, saying there was no justification for increasing the cost from Shs21.9 billion to 29.7b. But surprisingly, on October 2, 2015 the same committee approved J2E to be awarded the contract at Shs28.6b.
    By this time, even before the contract was awarded to him, Mr Mubiru’s company had zealously injected Shs11 billion into the project.

    One company, two names

    The investigators also observed that J2E was by now overstretched with work but its appetite for more deals and the urge by the army to award it more contracts was only surging and unquenchable.
    Despite the stalled works at Kaweweta, the same contractor under a different name Roestar Construction Corporation, was on March 22, 2014 awarded another contract worth Shs5.9b for priority works in Olilim SOFAAD Training School.
    “The contractor managed to carry out some preliminary works and mobilisation and later abandoned the site. This was attributed to delayed payments by Defence. Even after he asked for renewal of the project period for one year, which was authorized on September 22, 2015, works did not commence as he is overstretched by ongoing works.
    Such a situation raises serious concerns why all the works were being concentrated on one individual yet there are other pre-qualified bidders who can equally be given an opportunity to work with MOD/UPDF. This was a clear indication of influence peddling by the contractor,” Gen Angina noted in the report.
    On December 3, 2015, a separate investigation into contracts to J2E and Roester was commissioned.
    The report of the findings also by Gen Angina noted: “Right under our nose a Katosi/UNRA-like scandal has been crafted and orchestrated,”
    His probe, which covered other projects done by the same J2E and Roester companies, described Mr Mubiru as a dishonest man.
    “Records presented for the Phase 2 procurement showed that his dishonesty extends beyond overpricing (quotations) to forgery of academic qualifications as an engineer from Ndejje University. He has never gone to this university. This is contrary to ethical conduct of business for bidders under section 93 of the PPDA Act 2003, making him unfit to run government contracts,” Gen Angina’s report states.
    On April 25, 2015, Ndejje University Academic Registrar B.M. Sekabembe wrote to the UPDF, stating that Mr Mubiru has never studied engineering at the university and accordingly such academic papers must be fake.
    The inquiry also lifted the lid on other staff of Mubiru’s companies whose profiles were submitted during the bidding process as proof of competence to execute the contract works.
    One staff Alam Manzoor, the investigators say, he “has never done any water project as profiled.” Another staff Mr Hu Junquing was found to be “mysterious and apparently non-existent yet the works were awarded basing on such false information.”
    The report further states that Mr Isaac Ayepa, indicated as the project manager for the Parade Square, site manager for the dam and senior engineer for Phase 3, seems non-existing.
    For the dam project, his profile indicates that he joined J2E Investment in December 2013, while for Phase 3 bid of Kaweweta RTS, he is indicated to have joined the same company in April 2014.
    “This shuffling of facts applies to all personnel. Patrick Kalule, whose profile is submitted as project manager for all projects does not work with the company,” Gen Angina probe says.
    “It was also confirmed the contractor uses Engineering Brigade personnel from DD Regiment who were attached to the contractor under instructions to carry out official work for him and it was the same Engineering Brigade to do the technical evaluation… In other words Engineering Brigade makes the drawings, costing under supervision of the contractor who submits them for procurement and the same brigade evaluates their “employer” for the job…,” the probe team noted.

    Dubious books of accounts


    The probe says the company’s books of accounts exuded a stench of fraud with the contractor found to have a balance sheet size of Shs206m as total assets for the last three years and hasn’t made a profit above Shs12m, a scenario that suggests tax evasion.
    Financial statements seen by Daily Monitor indicate the company’s highest revenue/sales were in 2012 at Shs1.3b yet it won the contract for Phases 1, 2 and 3 of Kaweweta works and the dam and Olilim worth Shs76b.
    Going by the company’s own statements for three years, the probe team observed that it was “ineligible for award of contracts of such big sums.”
    “Unless it was a miracle, how could the evaluation and contracts committee fail to detect that such a company lacked the financial capacity before and now for all these contracts? This indicates existence of an extensive procurement collaboration network within the Ministry of Defence,” the report asserts.
    The investigation lists many more cases of fraud in the company’s transactions with the Ministry of Defence in collusion with various officials including auditors and the ministry’s internal departments.
    When the President was set to pass out the recruits, the army leadership asked for a square to be built to insulate him from dust as soldiers marched during the parade. Initially, the army was to undertake the work but Mubiru’s company was instead contracted to build the square at Shs3.6b.
    Mr Museveni later passed out the recruits on a dust-filled ground because the works were still incomplete yet Shs2.3 billion had been advanced to the contractor.
    Interestingly, J2E Investment Corporation claimed rich experience from landmark construction projects and cited Labanurm Courts owned by Kingstone Enterprises as one example of their projects done in 2008 at Shs2.3 billion.
    However, the property belongs to Oasis Group of Companies and were completed in 2013 at $50 million.

    Latest probe


    A separate investigation done in January this year raises the same sticky issues about the same company and recommends an overhaul of the army’s procurement, contracts and construction committees.
    The probe team comprised Brig Sam Kavuma, Brig. Ramathan Kyamulesire, Col. Abdul Rugumayo, Lt. Col. L. Arikosi, Lt. Arthur Ruhinda and Okello Engola. They ordered recovery of the Shs700m paid to Mr Mubiru for furniture supplied to Kaweweta without a contract and prosecution of the officers behind the deal.
    When contacted, Brig Richard Karemire, the UPDF and Defence spokesman, said: “We are still investigating that issue. Please let us do our work first. I shall not comment beyond that.”
    According to documents obtained from the Registrar of Companies dated June 28, 2003, J2E Investment Corporation has Mr Jordan Magunga, Ms Peninah Busingye and Eria Mubiru as the directors.
    Mr Mark Wanyana, a consultant with Hits Investments, which was hired to offer business advice to the company, wrote in his report dated February 1, 2013: “The client (Mubiru) is a young entrepreneur who has vital connections in the Ministry of Defence. The executive director is the mainstay of the company. The business has no formal structures, plan or projections.”
    On November 23, 2015 Mr Mubiru wrote to Ministry of Defence Permanent Secretary Ms Rosette Byengoma: “Mr Charles Angina took inappropriate steps including halting of procurement for Phase 3, biased and unfounded allegations against the company, prolonged investigations into our private operations, which has led to loss of business, delayed payments, delayed project implementation, continuous witch-hunt and harassment.”
    He then warned the PS, “If in 19 days the matters raised in this letter are not resolved we shall begin to demobilise all equipment from the site and shall forward to you both demobilisation and mobilisation fees.” He suspended the works on November 23, 2015.
    Daily Monitor could not reach Mr Mubiru, the sole company signatory and director, for a comment as calls and text messages to his known cellular line went unanswered.

    Previous cases

    Charges. In 1992, a senior aide to President Museveni, Capt Innocent Bisangwa, and four other people were indicted on charges that they had illegally tried to export antitank missiles and launchers to Uganda. Two of the men were also accused of illegally trying to sell helicopter parts to Libya.
    Shoddy deal. In 1999 Monitor reported another shoddy deal, when the Uganda Peoples’ Defence Forces (UPDF) imported an assortment of substandard military uniforms from China. According to a reliable source then, 10,000 pairs of combat military uniforms imported under a Shs1.5 billion contract deal from a China-based British registered firm, Britanica were found to be inferior in quality and size.
    Fake arms deal. In 2015, a Polish company was conned out of more than Shs2b in a fake arms deal. Prima Investments Uganda, claimed they had been contracted by the Defence ministry to find a company that could supply 375 tanks specified as T-54, T-55, T-72, T-90s; a number of PT-76 amphibious tanks; assorted BMP infantry fighting vehicles; 46 Ferret and Eland light armour reconnaissance cars and six self-propelled artillery pieces.

    Voice

    “We are still investigating that issue. Please let us do our work first. I shall not comment beyond that.”
    Brig Richard Karemire, the UPDF and Defence spokesman.


    nationmedia.co.ug

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