Museveni duped in factory land deal [Daily Monitor, The (Uganda)]
(Daily Monitor, The (Uganda) Via Acquire Media NewsEdge) KAMPALA
They asked for land. They got 50 acres for free at Kampala Industrial and Business Park in Namanve, Mukono District. Their promise was to build a computer and mobile phones factory which would be the first in East and Central Africa. President Museveni was excited and he signed off the prime land in the hope that it would boost his industrialisation drive. It was false hope.
The land worth $2.1million premium (about Shs5.5 billion) was sold after its ownership was dubiously changed. It's now proposed to host a warehouse for electronics instead of a computer factory.
How it startedOur investigations reveal that a Ugandan living in the US, Moses Katakanya who is a computer programmer contacted an American business woman Ms Toresa Lou who is an International Business Consultant of Global Epoint Inc, with a business deal. The idea was to set up a computer factory in Kampala. Mr Katakanya worked up his contacts in State House and a meeting was scheduled with Mr Museveni to brief him about the investment plan. This was on October 16, 2006.
Apparently, Mr Museveni was tickled by the idea of establishing the first computer and mobile phones plant in the region and pledged to support the investors all the way. The investors, passing as Global Epoint and Avatar Technology Inc., demanded enough land to accommodate their immediate and future plans. Accordingly, Mr Museveni reportedly nodded his approval and directed Uganda Investment Authority [UIA] to give the land to the investors as a matter of urgency.
In that meeting, sources say, Mr Museveni also pledged to support the investors and lobby for them access to the Common Market for Eastern and Southern Africa (Comesa) economic bloc to supply computers made in Uganda. Sensing the excitement and full support Mr Museveni had given to them; the investors formed a local company and named it COMESA Technologies Ltd which was duly registered with the help of Mr Muzamiru Kibedi as the lawyer.
In this company, Ms Toresa and her partner Johnny Pan held 90 per cent shares while Mr Katakanya and Mr Kin Kariisa, then an aide to President Museveni in charge of Information Technology, were to hold 10 per cent shares as local partners.
State House got involved in ensuring that the factory kicks off with President Museveni writing letters to UIA admonishing them over the delay to give the 50 acres to the investors.
The pressure on UIA to give the land was immense. Our sources say while UIA was still going through mandatory procedures, the investors through their new lawyers: Capital Law Partners and Advocates, pestered State House that UIA was inefficient hence delaying the commencement of their venture. In a follow up letter by State House, the then Principal Private Secretary to the President , Ms Amelia Kyambadde [now Minister for Trade], wrote to Ms Maggie Kigozi, the Executive Director UIA, expressing displeasure at the delay to give investors land.
The then State minister for Investment, Prof Semakula Kiwanuka, also weighed in, chastising UIA for not understanding the strategic importance to Uganda "of a technology company to manufacture computers here in Uganda. This is a great opportunity and hence all the usual incentives should be given to the Company."
Since Namanve Park wasn't ready then, Prof Semakula wanted UIA to give some land in Bweyogerere in Wakiso District to the investors. "They may want in the interim, a warehouse facility and I urge you to help in identifying such a facility. Ultimately, the Company should enjoy a level of protection and be assured that it will be a primary provider of the country's computer needs," reads Prof Semakula's letter. In his letter, the minister reveals how excited he was personally over the project.
Later in 2008, UIA gave a five-year lease of the land to COMESA Technologies Ltd. Ms Kigozi was apologetic to the investors for the delay. "Based on the directive of H.E the President, we have further reviewed your land requirements in light of the Government's intention that the Kampala Industrial and Business Park (KIBP) Phase I is developed within the next 5 years. Uganda Investment Authority is now pleased to offer COMESA Technology Ltd land in the KIBP to implement your investments..." reads Ms Kigozi's letter.
The firm had sold to the government, the idea of a computer factory and warehouse, monitors and LCD factory in the first phase while the second phase would include modems, internet accessories and VOIP phones factory. The third phase would be a factory for security products. "Thirty (30) acres can be accessed immediately for development by COMESA Technology Ltd. The balance of twenty (20) acres shall be reserved for COMESA Technology Ltd's future land requirements," reads the offer letter, a copy of which the Sunday Monitor has obtained.
American investor pulls outAfter getting the land lease, Ms Toresa reportedly demanded that since she was to inject an initial $2.5 million (about Shs6 billion) in equipment alone which would later rise to at least $10 million (about Shs25 billion), her local partners should construct the factory buildings. Our investigation revealed that the local partners became cagey, forcing Ms Toresa to doubt their commitment to the project. She pulled out, fearing to enter into business partnership with people who were unwilling to inject a penny into the venture.
When she pulled out, the local partners couldn't push the project but they flew to California in the US to convince Ms Toresa to allow them bring on other Ugandans on board but she reportedly insisted on local partners injecting in some investment capital.The local partners returned to Kampala with a different game plan. They formed another company called COMESA Holdings Ltd. The documents available appear to show an allocation of 33.3 per cent to Fox Odoi, a former aide to the President and now MP, 33.3 per cent to Mr Kariisa and 33.3 per cent to Mr Katakanya.
A memo by Mr Kariisa to other directors reads: "Today [2nd October 2012] we had a meeting at Media Plaza and agreed on the following: "…to set up USD and UGX accounts at Ecobank with Fox and Kin as signatories and Moses to always send in an email for any withdrawals.""We also agreed that we compensate all those that helped us i.e. David, by paying him 500 million spread through the current deal and subsequent deals that will be on the table, Robinah, Michael & Justus to be paid 45, 45 and 10m respectively," the memo stated.
They also switched to Chinese partners and promised to convince them take more land that was given to COMESA Technology Ltd and invest in the same project or use it for other projects altogether.
Meanwhile, the five years lease that they had got for the land elapsed without any activity at the project site. UIA mounted pressure on Comesa Technologies Ltd to show any value they had added onto the land since it was allocated to them.
"As you are aware, the said lease agreement expired on 17th February 2012. Consequently, the UIA Board of Directors at its sitting of 12th March 2012 noted with concern the expiry of the initial period without you commencing any development on the ground as had been provided for in the lease agreement," reads a letter by Tom Buringuriza, the then UIA acting executive director. Mr Buringuriza warned that UIA intended to repossess the land unless COMESA Technologies demonstrated commitment to the project with clear timelines for development.
Mr Buringuriza's communication would later kick off controversy as other UIA officials got involved in the deal. But Mr Kariisa instead wrote to UIA "re-affirming our interest in investing in Uganda particularly using the 30 acres allocated to us by the Government of Uganda at Namanve."
In his letter dated June 20, 2012, Mr Kariisa said: "COMESA Technology is ready to invest as soon as the UIA gives us the land tittle and possession of the land, which we have asked for a long time."
In spite of the fact that they formed Comesa Holdings, Mr Kariisa still transacted on behalf of COMESA Technologies Ltd about the same matter. Sunday Monitor understands the main interest was to have the land transferred to make it easier to sell off. Some officials at UIA were drafted into the scheme.
Mr Kariisa also lobbied political actors including State minister for Investment Aston Kajara, to intervene on their behalf to secure the land title. They also lobbied the board of UIA. Eventually, the land title was transferred to COMESA Technologies Ltd on December 20, 2012.
Land changes handsHaving obtained the land title, COMESA Technologies Ltd transferred all or part of the land to another company called Sunbelt International Logistics Ltd, apparently owned by Chinese investors.
"In a meeting held at the company head office, it was unanimously agreed upon by the directors that: The property described as Kyagwe Block113, plot 673 at Namanve be transferred in the names of Sunbelt International Logistics Ltd, a company dully registered in Uganda specialised in warehousing and logistics business," reads a company resolution, a copy of which Sunday Monitor has obtained.
Interestingly, Ms Toresa who is a director in COMESA Technology Ltd was not in the board meeting that resolved to sell the land and there is no indication that she okayed the change of ownership. Instead, Fox Odoi who was appointed company secretary of a separate company, COMESA Holdings, was part of the decision making. Sunday Monitor understands that after the genuine American investor withdrew, the investment on the land donated by the President became a local affair championed by the president's aides: Mr Kariisa and Mr Odoi.
The presidential aides instead appear to have made a financial killing from the land which they had got for free from the President. Although Sunday Monitor could not independently verify the value of transactions on the said land, some documents seen reveal that Mr Kariisa received money from Sunbelt International.
"This is to confirm receipt of 200,000,000 as part payment of Sunbelt Logistics International to COMESA, in relation to the addendum date 25th September 2012," reads an acknowledgement of payment signed by Mr Kariisa.
Instead of a computer factory which excited President Museveni, Sunbelt Logistics International is reportedly building warehouses on the land to store their imported electronics.
Out of the 30 acres, sources say, 10 of them were gifted to two renowned local businessmen including some officials of UIA who reportedly helped "smoothen" the process. Apparently, President Museveni was told that the investor had turned down the offer and hence the failure of the computer factory. But he is reportedly unaware that the land did not revert to UIA as it was sold by his aides.
Sunday Monitor's repeated attempts to contact Mr Kariisa were fruitless as he did not pick our calls.
When we managed to reach Mr Odoi who said he was in Ntungamo District, he refused to discuss the matter, saying we talk to Mr Kariisa. When we said Mr Kariisa was not taking our calls, he said then we should make a decision to publish or hold the story. He offered to meet our reporter at 8pm on Saturday when he returned to Kampala.When we insisted that his name was in the documents, he simply said he is an advocate of the High Court.
However, former UIA board Chairman Patrick Bitature confirmed the foreign investors had expressed interest in establishing a computer firm but said he didn't know why they had not done so. "They met the President and were given land. We are still hopeful about the project," he said, adding that some other investors did not commence work because utilities had not been established in the park.
Asked why the land had since changed ownership, Mr Bitature said: "The land was allocated to them but I don't know whether they have sold it or not. I am no longer in office; how would they sell it when the title had not been transferred to them."
The businessman sounded unaware of the fact that the land was no longer in the names of UIA. He revealed that while Uganda got "air" out of the deal, Kenya had already got three computer factories ready to assemble the IT equipment for use in Kenyan schools.
In 1997, the government degazetted 1 006 hectares of Namanve Forest Reserve to create an Industrial park to be managed by Uganda Investment Authority. In 2002, President Museveni launched an ambitious project that had promised to form the foundation for the turnaround of Uganda's industrialisation.
But the project that had been conceptualised around Namanve Industrial Park to date remains a vast wasteland with only a handful of firms that have constructed premises on it. It faces a myriad of problems including environmental concerns, administrative bureaucracy and inflated land costing procedures among others. Part of the land originally given to investors has been sold to individuals to build residential houses.
The 896 hectares of land at Namanve, is estimated at Shs350b and funded under a credit agreement between the government and the World Bank. Namanve Business Park is one of the 22 industrial parks the government plans to set up to create jobs and widen the national taxable base. Gulu, Arua, Lira, Mbale, Moroto, Tororo, Iganga, Rakai, Mubende, Luweero, Jinja, Nakaseke and Soroti would house the other parks.
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