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19 November 2012

Govt loses over sh430b to private firms

Each passing day, the Government loses hope of recovering sh432b from several companies, including 10 ghost firms, which it gave loans in the 1990s. This was revealed on Tuesday by officials from the Ministry of Finance headed by the accountant general, Gastavio Bwoch, who pleaded with Parliament to help them recover the money.

They were appearing before the committee to answer queries raised by the Auditor General to Parliament.

According to Bwoch, the finance ministry gave out 40 loans to several state and private enterprises and agencies to help them import goods that were scarce at the time.

The money was advanced to the firms under the Japanese Non-Project Grant Aid. Bwoch told MPs that efforts to recover the money had hit a dead end as some of the companies could not be traced by the registrar of companies.

Other companies, according to Bwoch, have since been privatised or wound up.

The commissioner for the treasury department, Isaac Mpoza, said although the matter was handed over to the Solicitor General for advice, he proved “not useful”.

“He raised technical questions which we could not answer. When we checked with the registrar of companies, we discovered that many of them (firms) do not exist,” Mpoza said, causing murmurs from MPs.

In October 2010, the registrar of companies wrote to the Ministry of Finance, indicating that 10 companies could not be traced in the system.

“We shall continue the search and update you accordingly,” the former acting registrar general, Robert Mugabe, wrote to the Accountant General.

According to the list, the companies that could not be traced include Baggrey Trading Company, BTS Uganda Limited, Kibuguma Coffee Growers Makyo Enterprises and Marks Pharmaceuticals Limited. Others are Seki Trading Company (wound up), UPET, Jasaba Pharmaceuticals Limited, High Way Motors Limited and GM Combine.

Among the documents before the committee, Bwoch on March 28, 2011, wrote to 17 companies, including those that could not be traced, to settle their debt obligations.

A report from the privatization unit, however, indicated that some of the privatised state enterprises had not cleared the loan because they were making losses, while the others had their liabilities taken over by the Government after the divesture.

The committee deputy chairperson, Paul Mwiru, said: “By the time you signed these agreements, you should have confirmed first that these companies exist.”

The chairperson, Kassiano Wadri, said: “We cannot accept a write-off because some of these companies exist and are making profits.”

The committee resolved to summon the privatisation unit and acting secretary to the treasury, Keith Muhakanizi, to appear before the committee today and explain the matter. -  By Mary Karugaba