Note: This is our record of what transpired in the meeting. Not verbatim.

Meeting with Uganda National Road Authority (UNRA)

Discussed in the Committee on Commissions, Statutory Authorities and State Entreprises on October 11th, 2016

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During a meeting between COSASE and UNRA management and contractors held on 30th September 2016, the committee observed inconsistencies in the accountability of funds worth UGX 47.7bn advanced to five road construction companies for compensation of Projects Affected Persons (PAPs). The committee directed UNRA management to undertake an audit into the expenditure of the funds and report back to the committee on 11th October, 2016. The UNRA team was led by Eng. Joseph Otim, who was assigned the responsibility last month by his boss, Allen Kagina the Authrority’s Executive Director, who is away in Washington DC on official duties. The committee is chaired by Hon. Abdu Katuntu, Bugweri County Member of Parliament.

The audit was to establish;

  • accounts on which funds were deposited and outstanding balances.
  • Whether the accounts were operated in accordance with the contracts
  • Actual amount of money that was advanced to PAPs
  • Existence and validity of bank guarantees.

UNRA management indeed conducted an audit and presented the report before the committee and below are the summaries of the audit findings;

  • Dates when funds for PAPs was advanced to contractors, opening of a special independent imprest accounts for PAPs money by contractors and Outstanding balances on accounts on which money for PAPs was deposited.
    1.  China Railway 18th Bureau Co Limited (Musita- Lumino/ Busia-Majanji Road, 104km). UNRA advanced UGX 12.9bn on the company’s general account on 26/ 02/2015 and the contractor transferred the money to an Independent imprest account on 07/05/2015, after 70 days. UNRA has instructed the contractor to pay PAPs UGX 153.4m and the actual balance per the bank statement is UGX 12.7bn representing a variation of UGX 27.3m
    2. China Railway No. 3 Engineering Group Co. Ltd (Kanoni-Sembabule-Villa Maria road 110km). It also received UGX 12.9bn from UNRA t but it was in instalments, the first advancement was UGX 3bn on 21/11/2014 and UGX 9.9bn on 04/12/2014. It took 8 and 21 days respectively for the contract to transfer these funds to a special independent imprest account.The contractor has been instructed to pay PAPs UGX 7.4bn and the expected balance is UGX 5.5bn. however, the available amount as per the bank statement is UGX 65.8m representing variation of UGX 5.45bn.
    3. Zhongmei Engineering Group Limited (Olwiyo-Gulu road, 70.3km). It was advanced UGX 6.5bn on 06/01/2015 and transferred the money to a special imprest account on 17/08/2015, after 223 days. The instruction to pay PAPs was for UGX 6.5bn and the remaining balance is UGX 35.9m
    4. China Railway No. 5 Engineering Group Co. (U) Ltd (Gulu-Acholibur Raod, 75km) – It received UGX 8.4bn on 23/12/2014 and transferred the money on a special independent account on 07/10/2016. This was after 654 days. The audit observed that this particular company first transferred this money to China. It opened the independent PAPs account and returned the money from China when the inquiry into the PAPs money began. The amount instructed to pay is UGX 6.8m and the remaining balance is UGX 8.39bn.
    5. Chongqing international construction corporation china railway (Acholibur-Musingo road road, 86.4km). UGX 7bn was advanced to the company’s account by UNRA on 12/11/2014 and it transferred the money to a special account on 11/09/2015, taking 304 days. The company has been instructed to pay UGX 3.4bn and the remaining balance is UGX 3.59bn

As per the signed Contract Agreements, UNRA was to advance money for compensation of PAPs to general accounts of the contractors who are supposed to open up an independent special imprest accounts and transfer these funds to those accounts within 28 days after the signing of the agreements. And withdraw/disbursement of these funds to PAPs is after authorization by UNRA. However, these companies traded and used this money for their operations without UNRA’s authority. It is only China Railway No.3 that complied with the contract partly, that is opening and transferring PAPs funds to a special imprest account within the stipulated period of 28 days.

UNRA management also informed the committee that out of the UGX 47.7bn that was advanced to contractors for compensation of PAPs. It has so far instructed payment of UGX 19.089bn to PAPs, however only UGX 17.38bn has been paid, leaving a balance of UGX 1.7bn.

  • Irregularities in the expending of PAPs’ funds

Three contractors traded in funds for PAPs and obtained interest as follows;

China Railway 18th Bureau Co Limited obtained UGX 1.26bn.

  • China Railway No. 5 Engineering Group Co. (U) Ltd also earned UGX 37.7m. It fixed funds and terminated before the maturity period causing loss in interest before transferring the funds to dollar accounts and later sending it to China using the General account not the special account.
  • Zhongmei Engineering Group Limited earned UGX 236.89m.

All the five companies used the PAPs funds for their operations without authorization from UNRA.

Chongqing International Company and China Railway No. 5 bank guarantees expired on 16/07/2016 and 31/07/2016 respectively. However, the former renewed its advance payment guarantees on 4th October 2016, with expiry in September 2017, although it was received by UNRA, it is subject to verification with Bank of Uganda.

The committee directed the contractors to pay all the funds they are holding on the UNRA Kampala Station Bank Account, 9030006387976- Stanbic Bank Corporate Branch by end of today afternoon. On 30th September, 2016, the committee chairperson wrote to the contractors’ banks and directed them not to allow any contractor to withdraw funds but allowed to deposit. He informed the contractors that immediately after the meeting, he will write to their banks to allow them access their accounts but only on condition that they transfer these monies to the UNRA station account. They are supposed to refund both the principal they are holding and the interest illegally earned as a result of trading with the PAPs’ money. The funds to be refunded are as follows;

China Railway 18th Bureau Co Limited                                        UGX 14.01bn

China Railway No. 3 Engineering Group Co. Ltd                      UGX 5.5bn

Zhongmei Engineering Group Limited                                       UGX 272.79m

China Railway No. 5 Engineering Group Co. (U) Ltd                UGX 8.43bn

Chongqing International Construction Corporation China Railway           UGX 3.58bn

The committee also resolved to probe the matter further when UNRA’s Executive Director returns back.

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