MORE details have emerged on government’s controversial purchase of 150,000 Preferential Shares from RoKo Construction Ltd valued at 207.13 billion shillings, prompting the leadership of Opposition in Parliament to block the move.
Drawing reference to the President’s letter, the Minister of Finance, Planning and Economic Development was required to follow all required legal procedures as required by Law in acquisition of equity in Roko Construction Limited. On this basis, the Secretary to Treasury instructed Uganda Development Corporation (UDC) to contract competent professional accounting firms to undertake the required due diligence.
It was however discovered that there was no due diligence done to inform the equity acquisition. The Executive Director of UDC informed Parliament that it did not undertake the required due diligence.
According the UDC Executive Director, failure to do due diligence was attributed to their inability to secure funds amounting to UGX 800 million required to contract competent professional accounting firms to undertake the due diligence.
Owing to that, the Leader of Opposition in Parliament Hon. Mathias Mpuuga Nsamba and his team maintain that it is unreasonable for Government to fail to avail UGX 800 million for the due diligence exercise, but instead proceed to seek approval from Parliament for UGX 207.13 billion. No wonder, on Wednesday 20 July, 2022, Parliament stood over the matter and the Speaker directed the Minister of Finance, Planning and Economic Development (General Duties) to prepare a comprehensive statement of issues raised before a decision is taken.
Besides, it is important to note that the PS/ST recommended for contracting of competent professional accounting firms upon realisation that the Ministry and UDC lacked the required expertise.
The majority report was premised on old constitutional documents of the company that were filled on 24th July 1969, yet we have been reliably informed that there were amendments regarding the share capital. For instance, share capital had been increased from UGX 200,000 in 1969 to the current amount of UGX 15 billion.
In the recent past because of failure to undertake due diligence, the same Roko Construction Limited together with FINASI entered into agreement with Government to construct a Specialised Hospital in Lubowa. To date no substantial progress has been registered and this prompted the House to reallocate UGX 319 billion that was proposed for promissory notes. This too reaffirms the need to contract a competent firm to undertake due diligence before the House pronounces itself on the proposal.
The Minority Report that was prepared by the Shadow Minister for Finance Hon. Muwanga Kivumbi recommends that approval of the proposal be stayed until due diligence is undertaken by independent competent professional accounting firms as earlier required by the Permanent Secretary / Secretary to Treasury. This will inform decision making processes of Parliament.
MP Muwanga’s minority report further suggests for Preference shares to only be attained after Government has acquired 51 % of the ordinary shares of Roko Construction Limited. This will safeguard tax payers’ money and interests of the country.
