By John V Sserwaniko
The 35 MPs sitting on the Committee of Physical Infrastructure are unanimously agreed on the major contractual breaches that have been committed by SGS, the firm that was contracted to implement mandatory motor vehicle inspection to establish their roadworthiness. The MPs also agree that, as the supervising entity, the Ministry of Works officials let down the people of Uganda and thereby occasioning financial loss to their employer-the GoU. The MPs are also unanimously agreed on the culpability of their colleague Eng Dennis Sabiiti who was the very influential Commissioner Transport Regulation at the time (17th March 2015) SGS was contracted. There is also consensus that a range of other officers conducted themselves very criminally and unethically during the procurement process because they had clearly been compromised to ensure SGS (that originally faced more than 30 competitors including ESP) wins the contract. Yet it’s not only Eng Sabiiti that procedurally behaved improperly towards SGS. The report also faults Commissioner Ronald Amanyire for flouting S93 (1) of the PPDA Act that expressly prohibits public officials from receiving gifts, favors or business hospitality from a current or future service provider to government. The public policy consideration behind this prohibition is that such acceptance or receipt creates an impression of influence peddling resulting into biases in favor or against some service providers. However, on 7th November 2016, Amanyire took an all expenses paid trip to South Africa courtesy of a South African company called Workshop Electronics Ltd-One that was eventually cleared to supply Mobile Testing Equipment to SGS. Eng Sabiiti, who was already MP and is suspected to have inducted him in the SGS deal, accompanied Amanyire to the South African trip to ostensibly inspect the company’s premises and manufacturing processes in South Africa ahead of its clearance to be sub contracted under the SGS deal. He returned to Kampala well convinced about the firm’s suitability for future business with the ministry.
OTHER BOSSES IMPLICATED:
Yet that isn’t all. There are other officers who got similarly well facilitated trips from the same company on the recommendation of SGS. They include vehicle inspectors Immaculate Nyamaizi and Anthony Muwonge. The other official MPs say was compromised by SGS/Workshop Electronics Co Ltd was Eng Fredrick Lukoma Basalirwa who serves as Ag Commissioner Mechanical Services/Chief Mechanical Engineer at the works ministry. The trio pretended to have gone to inspect Workshop Electronics’ suitability to supply Mobile motor vehicle inspection equipment for use by SGS to implement the inspection contract. The MPs say that on return the trio jointly authored a very favorable report (dated 3rd January 2017) strongly recommending Workshop Electronics Ltd. Ironically the report was to be handed over to the Chief Mechanical Engineer who was none other than Eng Fredrick Lukoma who was himself part of the delegation that travelled to South Africa! The report flattered the partnership between SGS and Workshop Electronics and the deal was passed as appropriate by the supervising entity. This what the MPs say in the report: “The all expenses paid trip to South Africa for Mr. Amanyire and the generous $3,000 contract to Eng Sabiiti should be treated as gratification for their role in helping SGS secure the mandatory motor vehicle inspection contract.”
BAGIRE EXPOSES ENG SABIITI:
Relying on the confidential dossier State Minister for Works Aggrey Bagire leaked to them, the MPs find that Sabiiti assumed too much power to the extent that he sidelined both the Solicitor General and his Supervisor the PS. He for instance chaired the Ministry’s contacts committee (CC) that awarded SGS the deal. He dubiously approved facilitation for travel by the due diligence team (Dr. Steven Kasiima, Jacob Lumonya & Amanyire Ronald) and sent them for the assignment without equipping them with Terms of Reference. Travelling on tax payers’ money, the trio went to Ivory Coast, Spain and Switzerland. On 10th February 2015 Sabiiti locked himself in the office and single handedly approved the due diligence report which was the last step preceding the awarding of the SGS contract on 17th March 2015. Having effectively sidelined the Evaluation Committee members, Eng Sabiiti on 2nd March 2015 sent the contract to Solicitor General for clearance directly. He also imposed himself to be among those signing as witnesses to the contract on 17th March. After ensuring SGS, which the MPs insist had severally compromised him, had the contract, Eng Sabiiti resigned his job in May 2015 and on July 17th 2015 he started work for SGS as a consultant earning $3,000 per month. The MPs say this was free money to incentivize him for the role he played to get them the contract since there wasn’t much work he was doing. That for much of the time, Eng Sabiiti was the only employee SGS had. This SGS consultancy allowed him to earn some good money and freedom to campaign for Rubanda West MP Seat which he took up in May 2016. The MPs disclose that Sabiiti earned the $3,000 per month up to May 2016 when he was sworn in as MP. The MPs also raise suspicion to further impeach Sabiiti’s character relating to the SGS deal; whereby the consultancy contract dubiously imposed non-disclosure obligations on him never to go public about its existence leave alone its terms. The MPs say that the SGS bosses were particularly happy with Sabiiti because of the meticulous way in which he executed the assignment given to him by the Works Ministry top management team during their 10th November 2008 meeting where it was resolved that SGS was very good and all had to be done to overcome competition to ensure it gets the job. The MPs also fault Eng Sabiiti for altering the original ministry top management position (dated 11th Sept 2007) that called for procurement of two service providers to implement the vehicle inspection exercise in the whole country. Instead his alterations resulted into SGS being contracted as a monopoly service provider supervised by the works ministry. The idea was to have many inspection sites rather than the mere 7 SGS promised but has even failed to put in place. In fact of the 7, only three are operational. The other 4 are yet to come on. The 7 inspection sites were to be located at Namanve, Kawanda, Nabbingo, Gulu, Mbarara, Mbale and Namulanda. The MPs claim only Kawanda has been operating and also dispute the location suitability of the one at Namanve, Namulanda and Nabbingo. They say the three sites are big risk to the public because they are located in busy motor traffic areas. They say Sabiiti altered the original plan, criminally without approval of the Attorney General, and ended up creating a monopoly in favor of SGS for personal gain. The legislators say SGS relied on these Sabiiti-authored monopoly clauses to lock out other local dealers like Spear Motors, Toyota Uganda and others that had for long been carrying out voluntary motor vehicle inspection at their workshops which MPs say are way much more sophisticated and better equipped to do the job than SGS. They also dispute the claim that Sabiiti was eventually cleared of wrongdoing by the High Court in the Kiwanuka Kiryowa-prosecuted Judicial Review case SGS filed in 2010. The MPs say their colleague only survived on procedural grounds (mere technicalities) whereby PPDA was faulted for condemning him unheard. The MPs say court never inquired into the substantive aspects of the allegations against Eng Sabiiti that bordered at literally rigging the entire procurement process to favor SGS. The MPs also fault the works ministry officials for generously allowing SGS to increase inspection fees on 12th April 2016 and thereby increasing public exploitation.
SIDELINING AG:
Eng Sabiiti who had assumed enormous powers at the ministry is also faulted for repeatedly sidelining the Attorney
General from originating of the SGS contract in total contravention of Article 119(4((b) of the Constitution that mandates the AG to originate the drafting of all contracts and agreements of interest to the government. The said article requires AG to not only originate or draft but to also peruse all contracts involving government and subsequently approve or advise modifications. In this case Eng Sabiiti, who isn’t a lawyer, originated everything and only forwarded it to the Solicitor General for clearance without even the input of his PS. The MPs say this denied government chance to negotiate a fairer deal. They conclude: “This contract is therefore null and void because it was entered improperly with the Attorney General being excluded.” The MPs, however, are disagreed on the consequences of recommending termination. The majority report avoids termination and calls for suspension of the SGS contract implementation (which has been off for 5 months now Sept 2017 todate) for an additional period of not less than 3 months. The majority report MPs say this period should be used to review the whole thing and renegotiate afresh with SGS. It appears their caution is motivated by fears that government may, under the contract terms, have to pay a lot of damages to SGS. The 9 MPs behind the minority report disagree. They cite many legal and contract provisions showing that SGS is in clear breach of contract conditions (not just warranties) which entitle the aggrieved party the GoU to repudiate/terminate the contract without incurring any damages in favor of SGS. They argue that the termination was actually long overdue and cite what they consider severe breaches by SGS. They inter-alia cite Sections 53(2) (3) of the Contracts Act and some aspects of the GoU-SGS contract itself. They say that at worst the government obligation is to simply refund the Shs123.4m SGS had remitted so far under the contract requirements obliging them to monthly surrender concession fees of 10% of the gross revenue collected. The MPs also say that SGS lied government about the potential for job creation because only 70 Ugandan jobs have so far been created largely because their processes are machine-intensive and not labor-intensive as initially promised. They argue this makes it even worse since the same contract allows SGS to repatriate up to 90% of the revenues made. They also fault SGS of deliberately sidelining NEMA, UNBS, Uganda Police and URA which is the one with accurate data regarding vehicle ownership and registration. Because it wants to hide the actual incomes being made, SGS always relies on motorists’ production of logobooks whose authenticity (as to forgeries) MPs say SGS has no capacity to verify. The MPs also fault SGS for relying on the enforcement services of the Uganda Police Force yet they don’t contribute anything towards financial, logistical, time and human resource-related expenses the Force incurs during such operations.
THE BREACHES:
The minority report MPs, who also accuse committee chair Eng Lillian Nakate of committing some procedural impropriety just to shield SGS, proceed to point out areas of great contractual breaches by SGS (In law there are two forms of breach: conditions and warranties. A breach of a condition is considered so essential/central to the contract that the aggrieved party is automatically entitled to termination. And warranties are taken to be minor breaches entitling the aggrieved to damages and not termination. The 9 MPs say SGS has breached conditions/going to the heart of the contract making termination automatic). They say these glaring breaches indemnify government to terminate the contract without incurring any liability to pay anything to SGS. They say SGS was required by the contract to remit monthly concession fees of 10% of the gross monthly revenue latest 15 days after the end of the preceding month failure of which the arrears would attract a monthly interest of 4%. For unknown reasons, the works ministry hasn’t been enforcing this even when SGS at some point defaulted this remittance for 8 months!! On the commencement date (when to begin implementing inspection), the contract stipulated that SGS would begin inspecting vehicles in a period not exceeding 18 months after contract signing. Signing was on 17th March 2015 meaning SGS had to start not later than 17th September 2016. This never happened. Instead SGS started work 20 months later (28th November 2016). The MPs say this was a major breach for which termination would have resulted if it wasn’t for indolence of the works ministry officials who are the supervising entity. Within 18 months, SGS had to have the 7 inspection sites ready plus three mobile testing units in place. As of November
28th, the MPs observe that SGS had only the Kawanda site ready yet the contract stipulated 7 sites. This, the MPs say, breached Clause 7.1 of the contract. They say that instead of being reprimanded for that, the Works Ministry PS through a one Benon M Kajuna only retrospectively wrote for the SGS a 1st December 2017 letter which enabled them escape liability for substantively breaching the contract. Kajuna’s letter criminally extended the commencement date in favor of SGS from 17th September 2016 to 28th November 2016. The MPs are further furious that Kajuna’s letter also allowed SGS to collect/reclaim the money they were supposed to deposit as performance security and thereby increasing the GoU vulnerability as a party to the contract. This was at a time the SGS had barely delivered or readied 10% of the required infrastructure at the inspection sites. The MPs say the works minister should have terminated the contract under Clause 7.7 which allows unilateral termination once such a contract condition is breached. The MPs conclude that: “This shows complicity in breaching the contract.” They call on the plenary to vote for termination of the contract to pave way for the Uganda Police’s Inspectorate of Vehicles to be revitalized with enhanced capacity so that Ugandans can once again enjoy high quality affordable vehicle inspection services. They argue that the Uganda Police has the advantage of the countrywide presence and plenty of human resources to do the job as opposed to incapacitated SGS that is only here for profit maximization. Referring to its unwillingness to share inspection data with URA, NEMA and UNBS, the MPs submit that SGS must be considered a threat to national security and immediately kicked out.
LIMITED CAPACITY:
Of the estimated 1m vehicles (both cars and motorcycles) eligible for the mandatory vehicle inspection to establish their roadworthiness, SGS has (since getting the contract on 17/3/2015) only inspected 31,327 vehicles of which 24,618 (79%) were cleared as road withy and the rest (6,709/21%) are unfit. The MPs argue this is proof SGS has no capacity and is complacent because there are already assured of automatic contract renewal for another 5 years even when they are clearly failing on all KPIs (Key Performance Indicators). The MPs say more vehicles would have been inspected by now if it wasn’t for SGS’ limitation by way of limited inspection locations/sites and the prohibitive inspection fees they are charging. The other problem is that those unsatisfied with the SGS inspection results have nowhere to effectively appeal since the master testing center the works ministry was supposed to have remains a pipe dream. It’s yet to be in place yet Shs1.5bn was already spent purchasing the required equipment that is rotting away in the ministry compound!
SHAM MAJORITY REPORT:
The MPs also claim the majority report as arrived at on 11th October 2017 is sham because it was voted upon in procedurally very improper circumstances. They say that there was no quorum as required by the rules. They say that meeting was effectively attended by 9 MPs where the rules require that at least of the 35 members, 11 are physically present during voting and not just signing and disappearing. The MPs of the minority report, including both NRM and opposition, argue that on 6th September 2017 they had unanimously voted for termination but the chairperson Lillian Nakate curiously backtracked and called another meeting to revisit the matter. They want the Speaker to take disciplinary action against the chairperson for that improper conduct. The September meeting was held in the East Committee room, business was well conducted and the position was termination which the October meeting overturned in favor of mere suspension. This aspect is likely to spark chaotic debate today Tuesday afternoon when plenary is expected to debate the report. The MPs are also unanimous in condemning Works ministry for falsifying accident figures in order to justify need and urgency for the SGS deal. They question why the Ministry insists on attributing 10% of road accidents in Uganda on poor mechanical condition of vehicles yet police says its 2.1%. They urge government to invest in sensitizing the public to impact on behavioral change that often results into drunken driving, overspeeding, bribery to traffic officers and disrespect of traffic rules.
THE SABIITI/FERDINAND EMAILS:
The MPs in their report unanimously claim that Eng Sabiiti colluded with his OB and close childhood friend Ferdinand Bitanihirwe who was the country manager for SGS at the time SGS was procured. The two studied together in SMACK and Makerere University. The MPs rely on 2010 email exchanges between the two in which Ferdinand was clearly using Sabiiti (chairman CC) to determine the eligibility criteria in a manner that would favor SGS and disfavor its competitors. The two discussed the need to include a requirement that the successful contractor must have a minimum capital of over Shs38.8bn (12m Euros) and must have experience of doing similar work in three continents. This clearly was meant to favor SGS and it came to pass when the requirement to have recorded minimum sales revenue of $12m annually was smuggled in the bid documents. The MPs also claim that SGS’ Ivory Coast experience was also falsified to get them the contract because what they did in Ivory Coast was totally different from the vehicle inspection job they were bidding for. The MPs quote Bagire’s confidential dossier to the committee which clearly corroborated earlier media reports regarding the mail exchange between Sabiiti and Ferdinand. The MPs unanimously resolve that their colleague Sabiiti, who has repeatedly contradicted himself in his explanations regarding these emails, should be severely punished for all these unethical practices exhibited through the SGS procurement process. Watch out for our follow up story (coming shortly) detailing how SGS evaded taxes and thereby occasioning financial loss to the government of Uganda. To comment on this & other Mulengera news stories, reach us on 0703164755
