February 28, 2024

BoU is responsible for shs4.2bn loss in LC1 bicycle scam, says Kashaka on appeal

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The former Permanent Secretary in the Ministry of Local Government John Muhanguzi Kashaka who was convicted of causing a financial loss of shs4.2 billion to government in the bungled procurement of 70,000 bicycles has said Bank of Uganda is to blame for the loss.

Kashaka together with five others were in 2014 sentenced to 10 years imprisonment by the Anti-Corruption Court for their roles in the botched purchase of LC one bicycles prompting him to run to the superior court for appeal.

The Court of Appeal upheld the conviction and sentencing, prompting Kashaka and his two fellow convicts to appeal against the decision in the Supreme Court.

On Thursday, when the case came up for hearing before a panel of justices including the Chief Justice Alfonse Owiny Dollo, Ruby Apio Aweri, Lillian Tibatemwa, Mike Chibita and Ezekiel Muhanguzi , the court was told that the central bank was at fault , leading to the loss of shs4.2 billion .

“There was a letter from the Bank of Uganda to the Ministry of Local Government indicating there was discrepancy in the Letter of Credit. There was no discrepancy in the payment of the 40% amount,” lawyer MacDusman Kabega told court.

“There was no need for BoU to raise the discrepancies since there wasn’t any. There is evidence to show the blame is squarely on Bank of Uganda and not the first appellant.”

During the hearing of the case in the Anti-Corruption Court, the former Ministry of Local Government Permanent Secretary was faulted for ignoring an alert by the Bank of Uganda of discrepancies’ in the LC1 bicycle deal.

BoU had warned the ministry against paying 40% of the entire sum which amounted to shs4.2 billion but the latter ignored the same and the money was paid but no bicycles ever arrived into the country.

However, in his appeal, Kashaka insists that he is not to blame since the Central Bank ought to have written to Citi bank which would verify whether there were discrepancies in the deal or not but not writing to the Ministry of Local Government.

“Citi bank was supposed to confirm the anomaly because it had the expertise.”

Asked what would have happened if the Ministry of Local Government had heeded to the Central Bank advice after noticing the anomaly, Kashaka’s lawyer insisted there were going to be problems.

“The supplier would have sued,” Kabega said.

Henry Bamutura (former principal accountant) and Sam Emorutu Erongot (former assistant commissioner for policy and planning) also told the Supreme Court in their appeal that there was no wrongdoing.

State disagrees

However, in response to the convicts’ arguments, the state represented by Josephine Namatovu, the Assistant DPP told court said Kashaka and his colleagues are solely to blame for the shs4.2 billion loss and not anyone else.

She argued that despite being warned of discrepancies in the impending deal, they went ahead and gave a go ahead that led to the loss.

“They carry the responsibility for the loss caused to government. When BoU detected a discrepancy, it wrote to the Ministry of Local Government but went ahead and allowed it,”Namatovu said.

“Had their evaluation committee meeting eliminated AITEL(Amman industrial Tools and Equipment LTD ) would have been eliminated the loss wouldn’t have been caused.”

The Supreme Court said it would deliver its judgment in the appeal on notice.

The case

Justice Catherine Bamugemereire in 2014 convicted Kashaka jointly with Henry Bamutura (former principal accountant); Robert Mwebaze (former principal procurement officer); Sam Emorutu Erongot (former assistant commissioner for policy and planning); Timothy Musherure (former consultant) and Adam Alum (member of evaluation committee) but Mwebaze has since died.

On conviction, Justice Bamugemereire banned Kashaka from working in any public office for 10 years after serving his prison sentence and ordered him to refund a sixth of the Shs4.2 billion lost in the botched procurement deal.

“He (Kashaka) ought to have exercised a high level of diligence in managing public funds and should have known that signing the deal with Amani Industrial Tools Limited was going to cause financial loss to government,” she noted.

Source: Nile Post


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