Uganda Telecom teeters on the brink of bankruptcy.
Budadiri West MP, Nandala Mafabi on Thursday alleged years of corruption and mismanagement. His report tabled in the House claims that the company loses 1.5 million dollars, over four bullion shillings every month.
Who’s responsible for UTL’s financial fiasco?
The MP further accused top managers, including the Managing Director, Chief Human Resource Officer, Chief Legal Officer and Chief Finance Officer of earning a total of 420 million shillings per month, which is a third of the salary bill of about 500 UTL workers. The culpable top managers have been barred from leaving the country until the investigations is complete.
UTL top officials and advisers involved have consistently laid the blame at the feet of Libya African Portfolio Green— the company that promised and failed to “retrofit” the telecom’s aging and debt-ridden accounts and owns 69 per cent shares. They went bankrupt in the process.
But an independent investigation of the rot says that the crisis would have been averted — or at least been far less severe — if the government officials and advisers had fully complied with financial laws. Government owns a 31 percent stake in the company.
Although by law, the Auditor General is mandated to audit government companies every year, UTL has not been audited for the last four years.
“According to one of the cabinet memos of May 2015, it was recommended that the Auditor General conducts forensic audits of the company. Surprisingly this has never been done. The company is on the verge of collapse, yet nobody cares to know what is taking place,” Mafabi says.
What’s more, the audit says, top officials and their advisers should have known as much at the time.
Time and time again, Hon. Nandala Mafabi said, rather than face the reality of soaring costs and debt load, UTL officials would rewrap the debt and refinance it, pushing back the bills.
He said as early as 1997 during Parliament’s passage of the Communications Act, well before 2000, when UTL was privatized and the government divested 51 percent of its shares to Ucom, a consortium formed by Detecon of Germany, Telecel International of Switzerland, and Orascom Telecom Holding of Egypt., officials should have seen warnings that the state telecommunications company’s debt was not sustainable. And yet the parties involved continued to refinance and push forward.
However, the company last year embarked on a rescue plan that will see a substantial injection of Shs217b in network upgrade and debt repayment. The money will be a phased injection spanning about three years.
Who’s responsible?
The answer — in these early days of Parliament’s inquiry into the management — is not entirely clear.
Stephen Kaboyo the chairman of the board of directors since early 2014 and he acting managing director is Mark Shoenridge, say they are ‘clean’.
Kaboyo particularly signed off the fraudulent sale of of the company’s prime properties in Industrial Area (sh17.15b), Nsambya Yard (sh5.4b) to Magnet Construction Company and other equipment at cheaper prices using fake agreements and memoranda of understanding.
Hon Mafabi also found out that Kaboyo’s allowance was increased from sh5m to sh17m per month, while a fellow board member, Mwase remained at sh3.4m per month
Both men have chosen not to respond TheUgandan’s multiple requests for comment on the matter.
The chief legal cousel is David Nambale also declined to comment on the matter, but in other venues has blamed government officials for failure of UTL.
People close to the UTL officials have said they were following advice of government appointed experts when they put pen to paper and should not be held accountable for relying upon the errors of more knowledgeable men and women.
Clear lines of culpability become obscured in a fog of legal finger-pointing.
Extent of the financial rot in UTL
The investigation includes the “chief finance officer is John Sendikaddiwa” in its list of topmost people who are potentially culpable.
Under Mr Sendikaddiwa’s watch UTL has struggled to keep afloat as the company operations continue to be bogged down by an overly stretched purse whose liabilities had in a 2014 audit outstripped assets by more than Shs140b.
Audited books put the company’s liabilities at Shs366b against an assets base of Shs220b.
The company had also failed to pay its licence obligation, forcing Uganda Communications Commission to issue a warning that would lead to the revocation of its (Utl) licence.
Additionally, the company continues to struggle with the payment of inter-connection fees owed to MTN and Airtel.
Uganda Revenue Authority is owed 58 billion shillings. The telephone company also owes eight billion shillings to MTN Uganda; 22 billion to communications regulator, UCC; 24 billion to Huawei Technologies and 16 billion shillings to National Social Security Fund (NSSF).
He also orchestrated the removal of field mileage allowances for operational staff on allegations of cost cutting but instead added on his and other top managers’ payments.
By Stephen Muneza Kagabo, Managing Editor
stephenmuneza@gmail.com | Follow on twitter
