The Supreme Court has handed businessman Hassan Basajjabalaba and his companies a major legal victory after setting aside a Constitutional Court ruling that had ordered them to refund more than Shs142 billion paid out as compensation for cancelled city market contracts.
The long-running dispute traces back to the early 2000s when Kampala City Council (KCC) leased out management of Nakasero, St. Balikuddembe (Owino), Shauri Yako, Nakawa markets, and Constitutional Square to firms associated with Bassajjabalaba, including Haba Group, Sheila Investments, Victoria International, and First Merchant International Trading.
KCC later annulled the contracts over irregularities, prompting the companies to seek compensation. The government eventually paid and guaranteed loans amounting to Shs142 billion through Bank of Uganda and commercial banks.
In 2012, Legal Brains Trust challenged the payments in the Constitutional Court, insisting the contracts were unconstitutional because they lacked the Attorney General’s clearance as required under Article 119(5). The petition also alleged fraud in the compensation process.
The Constitutional Court sided with the petitioners in 2020, voided the contracts, and directed the Attorney General to recover the billions already disbursed.
But in a unanimous decision, the Supreme Court struck down that ruling.
Delivering the lead judgment, Justice Monica Mugenyi explained that the Constitutional Court had stepped outside its jurisdiction.
“The Constitutional Court is not a trial court. Matters involving allegations of fraud or corruption must be proved through evidence, which can only be tested before the High Court or by way of enforcement proceedings under Article 50,” she stated.
The judges also ruled that the requirement for Attorney General approval does not apply to local government contracts.
“The word ‘Government’ in Article 119 does not cover municipal authorities like KCC,” the ruling clarified — a finding that shields many past and future local government agreements from similar constitutional challenges.
As a result, the order for recovery of funds from Bassajjabalaba and declarations against senior officials, including former Finance Minister Syda Bbumba and the late Attorney General Khiddu Makubuya, were set aside. Both were censured by Parliament in 2012 over their involvement in the compensation.
While the tycoon and his firms are off the hook for now, the government still retains the right to pursue a civil claim to recover the money.
Notably, the Supreme Court declined to award costs, stressing that the case raised questions of significant public interest.
