Inside the NSSF Select committee report
For efficient discharge of its functions, Parliament may at any time, upon a motion made after notice given, appoint a select committee to carry out investigations on behalf of the House. This is instituted in accordance with the provisions of the 1995 Constitution of the Republic of Uganda under Article 90 and the Parliamentary Rules of Procedure rule 178 and 179.
A committee instituted under such a provision has powers to call any minister or person holding a public office and private individuals to submit memoranda or appear before them to give evidence, have powers of the High Court, compel the production of documents, enforcing the attendance of a witness and examining them on oath, affirmation or otherwise and issuing a commission or request to examine witnesses abroad.
On the 10th day of July 2014, Hon. Samuel Odonga Otto raised an issue of scandals at National Social Security Fund (NSSF) and particularly the recruitment of the Managing Director, Deputy Managing Director and Corporation Secretary. The Minister of Finance, Planning and Economic Development Hon Maria Kiwanuka made a statement clarifying the delay on the recruitment of the top management tier, particularly Managing Director, Deputy MD and Corporation Secretary. She informed the House that she was consulting widely with relevant stakeholders and was in the advanced stages nearing completion at that time.
Subsequently, Parliament instituted a select committee to investigate the NSSF, which finally released its report indicating the findings and recommendations to the House. This happened during plenary held on 19th of March 2015, eight (8) months from 17th of July 2014 when the committee was instituted to look into the National Social Security Fund. The life of the committee was extended on two occasions by the speaker since the areas to cover were too wide.
NSSF was established under National Social Security Act Chapter 222, Laws of Uganda to provide Social Security to private sector employees, including employees of Non-governmental Organisations (NGO). The aim is for NSSF to provide social security to the contributing members when they reach the mandatory retirement age or become indisposed. NSSF as at June 2014, has a membership of 1,319,345 of which 578,000 are active. The net worth was noted to be at 3.34 trillion Uganda shillings.
The terms of reference of the committee as set by the House were that the committee looks into the allegations that NSSF irregularly acquired shares in UMEME [Uganda’s largest electricity distribution company]; allegations of irregularity, nepotism and unfairness in the recruitment process of staff at the NSSF; allegations of irregularity in the disposal of NSSF assets; and any other matters related to the above.
The committee carried out public hearings receiving evidence from the relevant stakeholders, a study of secondary documents such as Acts, reports, agreements, Prospectuses and other official documents. It also undertook a study visit to Dar Es Salaam to benchmark the pension sector governance and regulation, and another study visit to the international Social Security Association (ISSA) in Geneva to learn about international best practice and guidelines in pension fund governance and regulation.
In the performance of their obligations, the committee found out that NSSF since 2002 has bought a total of 131,502,300 shares from UMEME at a cost of UGX 36,163,077,500 in both IPO allotment and secondary market which took place between 5th and 14th of December 2012. However the transaction did not meet get the blessings of the Attorney General or the Solicitor General according to their findings.
The report read to the House highlights several agencies and individuals who played a part in the alleged mismanagement of NSSF and proceeded to make recommendations. For instance, Committee recommends that Mr Ivan Kyayonka the Board Chairperson of NSSF, be forced to vacate office for his irregular action in pushing NSSF to purchase UMEME IPO shares without the approval of the Solicitor General. That management and Board of Capital Markets Authority (CMA) be reprimanded for complacency for it did not sanction UMEME Ltd or its sponsoring broker for the anomaly of issuing the prospectus before fulfilling all the conditions set by CMA.
The Committee also recommends that Ms Geraldine Ssali, the Deputy Managing Director of NSSF and Ms Catherine Byakika the Head Human Resource be seriously reprimanded by the appointing authority for mismanaging human resource and dismissing staff without following the law. In addition to that it recommended that the dismissed staff be reinstated at the cost of the two so that the workers’ savings are spared from huge compensation costs.
The Committee further recommends that African Alliance, which acted as the broker and seller of the UMEME shares to NSSF be visited with sanctions by the Capital Markets Authority for its role accordingly. However, during the proceedings, the Managing Director of African Alliance denied any form of foul play in performing both responsibilities saying that they were not paid by NSSF as a result but only got paid by UMEME ltd. Nevertheless, the committee was not convinced by this information because of the conflict of interest that happened the moment they took up both responsibilities.
After such findings and recommendations are made by the Select Committees and presented to the House, they are subject to further debate by the members before any decisions are made. The decision taken by the House could be to adopt the report to its entirety, make amendments to the recommendations, or the report could be disregarded and not adopted. In this case, the Speaker deferred the debate on the report on the request of the members that they be given time to read the report in depth. Whichever direction the House takes on the day it debates the report, I hope will provide solutions.