Officials from the Uganda Development Corporation (UDC) have told Parliament’s trade committee that allegations that the corporation’s executive director fired the Board of Directors of Soroti Fruit Factory are baseless.
On Tuesday, 08 February 2022, Soroti West Division MP Hon Jonathan Ebwalu told a plenary sitting on the day that the managers of the factory and UDC were running the factory as a personal business.
Ebwalu added that the managers of the factory were frustrating local farmers by buying fruits from the neighbouring countries like Kenya, Tanzania and DR Congo, yet the factory was supposed to uplift their economic status.
“Farmers are frustrated and are cutting down their trees. They say a big percentage of the fruits is thrown away and the factory takes on only 20 per cent of their fruits. Soroti Fruit Factory has been making losses 10 years in a row,” noted Ebwalu in a meeting with the trade committee on Monday, 21 February 2022.
Appearing before the committee chaired by Hon Mwine Mpaka, Hope Kisitu, the Corporation Secretary/Director Legal Services at UDC said the term of office of members of the factory board expired in September 2020.
She said that the CEO of Soroti Fruit Factory in June 2020, notified the two shareholders – UDC and Teso Tropical Fruits Cooperative Union Limited that there was a change in board leadership, where the directors convened and signed a resolution appointing a new chairperson.
“That resolution reads that Ms Josephine Okot immediately and forthwith ceases to be the chairperson of the board of directors and remains an ordinary director. Mr Paul Echatu is hereby appointed as the chairperson of the board of directors. This resolution is dated 08 June 2020,” said Kisitu.
“The change in board leadership and the governance issues amongst the board, led UDC to recall its five directors and replace them with three interim members. They include the executive director Patrick Bitonder Birungi, myself (Hope Kisitu) and Head of Internal Audit,” she added.
Kisitu told the committee that on 08 September 2020, the board of UDC was still in existence and made a resolution that in accordance with Article 14.2 of the Articles of Soroti Fruits Limited, the UDC nominated directors be recalled with immediate effect.
During the committee meeting, Ebwalu tasked the UDC officials to explain how UDC acquired shares in Soroti Fruit Factory yet UDC 2016 cannot retrospectively own shares in the Factory that was established in 2012.
“Section 33(3) of the UDC Act, 2016 bars UDC of 2016 from taking on assets or liabilities of UDC under Cap 319. The only assets of UDCL that can and could be taken by UDC 2016 are listed under the schedule 2 of the UDC Act 2016; and Soroti Fruits is not one of those entities,” said Ebwalu.
Kisitu clarified the matter saying the Memorandum and Articles of Soroti Fruits Limited indicates the list of shareholders of the company registered in 2018, under the Companies Act; however, UDC became a shareholder of the company in 2010.
Ebwalu also raised concern over quality assurance at Soroti Fruit Factory, saying that brown water was allowed to go into the production of juice, which later caused a product recall.
“This recall was made without board approval which caused a loss of Shs 200 million in 2020,” said Ebwalu.
Hon Susan Amero (Indep., Amuria district) said the recall of their juice from the market posed a serious health risk and tasked the factory officials to explain how the returned juice is disposed of.
“How sure are we as Ugandans that this juice brought back to the factory cannot be repackaged and taken back into the market?” Amero asked.
“Where do you put the juice that has expired or been recalled? We need bank statements on this action,” said committee chair Mwine Mpaka.
Hon Richard Gafabusa (NRM, Bwamba County) called for a forensic audit into the operations of Soroti Fruit Factory and circumstances under which expired juice can be returned.
Felix Angeki, the Quality Assurance Manager at Soroti Fruit Factory said the expired juice returned to the factory is discarded through a storm water drain.
Patricia Bageine Ejalu, the Deputy Executive Director for Standards at the Uganda National Bureau of Standards, told the committee that before certification is issued, they monitor procedures of how non-performing products are handled.