Uganda Registration Services Bureau (URSB) boss, Bemanya Twebaze is set to be removed from the position of administrator general of Uganda Telecommunications (UTL), after defying requests for an audit of the telecom’s operations.
Government is expected to apply before courts of law to appoint another administrator, with Bemanya being accused of arrogance, defiance and refusing to implement a ministerial directive.
“The president gave instructions and I am now working with the Attorney General to effect these directives including going through a court process,” said Anite when contacted on phone on Tuesday.
It all started on May 7, 2019, with Investment Minister Evelyne Anite writing to Bemanya to facilitate a review of the state of affairs of UTL since 2016.
Anite said she had tasked the Internal Auditor General (IAG), Samson Sowate at the Finance Ministry, to conduct the review.
The Minister said the audit would be an “advisory engagement” intended to “add value and improve an organization’s governance, risk management and control processes without the internal auditor assuming management responsibility.”
Officials at the Finance Ministry told ChimpReports they expected compliance as the audit would only last two weeks.
“This was a normal process to appraise the minister on the operations of UTL. The audit was supposed to start on May 14, 2019 and the final report would be handed to Anite on July 31. She wanted firsthand information which she would use for consultations with higher authorities as the administrator continued with searching for an investor,” recalled a senior government official briefed about the development.
The review of UTL was intended to check the company’s financial management and reporting practices, compliance with regulatory obligations, procurement and contracting, operations, governance and management of assets and investments.
However, Bemanya responded to the letter on June 19, saying, “The situation has not in any way changed and we advise that it is not prudent to carry out this exercise at this point in time.”
The Finance Ministry officials said they were shocked to learn that Bemanya was opposed to the audit.
“We started getting suspicious because at UTL, people were open to checks. But Bemanya became a problem. We don’t know what he is afraid of,” said the government official who preferred anonymity to speak freely.
Bemanya is said to have been emboldened by a controversial letter from the Auditor General John Muwanga saying UTL was undergoing an insolvency situation wherein actions undertaken have to be agreed upon by the creditors and shareholders.
“Any request for a special audit at this point in time may potentially pose legal challenges, unless it is sanctioned by court,” said Muwanga in a letter to Anite dated April 24, 2019.
Muwanga’s office was first invited to audit UTL in November 2018 and later February and April but kept saying he was “busy with other audits.”
When Muwanga responded, an official said, “It was clear he had been misled by Bemanya.”
The AG defended Bemanya in a letter to Anite, saying he was in the last stages of identifying an investor and “any information (if the inquiry began) would affect the potential investors’ views about the company.”
It remains unclear how the AG imagined that his findings was cause a change of heart on the part of the investors.
Muwanga said the Libyan shareholders (Ucom) have in the past complained about reported discussions by the administrator with government of Uganda and yet they are supposed to be independent of all shareholders.
However, it is understood the audit was meant for the consumption of government, leaving many wondering how other shareholders (Libya’s Ucom) would be affected.
Bemanya’s associates say the worry is that if government audits then Administration will be challenged by Libyan shareholders leading to liquidation.
President Museveni directed that everything possible must be done to avoid liquidation.
But Finance Ministry officials say describing a planned audit of UTL as “interference” and warning about the possible “liquidation” of the company by Libyans is part of Bemanya’s “fearmongering campaign to cushion his administrative actions from scrutiny.”
It is said Ucon would actually be glad to see an audit report of a company in which they have a stake but is being run by a government official.
Additionally, while seeking an extension of the administration period on May 6, 2018, Bemanya said Anite had overall powers over UTL.
“The insolvency regulations 2013, require the consent of the company to extend the administration period beyond that specified in the administration deed. Given that you are the current shareholder with absolute powers on behalf of the company, you are required to give this consent,” Bemanya wrote to Anite.
Bemanya’s letter implied that Anite could, by a stroke of a pen, refuse to authorise the extension of the former’s administration period.
When the Libyans pulled out and their directors resigned from the Board in 2017, government went to Court and asked for permission to take decisions on behalf of both shareholders.
It was granted and a one man board meeting held to take decisions on behalf of UTL leading to signing of an Administration Deed.
So as far as the deed and extension of time is concerned, Anite has absolute power.
However, said a UTL official, that does not negate the Insolvency Act that stipulates the legalities of managing a company in administration, specifically the fact that the Administrator has to be independent of the shareholders.
“That is why, in the deed the pass on, willingly, all their powers to the Administrator,” said the official.
According to Minister Matia Kasaija, Public Enterprise Reform and Divesture Act Section 7 mandates the Minister responsible to monitor public enterprises.
He also says the “National Audit Act section 13 (3) empowers the Minister to request the AG to conduct a special audit and make a special audit report.”
Under Section 18 of the same Act, the AG, according to Kasaija, may inquire into, examine, investigate and report, as he considers necessary, on the expenditure of public monies disbursed, advanced or guaranteed to a private organisation or body which government has no controlling interest.
“UTL is currently under administration appointed by government,” said Kasaija.
Cabinet recently ordered all government institutions to buy internet from UTL.
Uganda Communications Commission (UCC) boss Eng Godfrey Mutabazi has since advised the administrator to fast track processes for identification of an investor to “take over effective management of UTL and end the administration processes.”
Mutabazi, in a letter April 29, 2019 to Bemanya, further said “dragging the administration process may sooner than later, leave the creditors and other concerned stakeholders with no option but to exercise their rights under section 169 of the Insolvency Act 2011 to apply for a court order to terminate the administration and liquidate UTL. This may jeopardize the government’s effort s to rescue UTL.”
Parliament is today Tuesday expected to decide on the audit of UTL.
Anite last week told Parliament that Government had no control over the management of UTL.
Anite said there is no record of the company’s revenue and disbursements. “We do not know the status of the company; I want to say that technically, we have lost the company,” she told MPs during the plenary sitting on Thursday, 20 June 2019.
Speaker of Parliament, Rebecca Kadaga, wondered: “Who is that ghost majority shareholder…the Minister has to explain where the treasury memorandum on the previous UTL report on what has been done [about management issues at UTL],” said Kadaga, who chaired the sitting.
She later promised to give a ruling on the matter on Tuesday, 25 June 2019
Government owns a 30 per cent stake in the struggling company, which is held in trust by Anite.
In April 2017, when faced by a pool of creditors who were jostling to liquidate UTL’s assets, government decided to put the company under receivership by the Registrar General, Bemanya Twebaze.
By putting the company under receivership, government insulated it from liquidation by incensed creditors and a search for new administrators who would buy and inherit the company’s debts was initiated.
Taleology Holdings, a Nigerian based telecom firm took over, but Anite said it failed to manage the company’s debt and accounts, and technically agreed to vacate.
By Anite’s admission, the current administrator is neither officially sanctioned nor known. “The watchman has stopped the owner from accessing the company,” said Anite in an analogy.
The company was co-owned between the governments of Uganda and Libya, but the arrangement shattered following the toppling of then Libyan President, Muammar Gaddafi.