A section of MPs are demanding that the Speaker of Parliament Rebecca Kadaga institutes a probe into the Shs 6 billion reward to 42 senior government officials for “winning” a 2014 tax arbitration case against Heritage Oil and Gas.
Dokolo North MP Paul Amoru (NRM) described the payout as “irregular, uncalled for and disturbing.”
He called for an investigation into the matter.
“For us, as concerned MPs, from the information we have, URA should answer to the Parliamentary committee whose work directly deals with that to help us answer certain questions. It is unprecedented and dangerous,” Amoru said.
Amoru was speaking at a press conference on Wednesday, in which the MPs said they want to clearly understand the source of the money rewarded to the 42 senior government officials and to know who exactly authorised the reward.
Other MPs at the press conference included Peter Ogwang (Usuk), Jackson Kafuuzi (Kyaka South), Michael Tusiime (Mbarara Municipality), Jacqueline Amongin (Ngora Woman), Sarah Temulanda (Mpigi Woman), Margaret Komuhangi (Nakasongola Woman) and Dan Muhairwe (Buhaguzi).
The MPs spoke out after it emerged that some senior government officials, including the Uganda Revenue Authority (URA) commissioner general, Doris Akol, Uganda National Roads Authority (UNRA) Executive Director Allen Kagina, Finance ministry’s permanent secretary Keith Muhakanizi and 39 others reportedly shared a chunk of the money that Tullow paid to government.
However, yesterday, URA assistant commissioner for public and corporate affairs, Sarah Birungi Banage, released a statement saying “all [the] payments underwent the necessary approval processes as provided for under the Public Finance Management Act as amended – for close to a year.”
She said, “The presidential handshake granted to the multi-disciplinary and multisectoral team of officials was not illegal and followed all due government processes. It was meant to appreciate the professionalism and patriotism exhibited by the team members, especially their ability to resist all pressure and compromise given the magnitude of the figures involved.”
MUSEVENI ENDORSEMENT
According to documents seen by The Observer dated June 26, 2015,URA boss Doris Akol proposed to President Museveni that the government should allocate Shs 6 billion as “a presidential handshake” for the team that successfully represented Uganda in the arbitration case in July 2014 in London against Heritage.
“I do hereby propose that a sum of Shs 6bn be allocated as a reward to the team, out of which Shs 2.358b will be deducted as tax and the net sum of Shs 3.642b will be given to the team as a take home package,” Akol’s letter said.
She further indicated to the president that the amount recommended as reward would enable the beneficiaries use the funds for something tangible, to leave a legacy to remind them and their offsprings of their contribution to the nation.
“For instance, the recommended amount could enable one to acquire a decent plot of land, pay a deposit on a mortgage or perhaps facilitate finishes on home construction. The amount will be distributed among 42 individuals that make up the core, non-core, and support staff of the team,” she added.
Museveni endorsed the proposal in a November 16, 2015 letter to Finance minister Matia Kasaija, in which he indicated that he met a team of officials that handled the case and that they requested to be considered for a reward in appreciation for the work done.
“Given the amount of money that was recovered for the government, I agreed that government pays them some money as a token of appreciation. I therefore, direct that a team of 42 government officials be paid Shs 6bn. The applicable taxes should be deducted,” Museveni’s letter, copied to vice president, prime minister, permanent secretary ministry of finance and URA commissioner general, reads.
DEMORALISING FACTOR
In 2011, Tullow Uganda Limited and Tullow Operations PTY Ltd (applicants) filed an application before the Tax Appeals Tribunal challenging initial assessments of income tax of US$472,748,128 (Shs 1, 229,145,132,800) by URA in respect of a transfer of their interests in Exploration Areas EA1, EA2 and EA3 to Cnooc and Total for the consideration of US$ 2,933,330,400.
The said assessments were eventually revised by URA to US$ 467,271,971 being capital gains tax. The applicants being aggrieved by the said assessments appealed to the tribunal which gave URA victory after the arbitration in London in July 2014. It is on the basis of this victory that the public servants sought the bonuses.
But the MPs argue that the request for bonuses for work which they are already paid for sets a bad precedent. They added that it also demoralises other government workers on meager salaries such as police officers and teachers.
“Why would a civil servant who has done their part seek to take some of whatever they have secured for government as a reward? I do not believe that that reward was justifiable and it is my thinking that whoever jotted down the request for it hoodwinked the president into thinking that it was indeed a required payment,” Tusiime argued.
The MPs also suggest that failure to have the government officials return the money is encouraging corruption.
“The common practice is that a reward is not solicited,” said Amoru. “If I have done a good job or I have been a good friend, I should not ask that I have been a good friend so you should pay me this amount.”
DEAL DETAILS
Documents obtained by The Observer indicate that after receiving a copy of the directive to minister Kasaija, Akol in a December 11, 2015 letter titled “Appreciation for the team that delivered a win for the government of Uganda in the Heritage Oil and Gas arbitration in London” to the permanent secretary in the ministry of finance.
“It was your recommendation that the commissioner general, URA be designated as the accounting officer through whom the handshake will be paid and for the purpose of ensuring that the beneficiaries to the directive receive their payments,” she said.
“The purpose of this letter is to request you to formally designate the commissioner general as the responsible accounting officer and secondly to requisition for the Shs 6bn needed to effect the payments to the 42 beneficiaries in line with the presidential directive.”
The letter was copied to finance minister, attorney general and the principal private secretary to the president. On April 25, 2016, Akol again wrote to the PS reminding him to designate her as the accounting officer through whom the handshake will be paid as per the president’s directive to reward the 42 government officials.
She wrote: “The purpose of this letter is to request you the following; to formally designate the commissioner general, URA as accounting officer, grant me the authority to make the payments to the beneficiaries as directed by the president and to formally requisition for Shs 6bn needed to effect the payments to the 42 beneficiaries in line with the presidential directive.”
That prompted the finance ministry permanent secretary Keith Muhakanizi to write back, saying he did not have the money to immediately pay the bonuses.
“As you may be aware, supplementary funding is not possible due to the Public Finance Management (PFM) Act 2015 limitations. You will, therefore, need to seek authority from the Hon. minister of finance [Kasaija] to reallocate from the tax refunds money to the relevant item,” he said.
In the same letter, however, Muhakanizi designated Akol as accounting officer through whom the money was to be paid when it becomes available.
On May 5, 2016, Akol wrote to the minister as advised by Muhakanizi. In a response on May 25, 2016, Muhakanizi insisted that the supplementary funding was not feasible having hit the three per cent supplementary legal requirement for the 2015/16 financial year.
On October 19, 2016, Kasaija wrote to the auditor general in a letter titled “Request for supplementary of Shs 6bn for the ‘presidential handshake” for the Heritage Oil and Gas case” asking him to reinstate URA budget in lieu of funds that were paid to the winning team in the case between government and Heritage.
It was from that following exchange of several letters among the president, finance minister and Muhakanizi that a directive was made and the auditor general, in a November 1, 2016 letter, granted a credit to treasury from the consolidated fund account of Shs 6bn.
newseditor@observer.ug