In case you have been away, the botched Mukoni-Katosi road
deal has been dominating our headlines.
These are the facts as we know them.
Government sought contractors to build the 74km road. The cost
of the project was put at about sh165b. An American firm Eutaw Construction
Company was declared the best evaluated bidder in March 2011. As part of the
deal Eutaw was entitled to an advance payment of about sh25b meant for
mobilising plant and equipment and generally getting work going.
But in order to get this money Eutaw needed insurance bonds
to guarantee they will do the work. Eutaw got some insurance bonds and the money
was released to the contractor by the Uganda National Roads Authority (UNRA).
It’s not clear when but after the payment was made in
January things started going awry.
Several things emerged that put the whole contract at risk.
It was discovered that the insurance bonds purportedly
issued by Statewide Insurance Company (SWICO) were forgeries. The question is
does SWICO even have the balance sheet to support such a bond? Secondly, Eutaw
turned out not to be the firm everyone thought it was. Checks with the only
Eutaw company in the US that deals in construction, revealed that they had no
Ugandan office and neither had it ever bid for a project in this part of the
world. And finally “our” Eutaw had sub-contracted all the work to a Chinese
firm in contravention of the rules governing such contracts.
At this point UNRA may have been best advised to call off the
contract. They did not. They got back to Eutaw and asked them to make good on
these irredeemable breaches of the original contract.
"At this point Eutaw went shopping for insurance firms that would underwrite the project, never mind that the horse had already bolted the barn....
Through their insurance brokers Marsh Uganda they approached
three firms, with Insurance Company of East Africa (ICEA) and UAP taking up the
offer. Essentially they were shopping for a fall guy, someone who would carry
the loss when the deal flopped.
Everything may have gone very well were it not for UAP
cancelling the advance payment bond when they realised that the payment they
were supposed to be covering had already been made. That in effect means the project
now is uninsured and cannot proceed.
The plot thickened when less than a week after President
Yoweri Museveni flagged off the project than the Finance ministry Permanent
Secretary Keith Muhakanizi wrote on 9th July 2014 requesting the IGG
investigate the deal because it had come to his notice that the sh25b advance
payment was paid out on the basis of a forged
insurance bond.
The police are now quizzing everyone in connection with the
deal but the IGG in her report on the deal has roped in the Works minister
Engineer Abraham Byandala as not beyond suspicion.
The devil – literally and figuratively, is in the detail.
Unfortunately as Ugandans this kind of corruption is par for
the course. But to put into perspective this what sh25b can do for in Uganda.
"According to the finance ministry’s draft estimates for the year a total of sh347m was budget for general staff salaries in the pre-primary, primary and secondary schools so this money can pay general staff salaries for 72 years. Or pay for immunisation services for 24 years or pay general staff salaries for the health sector for four years....
What is even more shocking is given the smoothness and
impunity with which the scam was planned and executed clearly the players were
very practiced, which means we are probably haemorrhaging hundreds of
billions a year in such schemes.
This is unsustainable situation that deprives our children
of quality social services, our businessmen a conducive environment in which to
operate, invariably stains our politics and is fast making his country
ungovernable.
To paraphrase the best time to nip corruption was 20 years
ago the next best time is now.
