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UTL SAGA: Anite Writes to Museveni

The State Minister of Finance in charge of Privatization and Investments, Evelyn Anite has written to President Yoweri Museveni to intervene in the inevitable removal of Uganda Telecom Administrator, Bemanya Twebaze.

Anite in her letter said the need to audit UTL, which is strategic national asset, is in public interest and the refusal of Bemanya is against a noble cause.

She also accused the Deputy Attorney General, Mwesigwa Rukutana for misinterpreting the law and intentionally smuggling opinion meant to shield Mr. Bemanya.

Full letter:

REMOVAL OF MR. BEMANYA TWEBAZE, OFFICIAL RECEIVER AS ADMINISTRATOR OF UGANDA TELECOM LIMITED (UTL)

Your Excellency, following your Directive to me to ask the Attorney General to take immediate action regarding the replacement of the Administrator of Uganda Telecom Limited (UTL), Mr. Bemanya Twebaze, Official Receiver, I formally wrote to the Attorney General on 26th June 2019 (copy attached) in which I tasked him to urgently petition the High Court to effect a replacement.

Your guidance on this matter followed my update in which I pointed out the difficulty we have experienced dealing with the current Administrator, Mr. Bemanya who is unwilling to permit the Auditor General to audit UTL as per his letter dated to me dated 18th June 2019. Whereas Mr. Bemanya availed progress reports on the Administration, he has not availed us with an update for over 8 months, and today, I do not know what is happening in the Company.

The progress reports provided by the Administrator informed the update I provided to you and Cabinet.

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The Regulator, Uganda Communications Commission has also raised related concerns including failure to connect UTL to the Intelligence Network Monitoring System (UCC), which can make the UTL a potential conduit for all fraudulent calls, transactions in the sector and could expose the country to security risks. A copy of the UCC letter to UTL dated 29th April 2019 is attached.

It should be noted further that the Board of Trustees of Uganda Communications Employees Contributory Pension Scheme have written to the Administrator threatening to sue him for breach of the Deed of Administration and trust, and have also indicated their loss of confidence in him.

I have been providing you and Cabinet with regular updates on the progress of the UTL recovery efforts, from the time we sought a Protective Order of the High Court that put UTL into Administration effective from 29 April 2017.

As political leaders responsible and answerable for the activities of UTL, we consulted you and Cabinet following which the Ministry of Finance, Planning & Economic Development and the only available shareholder agreed to taking the Company into Administration to protect it from imminent liquidation.

I have received with profound shock a response from the Deputy Attorney General dated 28th June 2019 (copy attached) in which he (the Deputy Attorney General) indicated that the effect of the Administration Deed executed on 22nd May 2017 is that shareholders, ceded their powers to manage all the affairs of the Company to facilitate settlement of creditors’ claims.

Whereas Government has not attempted to control the work of the Administrator as suggested by the Deputy Attorney General, it is true that the Administrator’s appointment was endorsed by ourselves as the only shareholders available to lawfully sign shareholders’ resolution, which further explains why the Administrator is required under the Insolvency Act and Regulations to obtain the consent of the Company. The Hon. Minister of Finance has issued those consents without any reservations in order to facilitate the ongoing process of Administration.

The success of the Administration cannot be guaranteed without the support of Government which is the lone shareholder authorized to lawfully sign resolutions on behalf of the Company.

I have noted the guidance of the Deputy Attorney General ( copy attached) but I respectfully disagree with his proposition in so far as he indicated that –

1) “The Minister of Finance, Planning & Economic Development has no locus to apply to Court to remove the Administrator, and that any such application is bound to fail Section 174 (1) (c) of the Insolvency Act, 2011 provides that:

A provisional administrator, administrator, creditor of the company or liquidators or provisional liquidators of the company may apply to court for an order removing the provisional administrator from office and appoint someone else as provisional administrator where the provisional administrator or administrator fails to comply with the duty under the arrangement, this Act or any other law or any order or direction of the court other than an order to comply made under this section.

Government/Ministry of Finance is the biggest UTL creditor and it is in that capacity that we instructed the Attorney General to initiate proceedings for the removal of the current Administrator.

2) ”Relatedly, the Minister of Finance, Planning & Economic Development has no supervisory powers over the Administrator.”

Your Excellency, I have failed to understand the source of this allegation by the Deputy Attorney General especially since it was never contained in my letter of 26th June 2019. We have not sought to supervise the work of the Administrator although I must emphasize that he has availed progress reports on his work which he no longer considers necessary for reasons that have not been explained.

In our letter dated 28 November 2018, the Hon. Minister of Finance, Planning & Economic Development requested the Auditor General to conduct an audit on UTL’s activities which is justifiable under the Constitution of Uganda, 2005, the National Audit Act, 2008 and the Public Finance Management Act, 2015. This has met strict resistance by Administrator, who has not been cooperative while insisting without lawful justification that the timing of the Audit is not prudent.

I am baffled as to why the Administrator would want to deny the Auditor General from fulfilling a constitutional mandate and the law, whose purpose is to ensure good governance, transparency and accountability.

3) “Even if he had locus, there are no grounds to remove the Administrator’~ The grounds for removal of the Administrator are premised on his refusal to comply with the constitutional requirement to audit UTL. This is coupled with a complete breakdown on communication exacerbated by the refusal of the Administrator to avail regular progress reports to the Ministry of Finance, in the capacity of the largest creditor representing Government, which initiated the process of Administration.

4) “In light of Rt. Hon. Speaker’s Ruling on this matter, your instructions to me may be perceived as Contempt of Parliament’~ We have not questioned the Ruling of the Rt. Hon. Speaker who rightfully concluded that the High Court is the supervisor of the Administrator until November 2019 when the period ends. The decision to remove the Administrator is provided for under the law as cited above, and does not in any way contradict the Ruling of the Rt. Hon. Speaker nor would it amount to Contempt as alleged.

5) ”Interference in the Administration process might curtail the process of sourcing for a strategic investor which is one of the duties of the Administrator. If the Company /Shareholders frustrate the efforts of the Administrator to achieve the purpose of the Administration Deed, the process may be challenged by the Creditors and the other shareholders and the Company may end up in liquidation. Continued interference in the Administration of UTL may attract liability on Government and you are also advised to refrain from it.”

Your Excellency, the suggestion by the Deputy Attorney General that Government’s request to the Administrator to comply with the law amounts to interference with Administration is misconceived and does not amount to interference. In fact what may be construed as interference as suggested may be used by those he has cited to unfairly accuse Government. There is no basis for this assertion and the Deputy General is arming potential plaintiffs to sue Government without cause, and yet his office should know better since he is constitutionally obliged to defend the Government.

6) “Lastly as advised by the Auditor General in his letter of April 2019, I agree that it would not be prudent to commence audits on UTL since the Administrator is trying to identify an investor for the Company. Such audits can be undertaken once the Administrator process is concluded. We finally agree on one thing! There is no law that stops the Auditor General from auditing the Company because this is good for the Company and the Country.

The insinuation by the Administrator that UTL cannot be audited by virtue of being in Administration is wrong and not supported by any law. The Hon. Minister of Finance, Planning & Economic Development sought a legal opinion of the Attorney General on this subject, but clearly that has not been given any due attention. Instead, the Deputy Attorney General is quoting the views of the Auditor General which we find inappropriate.

Your Excellency, whereas Government is enjoined to follow the advice of the Attorney General, we are disturbed that his conclusions on this matter raise more questions, and especially contradict the policy guidance I received from you regarding the removal of Mr. Bemanya, as UTL Administrator.

We have lost confidence in the current Administrator, and I am convinced that he can no longer effectively perform the role. We have identified potential replacements one of whom can see through the process, including advising Government on finalizing with the process of identifying a potential investor.

The Attorney General should therefore heed to our request to promptly file the relevant petition, without further delay. My conviction is further fortified by the guidance contained in your letter to the Rt. Hon. Prime Minister dated 9th January 2018, which I am enclosing for your ease of reference.

The purpose of this letter, Your Excellency, is to bring the above developments to your attention, and to seek your further guidance considering that I am convinced that the opinion of the Deputy Attorney General is fundamentally flawed and a misinterpretation of the law. Your timely intervention in the affairs of UTL is what effectively saved the Company from being liquidated at a time when many critics were advocating for liquidation of the Company.

I have appealed to the Attorney General to review the position and will seek your audience on the matter.

 

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