Log in
Free: The Observer Mobile App - Exclusive Content and Services

Chinese firm sued over Sukulu phosphate mining licence

Chinese investors and Ugandan officials signing the deal over the Sukulu phosphate project as Museveni (L) cheers on

Chinese investors and Ugandan officials signing the deal over the Sukulu phosphate project as Museveni (L) cheers on

The hearing of a case brought against Guangzhou Dongsong Energy Uganda Limited, a Chinese company that is undertaking the Sukulu phosphate mining project in Tororo district failed to start last week after one of the main respondents failed to show up claiming he was sick.

Guangzhou was sued together with Uganda Hui Mining Limited, Lv Weidong, Mao Jie, Yang Junjia and Guangzhou Dongsong Energy Group by Fang Min, the proprietor of Fang Fang hotel in Kampala over fraudulent acquisition of a mining licence for the Sukulu phosphate mine.

In a suit filed on June 9, 2018, Min claims that together with Lv Weldong, they agreed to go in a joint venture that subsequently acquired an exploration license over the Sukulu mine in Tororo.

Weidong knew about the existence of such deposits after reading geological reports of the area over the internet. Being that Min had more knowledge about Uganda, Weidong wanted to partner with her to register a mining company that would later acquire the exploration licence of the Sukulu that was then held by the Madhvani Group of companies.

Eventually when Madhvani's license expired, Min and Weidong’s joint venture company they named Uganda Hui Mining Limited took over the licence. However before its takeover, Min had paid $5 million (about Shs 18 billion) to register the company and also as part of the nominal capital with the understanding that, she would be reimbursed by her fellow shareholder Weidong who owned 80 per cent of the shares.

“At the incorporation, Weidong informed me that due to the law and regulations in China, he was unable to send money to Uganda and as such we agreed that I would in Uganda, pay for the nominal share capital, all the incorporation expenses including all licensing requirements of the department of Geological Surveys and Mines to obtain a license for the project,” Min’s affidavit reads in part.

It adds that however she was never reimbursed. But to her surprise, Weidong together with Mao Jie and Yang Junjia who were not even shareholders, agreed to transfer the ownership of the license to Guangzhou Dongsong without her knowledge. This, she says amounted to fraud.

Her efforts to regain her 20 per cent shares or her $5 million she had invested in the company all amounted to nothing; leaving her with no option but to sue.

She wants the Commercial court presided over by Justice David Wangutusi to force the company to refund her $5 million together with $4.7 million as appreciation for the money since 2012. This is not the first time Guangzhou Dongsong Energy Group is embroiled in a controversy in Uganda. Recently, the company fought with an American consortium for the construction of the $4 billion oil pipeline.

The company claimed that it had got the highest rating by the appraising committee for the construction of the pipeline but it was taken aback when it was not selected.   

The Sukulu project also took more than two years before kicking off with claims that the company never had money to invest. Recently there were also claims that it was trying to evade taxes by bringing in equipment meant for its steel production yet taxes were only waived on equipment that would be used in fertiliser production.



-1 #1 WADADA roger 2019-03-22 08:06
Greed,Greed and Greed, the Chinese are turning out to be worse than Ugandans in terms of double standards, leave alone the baganda
Report to administrator
0 #2 rubangakene 2019-03-23 22:12
We told you so; these Chines will take over Uganda one day and there will be nothing we can do about it.

At present, they have taken over even roadside maize roasting in Lira District. Where and when will these "forages" end, eh?
Report to administrator

Comments are now closed for this entry