MPs summon top Finance officials over Shs720b loan

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Kampala. Parliament’s Public Accounts Committee (PAC) has summoned Bank of Uganda Governor Tumusiime Mutebile, Secretary to the Treasury Keith Muhakanizi and other top officials in the Finance hierarchy to explain how Shs340b of the Shs720b ($200m) loan meant for medicines and rural electrification was used.
The PAC vice chairperson Gerald Karuhanga said Muhakanizi, Mutebile, Auditor General John Muwanga and Mr Lawrence Semakula, the Accountant General, have been summoned to appear before the committee on Wednesday to “explain the whereabouts of the money because no agency has received anything”.
Mr Muhakanizi, who doubles as the permanent secretary in the Ministry of Finance, yesterday said Parliament’s planned inquiry into use of the loan is “misdirected.”

He advised the MPs to task the Inspector General of Government or the Auditor General to conduct the investigations.
“What is the whole probe about? Everything was done properly and I will prove that; the documents are available,” Mr Muhakanizi said.
He said the money was pooled into the Consolidated Fund and spent on approved expenditures.
“Was the money for project support or budget support? If MPs think money is lost, why haven’t they asked the Auditor General to audit the money? Why don’t they ask the IGG to investigate? That is how countries are run,” Mr Muhakanizi charged.
Although Speaker of Parliament Rebecca Kadaga last week assigned the Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) to investigate the money, Mr Karuhanga said his committee undertook to carry out a broader inquiry about the loan, beyond why the National Medical Stores never received its share.

Parliament’s intervention follows declarations by Mr Moses Kamabare, the NMS general manager, that no medicine and other medical equipment would be provided to county and sub-county government health centres (III and IV) in the financial year beginning July 1 unless the more than Shs41b deficit in the NMS budget is cured. The NMS, which procures medicines and medical supplies on behalf of government, says last financial year it incurred a Shs68b loss due to depreciation of the Shilling and subsequent budget cuts, but that the Finance ministry provided only Shs27b, creating a Shs41b shortfall.

Following the complaints, Parliament approved and the government in August 2016 secured $83.5m (Shs292b) loan from the Eastern and Southern African Trade and Development Bank, a trade and development financial institution in Africa commonly called PTA Bank, to clear the funding gap.
The money, according to preliminary information, was never disbursed to the end-user government ministries, departments and agencies.
“The ministries and agencies that were supposed to benefit from the loan have not received anything at all; we have already started paying interest on this loan, which has now been abused,” said Mr Karuhanga.

The House, he said, approved the loan to address the currency fluctuation gaps in regard to NMS, Rural Electrification Agency and Works ministry transactions.
Last week, the Speaker directed Parliament to comprehensively investigate all matters related to the loan.
Ms Kadaga’s directive followed MP Cecilia Ogwal’s query on the use of the loan as a matter of national importance. Ms Ogwal (Dokolo Woman, FDC), said Parliament approved the loan specifically to cater for foreign exchange fluctuations.
“… It is an expensive commercial loan and the ministry must explain,” Ms Ogwal said.
Daily Monitor broke news of the simmering row between technocrats over the PTA loan in May after NMS warned that they would freeze delivery of drugs and medical supplies to lower level health units unless their budget shortfall incurred in the 2015/16 Financial Year was settled as agreed.

The disagreement between Finance ministry and NMS has persisted for months. For instance, Mr Muhakanizi on August 17, 2016 wrote to Mr Kamabare informing him that the ministry had secured a $83.5m (Shs292b) loan from PTA Bank to clear the funding gap.
He requested for copies of the procurement contracts and quarterly invoices for the payments made to enable the bank reimburse the government. NMS reportedly shared the documents with Mr Muhakanizi on September 13, but he did not release the money for medicines and other critical sundries for the affected health centres.
Mr Muhakanizi told this newspaper in an interview that claims that the loan had a pre-determined use was false.
Ministry of Finance’s Budget director Kenneth Mugambe wondered whether the MPs planning an inquiry just want to enjoy foreign travels.
“There is nothing to probe; may be they (MPs) just want a trip to Nairobi, Europe but there is really nothing to probe,” Mr Mugambe said.
Reacting to the remarks, Mr Chris Obore, Parliament’s director for communication and public affairs, warned Mr Mugambe against using demeaning language.

He said Ministry of Finance cannot work without supervision.
“Public officials should avoid use of demeaning language [about] their supervisors. If they know they used the loan well, why can’t they just appear before the committee and explain?” Mr Obore said.
“It is Parliament’s mandate to approve loans, and at the time of approval, a reason for such [request] is always sought; let the officials explain how the money was used other than undermining the probe,” Mr Obore said.
Ms Christine Alupo, the Bank of Uganda communications director, said the central bank will honour the committee’s invitation.
“I wouldn’t know whether such an invitation came in. It is, however, the bank’s practice to honour requests to meet Parliamentary committees whenever invited,” Ms Alupo wrote in a text message.

Other civil society actors weighed in on the counter-claims, demanding a full investigation to establish the truth.
“We implore Parliament to probe all bilateral and multilateral loans acquired over the last decade, including procurement, disbursement delays and Ugandans suffering debt repayment that at times didn’t reflect value for money,” said Mr Julius Kapwepwe, the Uganda Debt Network director.
Anti-Corruption Coalition in Uganda executive director Cissy Kagaba said the public outbursts among technocrats over the loan “show financial indiscipline,” especially that every loan is approved for a “specific purpose”.

Ms Kagaba warned that unless Parliament pursues the probe to a logical conclusion and culprits are held to account, financial impropriety and impunity will continue.
How it started
Daily Monitor broke news of the simmering row between technocrats over the PTA loan in May after NMS warned that they would freeze delivery of drugs and medical supplies to lower level health units unless their budget shortfall incurred in the 2015/16 Financial Year was settled as agreed. The disagreement between Finance ministry and NMS has persisted for months.

For instance, Mr Muhakanizi on August 17, 2016 wrote to Mr Kamabare informing him that the ministry had secured a $83.5m (Shs292b) loan from PTA Bank to clear the funding gap. He requested for copies of the procurement contracts and quarterly invoices for the payments made to enable the bank reimburse the government. NMS reportedly shared the documents with Mr Muhakanizi on September 13, but he did not release the money for medicines and other critical sundries for the affected health centres. Mr Muhakanizi told this newspaper in an interview that claims that the loan had a pre-determined use was false.

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