Uganda Airlines has been exposed after an internal audit uncovered procurement irregularities that cost the national carrier Shs1.6 billion during the 2024/2025 financial year.
The audit exposes a trail of questionable contract awards, unauthorized payments, missing accountability records and spending that exceeded approved budgets.
The audit, prepared by Internal Auditor Ronald Otukol, recommends disciplinary action against Contracts Committee Chairperson and Manager Corporate Affairs and Public Relations Shakila Rahim Lamar and Chief Finance Officer Allan Kyeyune, saying both officials bear responsibility for failures in the management of a multimillion shilling communications contract.
The findings add to a growing list of governance challenges that have haunted the airline in recent years, including recurring concerns over procurement practices, delayed audited financial statements, mounting operating losses, executive exits and repeated parliamentary scrutiny over the carrier’s financial management.
The investigation centres on a global communications and branding contract that was initially budgeted at $300,000, about Shs1.1 billion, in 2023.
According to the audit, Metropolitan Republic Uganda Ltd emerged as the only bidder whose quotation of $276,231 fell within the airline’s approved budget, making it the rightful Best Evaluated Bidder. However, the evaluation committee split the procurement into two separate contracts and introduced TBH Holding Ltd, despite that arrangement not being provided for in the original bidding documents.
The report says the contracts committee later negotiated separate deals worth Shs500 million for Metropolitan Republic and Shs650 million for TBH Holding, effectively accommodating the second bidder within the overall budget.
“It is important to note that only Metropolitan Republic Uganda Ltd submitted a bid within the Airline’s budget and should therefore have been the sole Best Evaluated Bidder,” the audit states.
The auditor concluded that awarding TBH Holding a contract departed from the pre approved terms of reference and undermined the integrity of the procurement process.
The audit also found that the airline paid for an international communications strategy that was largely never implemented.
Bidders had been required to demonstrate the capacity to execute campaigns across East Africa, Southern Africa, West Africa, Europe, Asia, the Middle East and North Africa. Instead, auditors found that nearly all activities remained within Uganda, apart from a single English Premier League advertising placement through MultiChoice in May 2025.
“So, no initiatives necessitated activating the contracted agencies’ global partners,” the report notes.
Auditors further questioned why the airline outsourced creative work despite employing in house graphic designers, creative personnel and a sales and marketing manager whose roles already cover branding, promotional content and visual design.
The report says Shs258 million was spent on creative and brand design services without sufficient justification.
“This situation reflects inadequate planning and needs assessment, with resources allocated to areas where they are not required,” the auditor wrote.
The investigation found that actual spending under the communications contracts reached Shs1.6 billion, exceeding the approved contract value by Shs478 million, representing a 42 percent budget overrun.
Of the total expenditure, TBH Holding received about Shs1.2 billion, while Metropolitan Republic was paid Shs408 million.
The audit also uncovered five payments worth Shs164 million that were processed in favour of TBH Holding in April 2025 without purchase orders being raised by the airline.
“As the contract manager, Shakila Lamar should provide justification and an account for the money that was paid without call-offs or purchase orders,” the report says.
Auditors found that procurement continued even after TBH Holding’s contract expired on March 12, 2025.
The report identified 40 transactions worth Shs778 million that were carried out without a valid contract or documented approval for an extension from the Contracts Committee.
“As such, 40 transactions worth Shs778 million were procured without a valid contract with TBH Holdings,” the audit states.
The report says the irregular transactions transferred unnecessary financial and operational risks to the airline.
Perhaps the most damaging finding was the absence of evidence that many of the contracted services had actually been delivered.
Auditors said procurement files and the airline’s Oracle Fusion ERP system lacked delivery notes, billboard installation records, monitoring reports, repositories of developed content, performance evaluations and other documentation required to verify that taxpayers’ money had produced the intended work.
“These are neither evidenced in the Oracle Fusion ERP nor in the procurement files,” the report says.
The auditor recommended that management produce comprehensive contract management records to prove that the services billed under the communications contract were actually delivered.
The revelations come as Uganda Airlines continues expanding its international network with routes including London Gatwick, Dubai, Mumbai, Lagos, Abuja, Accra and Kigali, while relying on continued government support to strengthen its operations.
Since its revival in 2019, the national carrier has remained under scrutiny from Parliament and the Auditor General over procurement compliance, financial reporting and persistent operating losses, making this internal audit another test of accountability at one of Uganda’s biggest state-owned enterprises.
