The State Minister for Privatisation and Investment Evelyne Anite has been told that she has no supervisory powers and therefore has no powers to sack Twebaze Bemanya, the administrator of Uganda (UTL) and that her quest to relive Bemanya of the role may be regarded as contempt of parliament.
In a letter dated June 26, 2019 and addressed to the Attorney General, minister Anite directed him to get immediate replacement for Bemanya, saying all the concerned parties have lost confidence in the administrator and therefore can no longer work with him.
“Reference is made to the letter of the Hon Minister of Planning & Economic Development to you dated 20 June regarding Uganda Telecom Limited (UTL)… In effect, a decision has been taken to remove Mr Bemanya Twebaze, official receiver as the current administrator and to immediately replace him with an individual that we will indicate.
The purpose of this letter is to request you to urgently apply to Court to replace the current Administrator within the context of Section 172 of the Insolvency Act, 2011, and the Insolvency Regulations (161 (1)),” read the letter in part.
“I will be pleased to swear an Affidavit to support the Application where the supporting reasons will be elaborated. I implore you to have the petition filed without any delay to ensure that the Administration of the Company progresses without any issue. I will appreciate your prompt response,” she wrote.
In reply to the minister, the Deputy Attorney General Mwesigye Rukutana in a letter dated June 28, 2019 says: “I have noted with concern that you have encountered considerable difficulty dealing with the administrator and have completely lost in his ability to continue to serve in that capacity. Unfortunate as it sounds, under our law, the removal of an Administrator from office is provided for under Section (174) (1) (c), of the Insolvency Act. It is noteworthy that under the law, a creditor would be a person listed as competent to apply to court to remove an Administrator from office. Whereas government entities may be listed creditors they have separate legal status. Accordingly a shareholder in this instance the Minister of Finance Planning and Economic Development has no locus to apply to court to remover the Administrator from office.”
Rukutana in the letter says that the fact that Finance Ministry consented to the extension of the contractor of Bemanya on two occasions, is prove that he has been doing his duties as assigned. The minister could only sack him if he had failed to do his duties.
Rukutana has also told Anite that the Speaker of Parliament Rebecca Kadaga ruled on the same matter on June 2019 where she clearly said the Administration is the court-controlled process that can neither be interfered with by the legislature nor the executive. “In light of Right Hon. Speaker’s ruling on this matter, your instruction to me may be perceived as contempt of parliament,” he said.
He has further advised Anite to refrain from interfering in UTL’ administration, saying that the interference may hinder the process of sourcing for the funds to revive the telecom company. He says it may also lead to legal challenge by creditors but also attract liability on government.
As a recap, Mauritius Telecom was recommended to takeover UTL after it offered to invest UA$100 million for three years with considered assets of US $45 million. The telecom firm the 6th last best evaluated bidder.
The Financial Intelligence Authority (FIA) in its due diligence report submitted to President Yoweri Kaguta Museveni cleared Mauritius Telecom as the “only credible and financially stable company among the evaluated companies.” Mauritius Telecom was considered as the last best evaluated basing on its capital of US $100 million and assets of US $45 million takes over UTL.
This recommendation drew queries since the best evaluated company from USA, Hamilton Telecom offered capital investment of US$285 million for a period of 3 years and its considered assets stand at US$70 million.
The other four evaluated companies include; Afrinet Communications Limited which proposed to inject US $150-$300 million with assets of US $67 million and acquiring 68 per cent of shares, Teleology Holdings with a consideration for assets of US $60.5 million and investing capital worth US $230 million and acquiring 67 per cent of shares, Neubacher Montage LLP offered assets of US $60 million and proposed capital investment of US$211 million taking 68 per cent of shareholding and lastly Baylis Consortium with US $55 million assets and US $120 million capital investment acquiring 70 per cent of shares for five years.
It must be noted that the total debts of UTL stand at US $147 million with five creditors who include; government US $53.61m, NSSF US$2.84 million, ESATD/PTA Bank US $8.91 million, UCECPS US $3.34 million and others US $77.86 million.
It is against this backdrop t government tasked the line ministry, Ministry of Finance to seek for a potential investor to recapitalise UTL after the Libyans pulled out last year. UTL had been declared bankrupt.
The responsibility of hunting for a partner was handed over to Anite who through a court process placed UTL under an administrator because the company was financially distressed and technically insolvent.
Bemanya was appointed Administrator and tasked to make the company healthier and attract investment before sourcing for a strategic partner.
Conditions
Whereas the process was in advanced stages of selecting an investor to recapitalise UTL, several investors set conditions to partner and revamp the defunct parastatal.
Among the conditions include; extension of service license for 20 years, expansion of frequency bandwidth- spectrum, tax waivers on import duty for equipment for four to seven years, the resultant company to become the sole provider of ICT services to government and access and uses national backbone infrastructure.
17 companies showed interest in taking over the liabilities of UTL but only six were considered as the best evaluated to investment their capital and revamp the company.
The administrator, then requested the Financial Intelligence Authority headed by Sydney Asubo to institute an investigation on the six telecom firm to ascertain whether their financial muscle and capability to run UTL.
