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Oil probe: MPs query double payment to US-based law firm

Even before parliament has exhausted probing circumstances under which a 42-member government team was rewarded with Shs 6 billion, MPs have learnt that a US-based law may have received double payment for the same controversial tax arbitration case between Uganda and Heritage Oil.

Parliament's committee on Commissions, Statutory Authorities and State Enterprises (Cosase) is now exploring circumstances under which Uganda, through the ministry of Justice and Constitutional Affairs contracted Curtis, Mallet-Prevost, Colt & Mosle LLP at $ 10 million (about Shs 36 billion), to arbitrate a tax dispute that arose after Heritage Oil and Gas Ltd sold its stake in Uganda's oil to Tullow Oil.

The same firm was also contracted by Uganda Revenue Authority (URA) at a cost of Shs 2.5 billion to defend Uganda in the same case, which was handled by United Nations Commission on International Trade Law (UNCITRAL) in a London court.

The Curtis team led by the firm group chairman George Kahale, an international arbitration lawyer, guided Uganda to secure $400 million (about Shs 1.4 trillion) in capital gains tax from the sale. Other members of the team included Curtis' partners David Hesse, Galileo Pozzoli and Marco Blanco as well as associate Justin Jacinto.

Now, legislators are questioning the possibility that the company received payment from both the ministry of Justice and from Uganda Revenue Authority for the same task.

The matter arose during the ongoing probe involving 42 government officials who received Shs 6 billion as a token of appreciation for their various roles in the case.

Finance minister Matia Kasaija (R) and Keith Muhakanizi (C) before the probe committee earlier 

The Permanent Secretary and Secretary to the Treasury Keith Muhakanizi let the cat out of the bag in an attempt to account for supplementary budget allocations and general finances in regards to the oil cash. He however said the payment could have been erroneous.

“It [double payment] can happen that is we need to know why it happened. I’m saying as far as am concerned I remember we questioned it, and we got an answer. That is why I said you give me more time to ask the accounting officers”, he said. 

Rujumbura county MP Fred Tumuhiirwe Turyamuweza states that it is an anomaly for two government bodies to pay the same company differently on the same matter.
 
“What we found is that, in our earlier examination of documents submitted by ministry of Justice, we found they had contracted Curtis at a fee of $ 10 million, and now for ministry of Finance, we have another release of Shs 2.5 billion to be repaid by Uganda Revenue Authority to Curtis. To us, it looked like Curtis was contracted by both ministry of Justice and also Uganda Revenue Authority to handle the same case, which would be irregular. So, we are trying to find out how that payment was made”, he said.

Cosase chairperson Abdu Katuntu said the probe committee would find out the facts through summoning the officers involved to clearly explain the payments.

FINANCE MANAGEMENT REFORMS NEEDED

In a related development, while appearing before the same committee, minister Matia Kasaija said the management and handling of finances in the ministry of Finance is dependent on human effort and judgment other than computerized and modernized alert systems and guidance. This has created a big gap and loopholes - prone to abuse in the ministry according to Kasaija.

The minister, made the remarks when asked by the Parliament's committee on Commissions, Statutory Authorities and State Enterprises (Cosase) on Friday to make recommendations on how the financial management in the country could be made better.

Kasaija also stated that whatever happened in the Finance ministry in relation to the presidential oil cash reward was erroneous and should never have happened.

He also stated that the permanent secretary, Keith Muhakanizi, a beneficiary himself who signed on his behalf to authorise the Shs 6 billion reward to public servants did so in error.

Last year Shs 6 billion was awarded to a 42-member government team that secured $700 million in two separate court cases against oil companies that attempted to avoid paying taxes for transactions involving Uganda’s oil wells.
 
Kasaija also proposed guidance on presidential favours and donations, saying there should be a system to ensure that the president's directive does not break the law.

“We need to develop a system that can quickly tell the authoriser that one; you are authorising this money it is in accordance with the law. Being busy, and I have to sign almost 100 documents per day that could be a problem. You might find something has escaped [through unchecked].

On presidential favours and donations, I think also there should be a system when the president orders me or directs me particularly to pay, there should be a system that verifies that what the president has asked doesn’t break the law. Maybe it can be instituted on his own side before he writes to me, but I doubt if he has that kind of system. [His directives shouldn’t] break the law and that it is in order according to government policies and practices”, Kasaija said.

Muhakanizi stated that  the ministry has learnt lessons that government meetings need to be formalised. He said previously some of the meetings had no minutes or unsigned minutes.
 
“It is a lesson we have learnt and we should act on. We should stop running government on [an] informal basis. In other words, if we go for a meeting we should have minutes properly signed for and confirmed. In the past, we attended many meetings and there were not there. I was clear on that one and I will make recommendations. Two, I think the whole area [management] needs to be improved and make policies that are much more transparent”, he said.

Katuntu said the recommendations made throughout the probe will be forwarded to parliament for considerations. He said whatever is being done is not meant to embarrass the public servants who received the money but meant to build the institutions of the country.

Comments

0 #1 Akot 2017-03-12 14:53
I don't understand why a tribally divided people with rich tribal lands can be looted by a president non want!

Unity of a people is "power" but Uganda tribal division is more powerful & makes Museveni the most dirty-evil ruler ever seen!

It's clear Ugandans don't want to Unite to throw out their common enemy looting tribal lands freely, but how can tribal leaders of tribal lands that hold natural riches allow this while their subjects go poor?

It's 1 thing Ugandans don't give chance for 1 of them to govern thus block ALL from benefiting common riches!

It's yet another that each & ever tribal land belongs to Museveni who loots at will & shares with who ever he wants, except locals on these rich tribal lands who go poor-oppressed & given the middle finger by the dictator Ugandans are keeping in power!

Which tribal land does Mueveni belong to?
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0 #2 Dav 2017-03-13 02:38
No minutes of meetings no proper control systems both in processes manual and computerised and making informed decisions.

The reason for most is obvious but for controls I doubt if there is shortage of highly experienced experts within the system just the will I guess.

Otherwise, the country has lots of seasoned professional auditors and financial managers, Modellers a resource that could be tapped into to design, develop, formulate and advise on good systems.

If you can't find, some of us are available if you don't mind looking beyond the cover, so to speak.

Interestingly government institutions probably spend a lot on training their personnel and most either have postgraduate training or been to high profile institutions abroad.
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0 #3 Ismail Kikosi 2017-03-13 05:00
What is the purpose of this probe?

It appears to me to be a window dressing affair where parliament is spending more money to hear stories of those who took what tantamount to a bribe to tell us how mistakes are made and calling for future changes and yet they acted in total contravention of the Public Finance Management Act.!

If we are simply going to let these people, including the president who believes he owns Uganda to walk scot free then Katuntu and Co should stop here and go back to parliament.
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