Crackdown on Corruption: Ministry of Trade Officials Under Investigation for Embezzling Cooperative Funds

#IvanKaahwaReports

Ongoing investigations into the mismanagement of funds meant for cooperatives have led to the imprisonment and court arraignment of several officials. However, these investigations are far from over, following a report by the sectoral committee on tourism, trade, and industry that implicated members from the Ministry of Trade, lawyers, relatives of public officers, Members of Parliament, and former MPs. The committee was tasked with inquiring into the governance and value for money of budgetary appropriations to cooperatives in Uganda.

In August 2023, the Sectoral Committee on Tourism, Trade, and Industry began an inquiry into the status, governance, resourcing, and value for money of public funds allocated to cooperatives during the period of FY 2011/12 to 2022/23. The allocations under scrutiny stemmed from the closure of the cooperatives bank and the collapse and loss of several regional and national-level tertiary cooperative unions arising from the 1979-2006 wars. The government undertook to compensate all depositors the full amount of their deposits, over and above the insured limit of USD 2000 [7.6 million Uganda Shillings].

These included the Uganda Cooperative Central Union, Uganda Cooperation Transport Union, the Cooperative Insurance of Uganda, the Cooperative Bank for Financial Services, and the Uganda Credit Cooperative Union for all SACCOS.

The government decided to revamp the cooperatives through compensation for losses incurred during the liberation wars of 1978-79 and 1980-86. An inter-ministerial committee was put in place to verify the claims received from the cooperatives for compensation. Initially, the Ministry of Justice and Constitutional Affairs handled the compensations, but later, the Ministry of Trade, Industry, and Cooperatives (MTIC) was tasked with settling the war compensation claims from the various cooperative unions and societies as approved by Parliament.

Data from the Ministry of Trade, Industry, and Cooperatives shows that as of August 30, 2012, there were 13,179 cooperatives spread across the country: 46% of the SACCOs in the central region, Western (24%), Eastern (21%), and Northern (9%). The Western region dominated in dairy and livestock (54%), while the Eastern region dominated in crop farming and marketing (47%).

The Ministry of Justice and Constitutional Affairs paid Shs 6.97 billion to cooperative societies and unions. Meanwhile, the Ministry of Trade, Industry, and Cooperatives received 137.86 billion from FY 2016/17 to 2022/23 to clear claims for cooperative societies and unions. However, approved budget estimates, reports, and statements for FY 2016/17 to 2022/23 suggest 172.77 billion was appropriated by Parliament for the Ministry of Trade for compensation of war loss claims for Cooperative Unions and Societies.

The Ministry of Finance revealed that only 119.89 billion was released to the Ministry of Trade, but accounts suggest that the Ministry of Trade paid 147.22 billion, including the 6.97 billion paid by the Ministry of Justice, registering excess payments of 37.28 billion. The committee established that the variances were due to diversions and mischarges committed by the Ministry of Trade to cater for compensation at the expense of other budget lines and priorities.

Total claims from the cooperative unions as of June 24, 2023, amounted to UGX 620.78 billion, out of which UGX 232.92 billion was verified. Of the verified amounts, a total of UGX 147.22 billion was paid as of June 30, 2023: UGX 6.86 billion by the Ministry of Justice and Constitutional Affairs and UGX 140.36 billion by the Ministry of Trade, leaving an outstanding claim of UGX 85.70 billion.

In 2016, the cabinet instituted an inter-ministerial committee to expedite payments for war loss compensations to cooperatives. Mr. Kavundira Leonard, Principal Cooperative Officer at the MTIC, was Chairperson, and Ms. Kukunda Clare, State Attorney at the Ministry of Justice and Constitutional Affairs (MJCA), served as Alternate Chairperson.

Their terms of reference included analysing the documentary evidence concerning the war loss claims submitted to the Ministry of Trade, Industry, and Cooperatives; verifying the validity of the claims made by the cooperatives regarding the losses incurred; holding meetings with cooperative union officials and community leaders to ascertain the various claims made by the cooperative unions; and compiling and submitting a report with recommendations to the Permanent Secretary, Ministry of Trade, Industry, and Cooperatives.

However, the Permanent Secretary of the Ministry of Trade, Ms. Geraldine Ssali, aware of the verification committee, constituted a parallel committee, causing duplication of roles and rendering the inter-ministerial committee redundant.

In a letter dated March 21, 2022, she assigned six officers from the Ministry of Trade and a government valuer from the Lands Ministry to verify war debt claims concerning several cooperative unions. The committee observed this move as duplication, illegitimate, ill-intentioned, and a continuous operation of an illegality, stating that Ms. Geraldine Ssali was responsible for usurping the powers of the inter-ministerial committee and creating the new verification committee.

The parallel verification exercise by Ssali’s committee led to the misappropriation, abuse, and manipulation of funds, including selective payments of unions without verification and double payments, because it lacked criteria or policy guidelines on the selection of claims to verify. Some cooperative unions connived with officials of the verification committee to inflate the claims.

There was a reported syndicate involving the Ministry of Trade, chairpersons of the unions, and law firms to abet fraud and inflate claims with the intent of stealing money. For instance, Okoro Coffee Growers Cooperative Union Limited submitted a claim of UGX 1,658,719,335 to the ministry on October 14, 2019, but ministry documents revealed an inflated figure of UGX 1,685,860,000, increasing the amount by UGX 27,140,665. The union also made a second claim of 4,335,734,822 billion on the advice of Madira and Co-Advocates to help it sort out some legal, social, and economic problems it was facing at the time but failed to explain how they arrived at the figure despite having received payments of 1,743,667,159 in the 2020/21 FY.

Madira and Co-Advocates requested 871,430,100 million shillings to do all the work for an unspecified period, but the requisition suggests they demanded 960,604,100 million, which the committee found fraudulent. The committee discovered that Okoro Coffee Growers Cooperative Union was smuggled into the national budget to receive UGX 1 billion (one billion shillings), despite never being verified by the inter-ministerial committee to establish the authenticity and actual value of their claim to date. Shockingly, Mr. Wachal, the chairperson of the union, confessed to withdrawing and giving UGX 200,000,000 (two hundred billion shillings) to a senior officer from the Ministry of Trade, Industry, and Cooperatives in the presence of the union’s secretary manager at the offices of their lawyer, Madira Jimmy.

Mr. Kavundira Leonard, the chairperson of the inter-ministerial committee and also staff at the MTIC, was responsible for swindling over 200 million shillings while also tasking the deliverer of the money to keep silent.

The deliverer in the racket is named State Witness X in the investigations. Based on these findings, the committee proposed that Mr. Kavundira Leonard, the chairperson of the inter-ministerial committee and staff at the MTIC in the Department of Cooperative Development, should be investigated by the Directorate of Public Prosecutions (DPP) with a view to prosecution. The accounting officer of the MTIC, Ms. Geraldine Ssali, who authorized the payment to Okoro Coffee Growers Cooperative Union Limited prior to its verification, should be investigated by the DPP with a view to prosecution under Section 79 of the Public Finance Management Act, 2015.

This is Just a tip of the Ice bag as the suspects in the corruption scandals are many.