An internal audit at Uganda Airlines has exposed a syndicate that cost the national carrier Shs 1.6 billion during the 2024/2025 financial year.
The report exposes inadequate planning and needs assessment, with resources allocated to areas where they are not required. It also notes that there were undelivered contracted items, budget overruns, unjustified expenditures, payments without purchase orders and procurements made without a valid contract, among others.
Also, at the centre of the scam is a fight between advertising agencies Metropolitan Republic Uganda Ltd and TBH Holding Ltd. Authored by Ronald Otukol, the internal auditor, the report also recommends tough disciplinary action for the chairperson of the contracts committee, manager Corporate Affairs and PR Shakila Rahim Lamar, as well as Allan Kyeyune, the chief finance officer, who are found culpable for the loss.
Reached for a comment, Otukol was cagey. “You man, I have no clearance to speak to you. Please speak to the CEO,” he said. Similarly, Ms Lamar referred The Observer to the CEO for explanation.
PRE-DETERMINED BIDDER
In 2023, the airline set aside $300,000 (Shs 1.1bn) for brand and image improvement. After the bidding process, Metropolitan Republic emerged the best with a bid quotation of $276,231.
However, the evaluation committee divided the bid into two and advised awarding TBH Holding Ltd for global footprint content and Metropolitan Republic Uganda Ltd for content creation.
This, according to Otukol, was wrong because the terms of reference included in the bidding document and outlined in the bid notice did not divide the scope of work into two.
“It is important to note that only Metropolitan Republic Uganda Ltd submitted a bid within the Airline’s budget and should therefore have been the sole Best Evaluated Bidder (BEB). TBH Holding Ltd, with an evaluated price of $382,013, should not have been recommended for contract award,” reads part of the report.
Subsequently, the airline contracts committee held negotiations with both bidders on November 30, 2023, resulting in the agreed contract prices of Shs 500 million (approximately $134,228.19) for Metropolitan Republic Uganda Ltd and Shs 650 million (approximately $ 174,496.64) for TBH Holding Ltd.
“As both entities were contracted for a similar scope of work, it may be inferred that these negotiations aimed at including TBH Holding Ltd as an additional BEB within the Airline’s overall budget of $300,000,” reads the report.
“The contracts committee, thus, inadvertently awarded a contract to TBH Holdings Limited in deviation from its pre-approved terms of reference.”
INADEQUATE NEEDS ASSESSMENT
According to the report, the procurement was defined with a global geographical scope encompassing East Africa, Southern Africa, West Africa, Europe, Asia, the Middle East, and North Africa, and bidding documents required bidders to demonstrate international competence.
However, Otukol notes that during the contractual period, activities remained confined to the Ugandan market, except for just one English Premier League spot buy from Multichoice in May, 2025.
“So, no initiatives necessitated activating the contracted agencies’ global partners,” notes the report.
OUTSOURCING VERSUS INTERNAL MANAGEMENT
Meanwhile, the audit report notes that whereas the terms of reference indicated that management of television, radio, print, digital, social and outdoor media (billboards), press conferences, reputation management, sales aids (brochures, fliers), and concept designs were to be outsourced for a consideration, the airline possesses in-house graphic designers, creatives, and a sales and marketing manager, roles equipped to deliver these services internally.
“There is no documented evidence confirming that these items were implemented during the contract period, despite their inclusion in the new procurement cycle. Implication. This situation reflects inadequate planning and needs assessment, with resources allocated to areas where they are not required.”
The report further recommended that management leverages the airline’s economies of scale to negotiate favorable rates with media houses and outdoor marketing agencies, reducing reliance on third-party agencies.
BUDGET/CONTRACT OVERRUNS
According to the report, the actual execution as per the reported purchase orders and invoices was valued at Shs 1.6 billion, hence a budget/ contract overrun of 42 percent, that is Shs 478 million.
Of the Shs 1.6 billion, Metropolitan Republic was paid Shs 408 million while TBH Holding Ltd bagged Shs 1.2bn.
UNJUSTIFIED EXPENDITURE OF SHS 258 MILLION
The report further established that whereas the airline employed graphic designers whose job descriptions provide for creating aesthetic images, conceptualizing visuals based on requirements, testing graphics across various media, among others, it incurred an unjustified cost of Shs 258 million on creative and brand designs.
“Shakila Lamar should justify and account for the expenditure of that money incurred,” reads the report.
Meanwhile, the audit further blames Lamar for authorizing five payments amounting to Shs 164 million in April, 2025 to TBH Holdings without any purchase orders raised by the airlines.
“As the contract manager, Shakila Lamar should provide justification and an account for the money that was paid without call-offs or purchase orders,” the reports reads.
PROCUREMENTS MADE WITHOUT A VALID CONTRACT
Furthermore, the report observes that whereas the contract with TBH Holdings ended on March 12, 2025, management continued procurement transactions with TBH Holding Limited without any documented approval of contract extension by the Contracts Committee.
“As such, 40 transactions worth Shs 778m were procured without a valid contract with TBH Holdings. This represents a risk transfer failure where all the operational and financial risks shift to the procuring entity.”
ABSENCE OF PROOF OF DELIVERY
Lastly, the report notes of the Shs 1.6 billion that was spent under the contract, there was no proof of delivery or contracts management reports on the services sought. Such contract management reports would include delivery notes or job cards, monitoring reports on the main media houses and social media, proof of billboard installations, a repository of developed content, minutes of meetings held with the contractors, performance evaluation reports and budget reports, among others.
“These are neither evidenced in the Oracle Fusion ERP nor in the procurement files. It is recommended that as the contract manager, Shakila Lamar should provide the contract management records related to the contract for the global communication strategy and prove delivery of any such deliverables under the contract.”
It wants to look as if the internal audit at Uganda Airlines is dealing with the staff who do not know such standing order procedures. In other words the job the staff members are bush doing is beyond their understanding! Who therefore is there to blame other than the ones who installed them on such a highly specialised administration in that competitive international corporation!!
A lot of them were probably selected because of nepotism or because they had contacts within the airline. What the new CEO should have done is fire everybody, close the airline down and start from new.
This is not news. There could be are more such cases allover Uganda but without independent minds and institutions we shall continue to see this usual cases.
It would be news if a clean report is identified in any Government entity. However, we applaud this internal audit team for being independent!
Good publication