Government boardrooms play host to gold mafia

In the wake of the arrest of David Balondemu, the embattled Kampala District Land Board chairman, as well as Spero Byokunda, the head of Petroleum Quality and assurance at ministry of Energy, several foreign firms have come out to expose operations of a ring of suspected fraudsters with immense influence in key sectors of the economy.

Balondemu is on remand at Luzira prison for allegedly obtaining money under false pretenses and conspiracy to commit a felony. His associates, Eric Geoffrey Mkwe, James Jeff Mugisha and Godfrey Mabirizi, are also on remand. They allegedly obtained $600,000 (approximately Shs 2.2 billion) under the false pretense of selling 53kg of gold to Korean national Hyun Uk Kim.

Meanwhile, Byokunda and others still at large are alleged to have fleeced $30m from a Serbian investor. But just before Balondemu appears on November 6 for his bail hearing, it has emerged that he is yet again the central figure in another fraud scheme of $600,000, which was obtained from an American firm.

COMMON TRAIL

The common trail in these cases is the unlimited access of the alleged fraudsters to high-profile government offices and boardrooms, access to key government documents, not to mention police’s inability to intervene when matters are reported.

In both cases, it took President Museveni’s direct intervention to have the suspects apprehended. According to sources at the State House Anti-Corruption Unit (Shacu), the investigating body, Byokunda is accused of being the mastermind of an unauthorized meeting on August 22, 2023 in the ministry’s boardroom at Amber house between a Serbian investors and fake persons who introduced themselves as ministry officials.

In the said meeting in which one of the members introduces himself as the minister of Energy and the other as the permanent secretary, they are said to have promised to process mining deals worth in excess of $300m for the Serbian investors.

“The deal was well-crafted because they managed to remove the actual portraits of the ministry top leadership and instead placed theirs impersonating the officials,” said the source.

“The Serbians were convinced they were dealing with the right people.”

The source, however, adds that the Serbians also did not come to the meeting with clean hands because the payment was to bribe their way to getting deals and tenders.

AMERICAN WOES

Meanwhile, American firm KG Unlimited LLC is accusing Balondemu of obtaining $600,000 from them through dubious means. In its June 17, 2023 petition to the Public Procurement and Disposal of Public Assets Authority (PPDA) as well as the Agriculture ministry, the company notes that in 2022, they landed on an advert on LinkedIn by KLA Consultancy Group to the effect that the ministry of Agriculture, Animal Industry and Fisheries (MAAIF) wanted an international company to supply it with agricultural drone sprayers worth $30m.

KG Unlimited offered to supply the drones and a person introducing himself as Denis Tumusiime, one of the directors of KLA, said his firm acts as an intermediary between government and private companies. He promised to lobby for them to clinch the contract.

Later in the year, KG Unlimited came to Uganda, and were assigned a full-time police patrol on top of getting accommodated at Sheraton hotel. During their stay, there held a meeting with a one Wilberforce Kabatsi, whom they were introduced to as the director of PPDA.

The said Kabatsi confirmed that the MAAIF is willing to contract them through direct procurement. However, KG Unlimited had to first hire a local company and prequalify him to supply his products. Kabatsi told KG Unlimited that because of corruption in Uganda, President Museveni directed that all communication money should be received by a specific law firm, Bloom Advocates.

According to the official judiciary website, Balondemu is listed as the principal of Bloom Advocates along with seven other lawyers. They were later introduced to a one Ivan Muhire (whose real name is alleged to be Geoffrey Eric Mkwe) at Bloom Advocates at a posh Kingdom Kampala office to help them to incorporate a company.

They claim that he charged them $52,000. According to documents, the incorporation exercise was witnessed by Victoria Nakanwagi from Bloom Advocates. Afterwards, KG Unlimited were informed that since they have no previous business in Uganda, they had to pay a solicitation fee of $250,000 and a performance bond of $250,000.

CON

KG Unlimited officials were assured that after signing the contracts, MAAIF would give them an advance payment of 50% of the contract sum. At the contract signing and payment of the solicitation fee, a fake team from MAAIF led by the ‘permanent secretary’ met with KG Unlimited officials in the boardroom of Statistics house in Kampala. According to the documents, the $250,000 was paid to Bloom Advocates account.

However, no copies of the signed contract were given to KG Unlimited officials on grounds that the ‘solicitor general’ had to first append his signature on the contract before the contract is enforceable.

Thereafter, the said Kabatsi told them that the solicitor general referred the contract to the PPDA to invoke the chargeable statutory performance security of two percent of the $30 million contract sum. Yet again, after wiring the money to the Bloom Advocates account, Kabatsi demanded more.

“When KG Unlimited officials went to meet Bloom lawyers at Kingdom Kampala for a clear-the-air meeting, they found when the firm had changed names to Balondemu and Company Advocates,” said the source.

It is at this point the Americans sought advice from the US embassy in Uganda. In turn, it advised them to seek clarity from Barenzi & Co. Advocates, who in turn unearthed the scam. Ramathan Ruyonga, a senior associate at Barenzi & Co. Advocates and now lawyer for the complainant (KG Unlimited LLC), says his clients were duped into falling for the con.

PPDA’S RESPONSE

Benson Turamye, the executive director of PPDA, said the Authority categorically denies issuance of any letter for such purposes.

“The logo does not belong to PPDA and there is no department in the Authority structure of the office of the director for compliance hence no compliance director. It thus follows that Wilberforce Kabatsi is not an employee of the Authority.”

“Standard bidding document, bid security shall at the bidder’s option, be in the form of either a letter of credit, a bank guarantee, a bank draft, or a cashier’s check, and issued by a reputable financial institution selected by the bidder from an eligible country and Performance Security, should be in the form of an on-demand Bank Guarantee and issued by a Bank by the Standard Bidding Document,” he said.

He said the 2014 PPDA Regulations prohibit payment of an advance payment exceeding 30% of the contract price. Therefore, advance payment to a bidder that exceeds 30% would be in contravention of the PPDA law.

Turamye stated that the law also prohibits PPDA from issuing a contract, documents, purchase order, or any other until all relevant agencies including the Attorney General make all the necessary approvals of the contract. It would, therefore be irregular for the Attorney General to approve a contract post-signing.

BLOOM LAWYERS SPEAK OUT

Andrew Kibumba, who works at the law firm, said our reporter asked for too much information which he would not reveal because he was not sure about who he was speaking to. Meanwhile, the permanent secretary to the MAAIF Maj Gen David Kasura said the ministry has not conducted any procure- ment regarding agricultural drone sprayers.

“MAAIF has not signed a contract with KG Unlimited LLC or received $600,000 from them,” Gen Kasura said.

REPORTING THE MATTER TO POLICE

The case was filed against Timothy Isiko Jonathan and other conspirators. The police, however, resolved to get a bank statement, signatory of the account and a freezing order. The signatory to the account was identified as Joseph Ibona, who was an accountant of Bloom Advocates. The moment the money was deposited, Ibona would immediately withdraw it.

The freezing order was obtained from chief magistrate, Buganda Road court. Later Isiko and Ibona were nabbed. The accounting officer denied any involvement in fraud and said he would withdraw the money and give it to Kaweesi Kizito. The suspects were later released on bond.

Following their release, Barenzi and Company Advocates said the freezing order was withdrawn and the $103,900 was withdrawn from the account.

FILE AT DIRECTOR OF PUBLIC PROSECUTIONS

According to the Shacu source, the file had been forwarded to the Director of Public Prosecutions (DPP) for perusal. The DPP has since recommended that Isiko and Ibona have no case to answer, and the only person to be charged is Kaweesi Kizito.

The complainants have since lodged a complaint to the DPP Jane Frances Abodo calling for reperusal of the file and reinstate charges against Isiko and Ibona. They have also petitioned police CID boss Tom Magambo, asking him to recall the file and investigate it from the headquarters.

They claim that the Central Police Station (CPS) has not done much because the suspects have never been interrogated. The Observer established that the complainants petitioned the State House Anti-Corruption Unit and the president. The Anti-Corruption Unit called Isiko for interrogation and revealed the names of all people who were involved. He said the people who were involved include Balondemu, Mkwe who acted as Ivan Muhirwe, Drake Twebazi, Joseph Ibona and one Martin.