Controversy surrounds govt shares in J&M hotel

PARLIAMENT|PUBLIC ACCOUNTS|COMMITEE|NSSF

KAMPALA - Thirteen years down the road, the battle to recover the Government's investment of sh2.1b from J&M Airport Road Hotel, Entebbe seems not about to end.

Legislators on Parliament's public accounts committee (PAC) have asked the finance ministry to explain why it has failed to recover taxpayers money invested in the project. The hotel was sold off to the National Social Security Fund (NSSF).

The query came after the Auditor General (AG) John Muwanga in a report to Parliament for the financial year ended June 2019 revealed that the hotel had been purchased by NSSF, but no sale proceeds were remitted to the Consolidated Fund on account of the Government's shareholding.

Muwanga also said although the statement of financial position indicated that the Government had an investment of sh2.1b in the Hotel, there was no share certificate in place to support the shareholding of the Government in the said company.

"In light of the above, I could not ascertain the basis of the continued recognition," Muwanga said.

Background

Three days prior to the Commonwealth Heads of Government Meeting (CHOGM) in 2007, the Government reportedly advanced sh2.1b to the proprietor of J&M Airport Road Hotel, Joseph Behakanira, to complete the construction of the hotel ahead of the meeting.

Parliament advised that if the hotel owner does not refund the money, the Government should acquire shares in the hotel.

In 2010, Behakanira appeared before PAC. He was to explain the circumstances under which he was given the money, three days before CHOGM for the construction of 200 rooms at his hotel.

Behakanira was supposed to give the Government shares in the hotel, but failed to do so.

He told the committee that the Government had not given all the money that had been agreed upon. Behakanira, however, died three days after appearing before the committee.

Accountant general Lawrence Ssemakula, however, yesterday informed New Vision that the matter had been forwarded to the Solicitor General for advice.

"The AG got it wrong. In any case we had no investment there. But we have written to the Solicitor General to advise us on what to do," he said.

NSSF speaks out

NSSF managing director Richard Byarugaba confirmed purchasing the property and land, but said it was not his responsibility to deduct the Government's alleged proceeds.

"We paid the proprietor all the money," he said.

Byarugaba said the Government asked NSSF to construct government offices.

The MPs also want the finance ministry to explain the Government's 20% shareholding in Munyonyo Commonwealth Limited.

The AG in the report informed Parliament that he could not confirm the value of the shares at the close of the year as these were not disclosed in the financial statements.

"There was also no evidence of oversight and supervision of the company by the finance ministry. Under the circumstances, there is a risk that the Government could be losing revenue from these investments," Muwanga said.

Finance ministry permanent secretary Keith Muhakanizi could not be reached for a comment, but the ministry's management response in the report, indicates that they pledged to enhance supervision and board representation as required.

Muwanga said he advised the ministry to ensure that share certificates are obtained and valued and that there is enhanced supervision through regularly attending board meetings.