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INVESTIGATION: The Story of BoU Banknotes; Mbire and Reckless French Printing Firm

In late April, 2019, two middle-ranking staff at Bank of Uganda were dispatched to France’s capital Paris to witness the transportation of stock (banknotes) printed from Oberthur Fiduciaire.

BoU’s decision to print money is based on the assessment of need, projections based among others on GDP growth and how that translates into demand for cash and replacement rate of worn out notes.

These are based on usual work-related statistics.

An investigation by ChimpReports indicates that the central bank has three firms which it obtained through selective bidding.

As is the practice with most central banks which print money from European countries, no single firm does all denominations.

For example Oberthur will print Shs 5,000 notes while others produce Shs 10,000 notes.

On BoU’s call list are Oberthur plus two others, all in Europe.

How money is printed/ transported

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Before money is printed, a detailed procurement process is undertaken, lasting almost six months.

This culminates into contracts specifying the quantity, price, and logistical delivery terms.

The contract requires the printer to charter a plane to depart from the airport nearest to the factory.

Oberthur Fiduciaire’s factory where the Ugandan currency was printed is based in France.

The printer chose Liege airport in Belgium which involved road transport across the border.

The distance between Paris and Liege is about 304 kilometers by road. This would be a long journey by Ugandan standards.

Map showing distance from Paris to Liege in Belgium

Bus tickets from Paris to Liège cost about €10 (Shs 41,870) while a train will charge €53 (Shs 221,911).

ChimpReports understands that BoU doesn’t have a direct contract with freight companies and airlines.

The contract requires the printer to identify at least two options for the purpose for selection by BoU.

So Oberthur as BoU’s agent engaged Kuehne and Nagel International AG, a global transport and logistics company based in Schindellegi, Switzerland

In France, BoU staff’s task was to verify the amount ordered which in this case was Shs 350bn in Shs 5,000 denominations and ensure the consignment was loaded on the chartered plane for transportation to Uganda.

BoU had expressly communicated that the banknotes had to be carried exclusively on a chartered plane.

Allen & Overy LLP, the lawyers of Oberthur say, “MD-11 (McDonnell Douglas MD-11) aircraft that was initially supposed to be used to ship banknotes to the BoU had been grounded in Kampala for technical reasons.”

They further said the chartered carrier switched the troubled plane “with a larger B747 (Boeing 747) which already had other cargo destined for Uganda.”

Interestingly, the operator of the B747, without notifying Oberthur Fiduciaire, used the same flight to ship one pallet of replacement parts for the MD-11 and four pallets of regular cargo.

It remains unclear why Oberthur didn’t bring to BoU’s attention the additional cargo since they were well aware of the central bank’s exclusivity requirements, or how much the airline understood BoU’s demand for exclusivity.

It appears, somewhere between Oberthur and Kuehne to the charter, there was a mistake.

At CID, detectives are asking if Oberthur communicated to BoU about the change of planes and central bank’s response to the situation.

What we know is that Oberthur has since offered BoU a financial compensation and apology which are yet to be accepted by the central bank.

The BoU staff sent to France left as soon as the consignment was airborne but included in their reports about extra cargo on the plane – spare parts.

Entebbe drama

Meanwhile, on arrival in Uganda, the plane carrying the banknotes was welcomed by officials from BoU, Aviation Security and Uganda Revenue Authority.

BoU staff don’t fly on the cargo planes. The officials sent to France used a passenger aircraft to return home.

According to URA, a private chartered plane arrived and as normal practice for sensitive cargo customs facilitated clearance of the currency at the tarmac in presence of BOU Officials, BOU Security, Aviation Security, Police and other security agencies.

Commissioner Customs, Mr. Dicksons Collins Kateshumbwa said the consignment was offloaded, inspected and loaded on BOU vehicles and taken to Kampala under heavy security escort.

He further said the same plane contained other cargo which belonged to various individuals / companies / organizations.

These organisations include United Nations, USAID and businessmen such as MTN Uganda Chairman, Charles Mbire.

Charles Mbiire

Mbire said he purchased adhesives, paint related material and spare parts for his boat while in London, England.

“The entire package weighing 28 kilograms was handed over to Nexus Cargo Handling Limited – a cargo handling company based in Middlesex, London and arrangements were made for the transportation of the package to Entebbe under air waybill number 574-32534305,” said Mbire on Thursday.

“The sole reason as to why the special-case delivery arrangements had to be made for the package is that adhesive material is classified as hazardous because adhesives contain solvents that are toxic and most are flammable,” he added.

He said after a few weeks, he received a notification that his package had been delivered to Entebbe and made arrangements through his local clearing agent for customs duties to be paid to URA and the package released.

Mbire said he was not “privy to any contractual arrangements between the cargo-handler in England and the logistics company (Kuehne + Nagel International) which delivered the package to Uganda by air-freight.”

Mbire, a businessman, also said he was not aware about the dealings between BoU and the logistics company for the delivery of the currency cargo.

Investigation

The BoU staff who picked money from the airport wrote a report saying extra cargo of different organisations including car inspection company, SGS, was aboard the chartered plane.

This was shocking as such a thing had never happened before since 1966, according to information seen by ChimpReports.

An internal management process started to establish what was in the 5 extra pallets after BoU took its 20 pallets of currency.

Due to the strategic sensitivity of the import and the uncertainty about the contents of the 5 pallets at the time, Mutebile, who had just returned from sick leave, asked Nakalema to “come in and investigate.”

Mutebile also said the staff should “cooperate” when called upon by the authorities.

The request for investigation was immediate, and the choice of when to commence investigations was up to Nakalema to decide.

Mutebile had previously fought with the IGG whom he accused of interference in the bank’s work. The war necessitated the intervention of president Museveni who called them to order.

The IGG has been investigating the recruitment of senior staff at BoU for almost two years.

A report is yet to be issued.

Due to the bad blood, Irene Mulyagonja would be the last person a stubborn Mutebile would contact.

Nakalema Acts

Nevertheless, Nakalema quickly picked BoU’s currency and procurement officials before detaining them at different police stations such in Kireka, Central Police Station and Kabalagala.

This was intended to take separate statements for review with the hope of obtaining contradictions.

“We want to know what was in the 5 extra pallets. You have to tell us,” a police detective was heard quizzing one of the BoU staff at Kibuli.

At police, BoU staff presented paper work showing the trail of the procurement process and also recorded their experience.

But other security organs were not convinced considering the country is preparing for the 2021 elections.

Sneaking in billions of shillings in undeclared cargo would give election candidates a war chest to take on president Museveni.

Museveni personally telephoned a high ranking URA official and asked for a detailed explanation on the procurement of the currency.

He also asked if extra money found its way in Uganda, to which URA chief responded in the negative.

ChimpReports understands detectives also queried claims that Oberthur Fiduciaire was blacklisted by World Bank due to corruption.

The company has since distanced itself from Oberthur Technologies South Africa which prints passports and other security documents.

What are the chances that BoU officials could print excess currency for own benefit?

A retired banker, who spoke on condition of anonymity, said, “It is not possible. Not even close. This is a misunderstanding of the process.”

The expert, who served in high profile positions in the banking industry, emphasised: “Apart from outright counterfeiting of cash which is photocopier/scanner business, by our day-to-day thug, printing money is a highly restricted and costly business.”

This website was advised to check out the said printing companies to understand the magnitude of track record and reputation.

“When your customers are countries, you don’t have a wide margin of error, or scope for expansion, you guard them jealously.  The competition between them is obviously cut-throat,” said the retired banker.

“A look at their balance sheets would give an indication of things. What would an entity that is seeking to maintain and increase its precious business gain from conniving with central bank staff for “excess” cash? Who would have paid for it? The said staff? Would it be free? What for? Would a hard won reputation can be sacrificed for Shs 90 billion (about 24m USD)?” he wondered.

Oberthur Technologies provides secure technology solutions for Smart Transactions, Mobile Financial Services, Machine-to-Machine, Digital Identity and Transport and Access Control.

Internet research shows as of 2008, Oberthur’s revenue was €882 million.

It is the successor of the Oberthur printing which was founded in 1842 by the master printer and lithographer, François-Charles Oberthür.

It has factories in Brazil, India, China and acquired technology businesses in Spain, France and United States.

But the retired banker suggests that Bank of Uganda should “deter Oberthur contractually through a punitive penalty for breaches.”

This would send a signal that Ugandan currency is not something to play around with.

Damage

Ugandans on social media have since expressed frustration with how BoU managed the procurement process of the currency.

Many appeared to have lost confidence in BoU’s ability to deliver on its mandate especially following the damning Cosase probe.

The contradicting statements among government officials has since worsened the situation.

But this is not just BoU but the country, the Government, the ruling party and the President whose reputations have been damaged.

The intrigue in government circles also appears to be fuelling the crisis.

On social platforms, some wondered why the state allowed such delicate strategic issues starting from Crane Bank/COSASE in the public domain.

“We have not begun to quantify the damage. It’s because the main actors don’t have the bandwidth to process the consequences,” observed a one Moses K on Facebook.

But Timothy D said “all we need a well investigated report on what happened to restore public confidence in the operations of the central bank.”

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