In Summary
Complaint. Some MOF board officials accuse their colleagues of conniving to cause financial loss to the company
The management of the Milton Obote Foundation (MOF), the main sponsor of Uganda Peoples Congress (UPC) party, is in the middle of a storm over a Shs4 billion controversy and forgery of board minutes by some members ostensibly to fleece the Uganda House trustee.
Unanswered questions
Would you borrow Shs3.9b from a money lender, pay the money lender all the interest on the loan for a full year in advance and then deposit the money on a fixed deposit account from which you cannot withdraw it until the agreed loan period expires?
What if you wanted to use the borrowed money to dupe a bigger lender that you have some money of your own so that the creditor can advance you a bigger loan to help you expand a commercial building in a prime location?
Should the bigger lender reject your loan request and therefore you have to repay the Shs3.9b you had already borrowed five months before the year elapses, would you just hand back the whole loan sum without subtracting the interest for the five months you have not held it?
If the opening questions are confusing, it is because the story is complex. But it is real and unfolding at the 11th floor of Uganda House, the seat of the Milton Obote Foundation.
Background
MOF planned to expand Uganda House on Plot 8/10 Kampala Road to enhance its revenue. Mr Ignatius Barungi, the chairman of MOF Board of Governors, gives impressive figures to bring their dream to life.
The plan was to invest at least $11.5m in the project to increase the available rental space by 77 per cent. This was projected to increase rental income by a monumental 273 per cent, from $926,723 to $3,453,729 per year.
Having failed to secure a loan within Uganda, Mr Barungi says, they contacted Shelter Afrique, an intergovernmental lending agency in Nairobi, Kenya.
Armed with the project feasibility study by the reputable PKF firm and hope, they were confident to get the loan from Shelter Afrique.
Mr Barungi and Mr Terence Ayepa, MOF’s acting corporation secretary and general manager, are armed with their correspondences with Shelter Afrique and other relevant documents.
Shelter Afrique’s lending policy does not allow the company to singly finance such projects. Therefore MOF, which was borrowing through Uganda House Investments Ltd (UHIL), one of its companies, would have to contribute a substantial part of the required loan for co-financing.
Shelter Afrique would provide $9m and MOF/UHIL would contribute the balance of $2.5m. Of this $2.5m, MOF/UHIL, Mr Barungi says, intended to raise $1m from rental security deposits paid by tenants at Uganda House, while the remaining $1.5m was to be borrowed.
But because the $2.5m was supposed to be MOF/UHIL’s contribution to the project, Shelter Afrique would ideally not expect it to have been borrowed.
Indeed, MOF/UHIL did not inform Shelter Afrique that the Shs3.9b, which was at the time of borrowing equivalent to $1.5m, had been borrowed from Mr Mahmud Bharwani, an international businessman with interests in and outside Uganda.