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Blow to Bemanya as Court rules audit of troubled UTL must be carried out

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The High Court has ordered that Uganda Telecommunication Limited (UTL) must be audited in 30 days in the ruling delivered on August 9, by Justice Musa Ssekaana, dashing away hopes of the troubled company’s Official Administrator, Bemanya Twebaza, who had resisted the audit. Bemanya is also the Executive Director of Uganda Registration Services Bureau (URSB).

The ruling comes after the Uganda Broadcasting Corporation (UBS) sued Bemanya, praying that the Audited General be appointed to audit the company swimming in debts worth billions.

Justice Ssekaana in his ruling held that: “An audit be carried out Uganda Telecom Limited-in administration by the Auditor General with a period…30 days from the date of this order.”

The judge also ordered that the audit report be presented or given to all creditors of the company.

Bemanya was represented by his lawyers Nuhu Wandembere while Counsel Christine Mpumire represented UBC.

The judge’s ruling should make the State Minister for Investment and Privatisation, Evelyne Anite happy as she has been calling for the audit of the company after President Yoweri Museveni directed that the audit be dome to establish what is happening within the company.

In a letter dated July 16, 2019 to Anite, Museveni said he had “heard of some allegations”.
“This is to direct you to institute an audit in the activities that are going on in Uganda Telecommunication Limited,” read part of Museveni’s letter, a copy of which was seen Eagle Online.

The audit as instructed by Museveni had taken shape but a suit by UBC forced Keith Muhakanizi, the Ministry of Finance/Secretary to the Treasury to halt the audit on account of sub judice rule, a decision that was quashed by Anite and now court has granted her wish.

In a recent letter, Anite said Muhakanizi and Finance Minister Kasaija should have taken note of Museveni’s directive on the audit of UTL and facilitated its implementation, instead of derailing the process.

“The audit into Uganda Telecom Limited was to me through my office sanctioned by H.E the President…I have clear and unequivocal instructions from HE The President to carry out an audit of UTL. In the absence of a contrary directive from him, I am not in position to act contrary to his directive and you and Hon. Matia Kasaija would be well advised to-do likewise,” Anite stated.

Museveni has always said UTL provides is of strategic importance to government as far as investment in the company is concerned.

For more than two years, UTL has been placed under administration and there is no sign that the company will change for the better.
In early 2017, UTL was in debts of more than Shs700 billion when the Libyans, who held 69 per cent shares, left.
At that time, government had to liquidate the company or save its collapse by putting it under provisional administration to allow a search process for competent investors to take it over.

In May 2017, UTL went under Administration Deed and government appointed Bemanya, as the provisional administrator.
One of his tasks was to find an investor to buy UTL within six months. Others were to clear liabilities to all creditors.

However, the company did not attract a new investor and Bemanya’s provisional administration was extended twice by the Finance Ministry.

In May 2018, Museveni ordered that all government ministries, departments and agencies (MDAs) sign up UTL as their sole provider for internet services as part of efforts to make the company more attractive to a prospective investor. Anite was at the forefront of that effort.
Also the National Backbone Infrastructure (NBI) would be given to UTL by the National Information and Technology Authority (NITA) to ensure fiber network connectivity across the country.

A Shs200b debt UTL owed to government was also written off and turned into shares under Uganda Development Corporation (UDC).
In April last year, Cabinet extended UTL’s operational licence for 20 more years. This also included a directive that Uganda Communications Commission (UCC) expands the UTL reach to cover the whole country.
UTL remains indebted to the tune of Shs536b, according to a bi-annual progress report for November 22, 2018 to May 22 this year that the administrator sent to the Commercial Court, all creditors and shareholders indicated.

Bemanya versus Anite
There has also been a protracted fight between Bemanya and the Ministry of Finance.
Early this year, the ministry failed to have UTL audited on two occasions and Bemanya be sacked. The first was when Finance minister Matia Kasaija requested the Auditor General, John Muwanga, to audit UTL.
In April, Mr Muwanga wrote back to the ministry, saying he could not audit the company because “it is being supervised by court.”
The second attempt was by Anite, who asked Bemanya to allow the ministry audits the company.

Bemanya declined, saying such an exercise can only be conducted after the lapse of the Administration Deed in November.
After a week of confrontation through letters between Ms Anite and Attorney General, William Byaruhanga, and his deputy Mwesigwa Rukutana, Museveni weeks ago ordered Justice and Constitutional Affairs minister Kahinda Otafiire to ensure UTL issues are presented before Cabinet before any further action is taken. The President insisted efforts to revamp UTL through getting another investor must be explored first and Cabinet must take a decision on that.

The following day, Otafiire wrote to Bemanya to expedite the process of finding an investor before the company is liquidated.
“As the administrator of the company, you are requested to expedite the process of sourcing a strategic investor. You are required to continuously update me on the progress to enable me report to Cabinet accordingly,” Otafiire stated.
There are also other limitations that undermine the successful search for an investor for UTL as listed in the 2017 audit report of PricewaterhouseCoopers Uganda.

Anite in one of her communications months ago said some individuals were oraginsing to take over UTL properties.

It noted that there was need for a restructuring plan that would include conversion of the Shs224 billion debt UTL owes to Ucom, a company owned by the Libyans, into equity.
The firm also recommended that the Uganda Posts and Telecommunications Corporation pension liability of Shs206 billion be taken over by government and converting the combined debt of Shs134 billion owed to government entities such as Uganda Revenue Authority, National Social Security Fund and UCC into equity.
The auditors argued that this would reduce the debt to Shs145 billion. However, this has not been done.

The relationship between UTL and UCC is also on the rocks.
In an April 29 letter, Godfrey Mutabazi, UCC executive director, wrote to Bemanya, saying it may not renew the UTL licence in June 2020 because the latter had not met the application process requirements under the law.

He also said that UTL owes UCC Shs49.8 billion in pre-administration debt and Shs10.2 billion as part of the administration. Mutabazi also accused the company of failing to comply with the Uganda Communications Act 2013 which requires an installation of an Intelligence Network Monitoring System (INMS) to enable state agencies monitor telephone calls for security purposes.

He further faulted UTL for underutilising assigned mobile and fixed phone numbers, not complying with the directive on implementing Location Based Services (LBS), not submitting any of its networks and end-user device/terminals to UCC for approval; poor quality of service, using networks that no longer have manufacturer’s support services and failure to seek UCC approval prior to using short codes used by other network services.

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