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    Posted February 12, 2013 by

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    Mining scandal costs Ugandan taxpayers Shs43.5 billion

    Ugandan President Yoweri Museveni’s decision in 2007 to award Dura Cement’s mining lease to another firm “without due process” raised many eyebrows on the African continent and elsewhere, amid cries of foul play and corruption. Dura Cement’s contract was awarded to Lafarge/Hima Cement and predictably, Dura took the matter to court. So far, the main victims in the scandal have been Ugandan taxpayers, who were charged a bill to the tune of Shs 43.5 billion in the ensuing lawsuit.

    An investigative report into the whole affair has since revealed that despite the President’s claims that he came to a decision based upon “economic” and “strategic” reasons, MPs behind the Public Accounts Committee report reveal that there is evidence to suggest that the province in which the mines were situated has enough limestone for three cement manufacturers. The conclusion was thus that the cancellation of Dura’s contract had little merit.

    The Committee also advises Parliament in the report to tell the President to “desist from gifting critical national resources to so-called investors free of charge and without following the due process” , as well as warning him to stop relying on “unofficial sources” and to make use of the wealth of technical advice he can receive from his official team.

    MPs behind the report are also calling for further sanctions to be placed on MP Fred Mwesigye, the former head of the National Enterprises Corporation (NEC), who is accused of facilitating the irregular transfer of the mining lease from NEC to Lafarge without proper tendering.

    Also in the firing line is Justice Billy Kainamura, the former solicitor general who allegedly leaked a draft report by auditing firm KPMG to Elly Kurahanga of Kampala Associated Advocates (KAA), who then misled the president with the report on the amount of compensation for Dura.

    Elly Karuhanga was implicated for allegedly peddling influence and “professional misconduct” and the Committee now wants Karuhanga investigated by other government agencies and relevant professional bodies.
    KAA represented Dura in their legal dispute and were later hired by the Ugandan tax authority to collect taxes from Dura. The law firm and Karuhanga also made headlines earlier this year in their representation of Tullow Oil, the Irish oil firm who took the Ugandan government to court over a minor VAT dispute. KAA and Karuhanga were accused of being too close to the oil firm after it materialised the Karuhanga, founder of KAA, is the President of Tullow Uganda.

    The former Attorney General, Khiddu Makubuya, has also been singled out for punishment by the Committee, who want to hold him responsible for causing financial loss to the government by refusing to discount the offer of $14.5 million over 19 years to a single lump sum payment of $6.5million.

    URA Commissioner of Domestic Taxes, Moses Kajubi, has also been recommended for investigation for allegedly waiving taxes on the compensation which was deemed to have arisen from loss of business profit over 19 years. The Committee noted that KAA made a false representation in the consent judgment to evade payment of taxes.
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