A loud arbitration fight has brought to light details of the construction of a pharmaceutical facility in Matugga, Wakiso district by Mathias Magoola, a biochemist, who first burst onto the national stage in 2020 with a promise to facilitate the production of a sanitizer that killed many viruses including Covid-19.
Magoola also introduced to Ugandans the sanitizer developer, Professor Sarfaraz Niazi, a scientist from the University of Illinois in the United States, who together with the biochemist, are proprietors of Dei Biopharma Uganda Limited.
The claim of a Covid cure then, and a picture of Prof. Niazi in the company of President Museveni and then-Speaker of Parliament Rebecca Kadaga, kicked up a public storm.
Magoola, the managing director of Dei Natural Pharmaceuticals under Dei Group, is locked in a bitter Shs 4 billion arbitration fight with Mutoni Construction (U) Limited, a South African company he contracted to build a pharmaceutical manufacturing warehouse at Kigogwa, Matugga in the central district of Wakiso.
In a complaint sent to The Observer, Mutoni Construction (U) Limited, represented by Hakim Semuwemba, the Ugandan partner, said, “We are writing to your platform seeking help to expose a bad man walking the streets of Kampala. He rubs shoulders with the powerful of the most powerful in this land. He wears the most expensive suits and drives the latest range of the Rovers. He is a smooth talker… The man we are talking about is Mathias Magoola. The one who frolics with Rt.Hon. Rebecca Kadaga, HE William Ruto, and HE Yoweri Kaguta Museveni.”
Ruto is deputy president of Kenya. Semuwemba said, “Magoola is the managing director of Dei Natural Pharmaceuticals under Dei Group. They contracted us to build a pharmaceutical manufacturing warehouse at Kigogwa, Matugga in Wakiso District sometime in September 2019. We hit the site running and by the first lockdown in May 2020, Mr. Magoola was able to host the president and former speaker of parliament at that site.”
“In June 2020, Mr. Magoola developed payment problems with the architect on site. We the contractors only get paid after the architect issues a certificate of completion for each stage of work completed. The architect (SYL Architects) continued on the project, issuing certificates of completion until November 2020. Up till today, Mr. Magoola has not paid over a billion shillings duly signed off by the project architect before November 2020,” he said, adding, “Around November 2020, the presidential election campaign was in high gear and Mr. Mathias Magoola was having responsibilities at H.E Museveni’s team and said there was no money right now. He explained that Mutoni Construction continues (with credit supplies of materials and equipment) to build and finish the project. Magoola explained that his financial backers would find it easier to bring forth more money for the project after it takes on an almost complete shape.”
“In December 2020 - when Mutoni Construction was faltering financially, Mr. Mathias Magoola wrote to a finance house to discount our November 2020 invoice so that we could access some money. The finance house undertook a background search on Mathias Magoola and his Dei Group and they chose to decline the invoice discounting matter,” he said.
He said the company did its best to finish the project.
“By pooling resources from other ongoing contracts, Mutoni Construction was able to finish the building at Matugga by end of January 2021. There was no architect to issue a certificate of completion. Magoola had until that time and up till to date not appointed a replacement architect. Having the technical know-how - Mutoni generated a status certificate on the building and based on this generated an invoice covering all the work done in November, December 2020, and January 2021.”
When Mutoni presented the bill of more than Shs 4 billion, Magoola explained that he still did not have money to settle our bill, Semuwemba said.
“He said he was processing a loan from Equity bank. The bosses of Equity bank were to fly into Uganda for an on-the-ground inspection of the building and assessment of the financial requirement for the additional buildings that were to be built as part of the whole complex. Mathias asked Mutoni to cooperate and be a part of the meetings with Equity bank, once the loan got released, Mutoni was promised payment and additional work on the new buildings.”
“After 2-3 months of back and forth, Magoola got his loan in millions of dollars. He quickly somersaulted on Mutoni saying that he did not owe any money to us. He arranged soldiers to guard the site and keep us out plus other unpaid suppliers. He stopped answering our phone calls, emails, and other messages,” Semuwemba wrote.
“In the meantime, we continue to battle for our money against Mathias Magoola. We are in court, we have reported the case to the office of Col. Edith Nakalema, We have got people to present our matter to H.E Museveni but Mathias has not yielded,” he said.
In May 2021, Mutoni’s lawyers; Kyagaba & Otatiina Advocates filed an arbitration claim with the International Centre for Arbitration and Mediation in Kampala (ICAMEK) and ICAMEK appointed an arbitrator to handle the matter. The respondent agreed to the appointment of the arbitrator on May 10, 2021.
Mutoni in the claim says that “On 25 and 27 September 2019, the Claimant and the Respondent (Magoola) entered into a Production Building Construction Agreement for construction by the Claimant of the Respondent’s pharmaceutical industries in Matugga in Wakiso district.”
“Under the Contract, the Respondent undertook full responsibility for payment of the contract price to the Claimant. It is imperative to mention that the responsibility to make this payment was not only borne out of contract but also has a legal basis. Under the contract, the Claimant and the Respondent agreed on the payment mechanisms as hereinbefore described.”
“In total and blatant breach of the provisions of the law and the Contract, the Respondent ignored and/or refused to pay any sums due and owing as indicated under the invoices sent to it. The invoices and interim certificates were prepared in accordance with the Contract. The refusal to effect payment by the Respondent does not have any legal basis.
“In breach of the provisions of the Contract, the Respondent has had to demand unjustifiable conditions before settling the invoices. Even where the conditions have been met by the Claimant in its efforts to foster a good business relationship, the Respondent has refused to settle the invoices….
For the reasons set forth above, the Claimant respectfully requests the arbitrator to issue an award:
“Directing and (or) Ordering the Respondent to pay to the Claimant the combined amounts of UGX 4,108,593,090.45 (Uganda shillings four billion, one hundred eight million, five hundred ninety-three thousand ninety and forty-five cents) being the sums due on unpaid invoices, interest on sums on unpaid invoices and unpaid VAT,” the arbitration claim reads.
In a statement of defense drawn and filed on June 25 2021 by Joska Advocates; Magoola’s lawyers, the respondent said he disputes the claimants claim in its entirety.
“The respondent shows and highlights that the respondent has overpaid the claimant by Shs 79, 129, 632. Wherefore, the respondent seeks the dismissal of the claimant’s claim and the grant of appropriate orders in favour of the respondent, for instance, the order for the claimant to refund the overpaid sum of Shs 79, 129, 632.” Mutoni however, disputes this assertion.
“…Overall, unless specifically admitted, all the allegations of facts and each of them is denied, and the Claimant will be put to strict proof at the hearing.”
“…At this stage, the Respondent does not dispute the Claimants presentation with respect to the works scope. However, the Respondent reserves the right to show during hearing by evidence based on the Contract, Bills of Quantities and by conduct and workmanship principles, other critical specifics of the works scope.”
Right at the onset of the Covid-19 pandemic in March 2020, then-Speaker of Parliament Kadaga kicked up a public storm when she claimed that a local pharmaceutical company was about to manufacture an alleged “cure” for the coronavirus disease.
She told parliament that the local pharmaceutical company would start producing a cure for the coronavirus disease in two weeks.
Her statement came after a meeting with Professor Sarfaraz Niazi, a scientist from the University of Illinois in the United States, and Magoola, the proprietors of Dei Biopharma Uganda Limited.
“Professor Sarfaraz Khan Niazi developed an effective advanced sanitizer that has been proved to kill the Covid-19 virus instantly. Tests were recently conducted in the US and Glasgow with a certificate of analysis showing the ability of the product to kill the virus in seconds. The trials are starting today in the United States of America,” said Kadaga.
Mathias Magoola, a biochemist working for the pharmaceutical company, and Niazi also met Ugandan President Yoweri Museveni, and seemed to convince him that the product would kill not just Covid-19 but any virus.
Kadaga added that Professor Niazi was one of the world’s prolific inventors with more than 100 patents of pharmaceuticals, adding that he had developed more than 3000 formulas which he has donated to DEI Pharmaceuticals to help Uganda become self-sufficient in essential medicines.
“A young man called Mathias Magoola has established two industries; one in Luzira manufacturing malaria and cancer drugs and another in Matugga, which will be the biggest pharmaceutical industry on this continent. This professor came to assist with setting up that industry,” Kadaga said.
Dei speaks out
Dei Natural Products International Ltd (Dei), which is part of the Dei Group, says whereas they contracted Mutoni Construction (U) Ltd and paid it the required money, the latter has failed to finish the production plant and has instead turned around and dragged them to police, claiming they were not paid.
On October 14, 2021, Mutoni Construction (U) Ltd wrote to Police’s Criminal Investigations Directorate (CID), claiming that Dei and its director, Mr Matthias Magoola, procured them to construct the multi-billion pharmaceutical company but hasn’t paid them Shs 4 billion.
But Magoola, in a statement of defense, said Mutoni Construction (U) Ltd was paid the money to complete the project but still failed. Up to Shs 6 billion has since been paid to the contractor, Dei said. Dei added that Mutoni should stop using underhand methods and fulfill the contractual obligations.
“Mutoni should stop engaging in ‘imperialist tendencies’ crying about being a South African investor because it was not given a contract because it was a South African investor, but because it undertook to construct and hand over the building to Dei within agreed timelines and standards,” Dei’s defense reads in part.
“By failing to execute the contract in a just and transparent manner, Mutoni cannot expect to receive free money simply because it is a company of the so-called South African investors. One wonders, if in South Africa contractors get free money or whether in case of disputes they drag in political heads to resolve the disputes,” it adds.
The Genesis: On September 27, 2019, Dei and Mutoni signed the contract for the construction of phase 1 of the Pharmaceutical Production Building at Matugga for UGX 9.6 billion, including both labour and supply of construction materials.
By the terms of the contract, Mutoni was to complete the construction of the building within four (4) months.
Mutoni took possession of the site on October 1, 2019 and was required to have completed and handed over the building by February 20, 2020.
But Mutoni was later unable to beat the deadline and requested an extension.
“However, Mutoni was unable to supply the materials and to avoid delays, it was mutually agreed by both Dei and Mutoni that the supply of materials be removed from Mutoni and Mutoni only remained with the labour contract. Any person familiar with construction will know that the biggest component of construction is materials, and labour only constitutes about 20%. Yet Dei has so far paid Mutoni over UGX6 billion,” Dei’s defense reads in part.
According to Magoola, Dei was patient with Mutoni and continued making demands for speeding up the project but the construction company’s promises “were always empty, and not complied with.”
As Dei was contemplating another company to complete the work, Mutoni gave assurance to Dei that once payment of UGX500 million was advanced, the project would be completed without the necessity of other funds or certification.
“On this undertaking and since Dei was desperate to have the building completed and availed; Dei agreed to the payment and parties agreed in principle that then it was not necessary to appoint a successor project manager. The UGX 500 million was paid, but Mutoni did not do any work and indeed did not complete the construction as promised,” the pharmaceutical company says.
Dei says as it complained about the failure by Mutoni to complete the building as promised, it was shocking that Mutoni came up with three “manipulated and false claims of over UGX 4 billion.”
“Mutoni’s inflated and false claim was naturally rejected by Dei and Dei suggested that an independent entity be engaged to evaluate the project for mutual settlement but Mutoni aware of its schemes rejected the proposal and even threatened sinister schemes to tarnish the image of the project,” Dei says.
Mutoni, who got the job after Dei advertised the tender and several companies placed bids, including Mutoni Construction (U) Ltd, was later informed by an independent consultant that the claim by Mutoni that it could do the project in four months was false and used as a ploy to win the tender.
“Mutoni Construction (U) Ltd misrepresented this timeline to win the contract! They have instead spent over two years and still failed to deliver the project on top of being paid almost UGX6b,” Dei states.
Dei says that the independent consultant also indicated that they had overpaid Mutoni. Efforts to resolve the matter before arbitration have been frustrated by Mutoni Construction (U) Ltd who have since rejected court arbitration and instead resorted to sinister schemes, including involving police and the president, to resolve the matter.
“That contract did not involve the President of Uganda or the Vice President of Kenya, who Mutoni is unfairly bringing into the conflict to malign Dei. Mutoni as a contractor should know, that it is normal the world over for a dispute to arise in contracts and that is why dispute resolution mechanisms are embedded in contracts, and contractors ought to follow these mechanisms, and not run to political heads or institutions who have nothing to do with the contracts in the first place,” Dei said in an official statement.
“Mutoni needs to respect the commercial justice mechanisms in this country, and having gone to arbitration, Mutoni should have pursued the arbitration and to respect the process and the decision thereof, rather than resort to maligning Dei in the press,” Dei’s defense reads in part.
Police have since asked Mutoni to petition a civil court for remedy. In June 2021, President Museveni commissioned the biological drugs and mRNA (Messenger Rigonucliec Acid) vaccine facility in Matugga, Wakiso district, which will make vaccines readily available in the country.
The president was in the company of Dr William Ruto, the deputy president of Kenya; Dr Yonas Tegega Woldemariam, the World Health Organisation (WHO) country representative, and an adviser at Food and Drug Administration (FDA), Prof Sarfaraz Niaz, among others.
The Minister of Health Dr Jane Ruth Aceng was also present during the commissioning. Dr Monica Musenero, the minister of Science, Technology and Innovation, who is also a senior presidential adviser, said the facility is a private initiative that will manufacture modern vaccines.
According to the government of Uganda, the project will make Uganda self-sufficient in all her health care needs by making essential drugs that are currently being imported into the country.