The House Committee on Tourism, Trade and Industry has commenced investigations into the alleged financial mismanagement of government funds released to cooperative societies.
The investigation was ordered by Speaker Anita Among on 29, August 2023 following reports of massive corruption in cooperatives.
The committee chaired by Hon. Mwine Mpaka, began its inquest in Jinja District, eastern Uganda, where they met Busoga Growers Cooperative (BGC) and Jinja Multipurpose Cooperative Society (JMCS), the beneficiaries of war loss compensation on Monday, 04 September 2023.
MPs were irked to find out that a big percentage of funds released to the two cooperatives, was retained by third parties for purportedly supporting them in the compensation application process.
The committee learnt that since 2018, government has paid out Shs15.5 billion to BGC but only Shs5 billion was received, leaving the rest to two law firms – Matovu & Matovu Company Advocates and Makada Company Advocates.
“Who advised you to hire the services of law firms to process your compensation and to be cheated this much?” asked Hon. Richard Gafabusa.
Members were further disappointed to learn that the cooperatives operated on a Memorandum of Understanding with the law firms, to retain 40 percent of the total compensation monies which the firms never honoured.
“Right from the start, the firms used to disburse 40 percent of the money to the union instead of 60 percent. 20 percent would go missing. With time, they would give us only 20 percent,” said Haruna Ntuyo, the Treasurer of BGC.
Right from the start, the firms used to disburse 40 percent of the money to the union instead of 60 percent
Although he could not avail documentary evidence, Ntuyo said the cooperatives were advised to hire law firms to help them process their compensation money, by the then Permanent Secretary in the trade ministry.
For JMCS, it was revealed that only Shs1.5 billion out of Shs5.3 billion released by government was received. MPs were furious to learn that the cooperative did not only lose money to Matovu & Matovu company advocates, but also gave out Shs2.1b to a syndicate of officials on the verification committee in the Ministry of Tourism, Trade and Industry.
“The money was paid to me in cash [and] I would hand it over to the district commercial officer. He said there were officers who had to benefit from this money because they helped us in the verification process,” said the chairperson, JMCS, Henry Magero.
Magero added that the district commercial officer identified as James Muganza, did not sign any document on receiving the said funds. Muganza who is out on Police bond over the same matter denied all allegations.
MPs criticised Magero and Muganza saying they were full aware of their corrupt actions and hence part of the syndicate that diverted the cooperative’s funds.
“I am putting it to you that you knew the whole scheme of why and where the money was taken. Because when you were giving Muganza the money, did it occur to you that he was lying, that he wanted it for himself?” asked Hon. Elijah Mushemeza.
Hon. Mpaka noted, “there is a clear evidence of intentional corruption; for you to give the lawyer all that money to keep cheating you and you do not report the case at all. To give Shs2 billion to an individual without him signing anywhere”.
The Resident District Commissioner (RDC) for Jinja, Richard Gulume, urged government to review the compensation programme, cognizant that there were numerous loopholes.
“We need to streamline how we handle compensations in the near future, for example, the RDC office is critical but we were never involved in this process, in such a case we are not able to supervise,” he said.
The committee proceeds with its investigations in Mbale, Soroti, Lira, Gulu, Masindi and Nakaseke districts.
