By Mulengera Reporters

The Uganda Law Society (ULS), a statutory body mandated to advise on legal matters, has this Saturday evening outed a statement declaring that under the Insolvency Act (under which Twebaze Bemanya is running UTL), the Finance Ministry (as a shareholder on behalf of government) can’t supervise or direct the administrator.

Senior legislator Abdul Katuntu of Bugweri had made the same point earlier in the day on Capital Gang where he said under the Insolvency Act, there is no way the shareholder (in this case GoU under whose watch things went wrong) can have supervisory powers over the administrator whose mandate is to do all he/she can to correct the previous management wrongs and gradually revive the company.

Along with Robert Kirunda, another Lawyer representing a number of creditors in the UTL saga, Katuntu said being the official government receiver under the same Insolvency Act makes the Registrar General Bemanya the best suited person to handle the administration because, unlike any other administrator that could have been deployed, Bemanya is assigned at no extra cost because this already is his statutory duty.

In a two-page media release signed by its President Simon Peter Kinobe, the ULS says the office of official receiver which Bemanya currently occupies is created by law under Section 198 of Insolvency Act and the appointing authority is the Justice Ministry and not that one finance. That under Section 155 of the Insolvent Act, the Administrator takes full responsibility on being appointed and the company shareholders cease to have any authority over what happens until the ailing company is salvaged from insolvency or liquidation. The idea is to get something better for the creditors than they would walk away with if the company was to be liquidated.

“Once the company embraces insolvency proceedings [be it liquidation, receivership or administration], the shareholders can’t supervise the office holder [liquidator, receiver or administrator]. The interests of creditors [which hypothetically were not taken care of by the company directors and shareholders] in such situations take precedence over the interests of shareholders. Therefore, the Hon Minister of Finance as a shareholder can’t be held out as the supervisor of the administrator of his insolvent company,” the ULS statement reads in part.

That the correct legal position is for the administrator to keep reporting to and updating creditors every 6 months in full supervision of the court which (quoting from Bemanya’s 21st June media statement) the ULS says the administrator has been doing. Kinobe argues that those wanting to assess Bemanya’s performance and the current state in which UTL is should freely access his 6 monthly reports to court since these are public documents any member of the public can access under the Access to Information Act.

Kinobe adds the grounds for removing the administrator are laid out in Section 174(1) © of the Insolvency Act and court has to be involved since the entire administration thing is a court-controlled process. He faults Minister Anite for not disclosing any of the grounds in the manner prescribed under the aforementioned provisions of the law.

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The ULS President also makes reference to Article 119 of the Constitution to categorically state that: “Under our laws, no Minister has the mandate or power to order the Attorney General to undertake any action. The Attorney General, in his capacity as the principal legal advisor of the government under article 119 of the Constitution, may deem any act inappropriate or outrightly illegal.”

Kinobe adds that it doesn’t matter whether it’s the AG himself William Byaruhanga or his deputy Mwesigwa Rukutana issuing the statement, it naturally becomes the legal government position on any legal matter until its invalidated, altered or pronounced illegal by court of competent jurisdiction. Kinobe also demands that Ministers holding public office should exhibit expected minimum levels of decorum.

Simon Peter Kinobe the ULS President

ANITE FIRES BACK

In a phone interview, Anite told Mulengera News she wasn’t bothered by the Law Society position “because it doesn’t change the fact that I’m one of the creditors and that’s the capacity in which I will continue asserting my rights as a representative of government in this UTL matter.” She added that she isn’t asserting herself to be the supervisor of Bemanya as administrator but her determination is directed at asserting her rights and entitlements as a major creditor with a claim of over Shs207bn.

This (Shs207bn claim) is in respect of the government entities like URA and UCC that appear prominently on the list of UTL creditors. Rukutana says since these are body corporate, capable of suing and being sued in their name, they have an independent legal existence and can legally not be represented by the Finance Ministry.

Anite also shed light about the origins of the derogatory remarks she made about Bemanya in her letter responding to Deputy AG Mwesigwa Rukutana. She said this characterization, also referring to Bemanya as powerful and very connected in the Justice Ministry and AG chambers, was made by the PSST and it was well-minuted by Dr. Fixon (the Finance Ministry’s internal auditor) who was secretary for the meeting that day.

She says in the presence of Minister Matia Kasaija, Dr. Fixon and herself, they sat waiting for Bemanya to join them that Thursday morning and he didn’t turn up. Instead the PSST walked in and delivered Bemanya’s explanation indicating why he was unable to attend in person. “I found it irregular that a senior person would deliver the message of a junior officer. And the PSST answered by saying that man [Bemanya] is like that and very powerful in the Attorney General’s chambers and I ensured Dr. Fixon minuted that on record,” Anite said.

She added that since that time she became cautious about the neutrality of the AG’s chambers regarding the UTL matter and opted to stay away from the subsequent meeting the next day which was a Friday. “I opted to stay away and as I went about my business, the PSST, Hon Matia Kasaija and the Attorney General Hon William Byaruhanga walked into my office and we had the meeting from there. But the truth is the PSST’s revelation eroded my confidence in the office of Attorney General regarding UTL,” Anite explained sounding defiant and vowing not to give up her fight against Bemanya’s continued headship of UTL. (For comments, email us at mulengera2040@gmail.com).

 

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