UGANDAN SECURITY MINISTER IMPLICATED IN LAND

UNCLAS SECTION 01 OF 02 KAMPALA 001220

SENSITIVE
SIPDIS

DEPARTMENT PASS TO USAID AND TO MCC/MALIK CHAKA

E.O. 12958: N/A
TAGS: PGOV KDEM KCOR UG
SUBJECT: UGANDAN SECURITY MINISTER IMPLICATED IN LAND
SCANDAL


1. (SBU) Summary: A scandal involving Uganda's National
Social Security Fund (NSSF) has generated heated hearings in
Parliament and exposed what appears to be another case of
high-level Ugandan government corruption. The scandal
centers on land NSSF purchased in early 2008 without proper
attention to procurement procedures at an apparently inflated
price from a company owned by Minister of Security Amama
Mbabazi, who is also Secretary General of the ruling National
Resistance Movement (NRM) party. Minister of Finance Ezra
Suruma apparently approved the deal. While the controversy
has engendered public anger and feverish media attention,
many Ugandans, frustrated by the government,s failure to act
in the past, believe it is unlikely that officials will be
held accountable. End Summary.

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LAND DEAL: MADE IN THE SHADE
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2. (SBU) Parliament summoned NSSF officials on August 22 for
an explanation of a land purchase NSSF made in March this
year. According to media reports of the Parliamentary
hearings, the NSSF purchased 464 acres of land in Wakiso
district, just outside of Kampala, from businessman Amos
Nyezi and Arma Ltd., a company in which Minister of Security
and NRM Secretary General Mbabazi has a large stake.
Parliament has focused on three alleged improprieties with
the purchase: 1) improper procedures used to purchase the
land; 2) the inflated price NSSF paid for it; and 3) the
benefits coming to a range of high-level government figures.


3. (SBU) According to press reports, the Ugandan Public
Procurement and Disposal of Assets (PPDA) authority did not
approve the purchase, and no minutes exist of a final private
board meeting (attended by NSSF Chief David Chandi Jamwa and
Finance Minister Suruma) authorizing the transaction. The
NSSF board members present have since said publicly they were
under political pressure to approve it. The price NSSF paid
for the land is also under investigation. The NSSF paid USD
14,750 per acre, as opposed to a market value of USD
8,900-11,000 that three independent auditors placed on it.
In addition to the benefits to Mbabazi, Minster of Finance
Suruma appears to have benefited, as he is partial owner of
the National Bank of Commerce, which was the recipient of
some funds received from the sale. (Note: Suruma is Vice
Chairman of the National Bank of Commerce. End Note.)
Finally, on Wednesday, August 28, Parliament learned that 52
of the 464 acres in the deal do not actually exist, a problem
that NSSF officials were unable to explain, leading Members
of Parliament to begin asking for the resignation and/or
arrest of the officials in question. The Committee on
Commissions, Statutory Authorities and State Enterprises
(CSASE),is hearing the case, and the NRM Parliamentary
caucus summoned Mbabazi back from his trip to the United
States early to appear before them on September 1 to explain
his involvement in the deal.


4. (SBU) Appearing before the NRM Parliamentary caucus in a
closed door meeting reported in the press, Mbabazi vowed to
resign if found guilty of wrong doing for his involvement in
the deal. A group of NRM members demanded Mbabazi resign
now, however, to allow investigations to proceed and to avoid
fallout that could damage the NRM in the run-up to national
elections in 2011.


5. (SBU) In a meeting with Embassy officers on August 28,
Auditor General (AG) John Muwanga expressed his frustration
that Parliament's recommendations to the government are often
ignored, saying scandals often disappear or get bogged down
in court after hearings stop. Muwanga explained that,
although a range of institutions, including the Auditor
General, the Inspector General of the Government, and the
PPDA, exist to counter corruption, the government often does
not act on Parliament's required recommendations issued at
the end of committee hearings. Committee recommendations,
for example, are sent to the Finance Ministry for action, and
the Finance Ministry is required by law to issue a Treasury
Memorandum explaining what actions the government has taken
to follow up on the committee's recommendations, Muwanga
said. But, he added, "The Finance Ministry has not issued a
Treasury Memorandum since, I think, 2000 or 2001." Thus,
though some institutions are active in government oversight,
the "cycle of accountability" is not complete, Muwanga said.
"If you get the cycle of accountability right then
everything falls in place, but we do not have it," he said.

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Comment

KAMPALA 00001220 002 OF 002


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6. (SBU) This case, brought to light by a whistleblower, has
become a lightening rod for public frustration with
high-level government corruption and compounds widespread
anger with NSSF, which invests mandatory pension
contributions and has mainly lost money on its investments
over the years. In this case, the conflicts of interest
appear egregious, not only because of Mbabazi's role, but
because Finance Minister Suruma would be required in his
Treasury Memorandum to report on actions taken against
himself for approving and benefiting from the purchase.
Politically, it has served to galvanize both the opposition
and younger members of the ruling NRM, who have been trying
to oust Mbabazi from the leadership of the party. While it
will be difficult for Museveni to ignore this case, given its
magnitude and implications for the party, most Ugandans
remain skeptical that Mbabazi and Suruma will be sanctioned.
BROWNING