Local National

MPs call for forensic audits and refund of Uganda Airlines cash

By Misairi Thembo Kahungu

The probe by the Parliamentary Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) might have gained widespread publicity when it came to the personal life of Uganda National Airlines Company Limited (UNACL) Chief Executive Officer Jennifer Bamuturaki.

For over two months, the legislators dug deep into the academic documents of Bamuturaki, something that dragged in the management of Makerere University where she said had graduated about 20 years ago and was reportedly undergoing a Master’s Degree program.

But the COSASE report that is ready to be presented to Parliament by Committee Chairperson Joel Ssenyonyi has unearthed a lot of irregularities in the operations of the recently revamped national flag carrier.

The COSASE probe stemmed from the queries in the Auditor General’s report of the financial year 2020/2021. It is within the year under review that Uganda Airlines returned to the skies after two decades to compete with the regional market giants Ethiopian Airlines and Kenya Airways.

Auditor General, John Muwanga in his report informed Parliament that there were a number of queries about the operations of the Airline. Most of the queries were on the unsupported payables, direct procurements, and failure to avail proper records of equipment purchased for the service of the aircrafts.  

The airline operates six jets which include four Bombardier CRJ 900 that fly to regional destinations and two Airbus A330-800 planes which are for long-haul flights.

Legislators who have recommended to Parliament to order for a number of forensic audits in order to reach the conclusion on a number of procurements that management of the Airline could not explain at the time of the probe.

Forensic audits needed

After observing that there were no supporting documents furnished with neither the Auditors nor the Committee in regard to the procurement of in-flight service equipment for Airbus aircrafts, the lawmakers want a deeper investigation through forensic audit.

The equipment worth $319226.86 (about Sh1.2b) was procured through a contracted service provider, M/s Ninesun Manufacturing Limited and management had informed the auditors that the consignment was delivered to DAS Air but there was no evidence that they were received, witnessed for quality and quantity and the handover to DAS Air stores.

“The unclear terms and conditions in the procurement supplies/contracts pose a risk that the items were not supplied and that they may go missing without accountability in case they were supplied due to lack of a tenancy agreement with DAS Air for storage of Uganda Airlines equipment.

The Auditor General should carry out a special audit into the purchase of the said equipment” reads part of the report seen by this newspaper.

The report which has been on the Order Paper since last week but it yet to be presented for debate and adoption, also recommends that management of the Airline needs to enter a formal tenancy agreement with DAS Air which does ground handling at Entebbe International Airport.

Another forensic audit the MPs want contacted by the Office of the Auditor General is about the procurement of critical spare parts for Business Class seats for A330-800 Neo aircraft at $146230.72 (about Sh555.7m) but there was no evidence provided to the Auditors by management.

While appearing before the COSASE, UNACL Management team led by Bamuturaki responded that the purchase of the critical spare parts was already pre-determined at the contract signing between the Airline and Airbus and were delivered through a company called Stelia.

The lawmakers also want another forensic audit to be conducted on the 20 procurements that were found to have been done without the evidence of contract management files.

The Auditor General queried why the 20 procurements he sampled were done without appointment of contract managers. Some of these procurements were also made in different currencies including Uganda Shillings, Kenya Shillings, US dollars and Euros.

The report notes that the management of the Airline during the prove “acknowledged the anomaly” which is contrary to Regulation 52(2) of the Procurement and Disposal of Public Assets (PPDA) contracts regulations.

“Failure to appoint a contract manager and absence of contracts management files implies that this particular procurement is shrouded in mystery. It is therefore difficult to assess the performance of the contract or whether there was value for money.

The Accounting Officer should be held liable for failure to follow the law on procurement” adds the report.

Having observed that there have been cases of void tickets being reused for travel abroad Uganda Airlines aircrafts, the MPs also want another forensic audit with the intention of prosecuting culpable officers and forcing them to return the lost funds.

It was observed that there was an internal syndicate among staff to defraud the Airline by not closing tickets that have already been flown on so that passengers can use them again. Tickets worth Sh982m were voided and the money is missing in the reported revenues.

Call for refunds

For failure to explain the queries before the Committee, the Accounting Officer, Bamuturaki and other managers have not been managed by the recommendations of the COSASE which wants the House to refund the money spent on different outputs that lacked documentation at the time of the audit and the probe in Parliament.

The MPs want Bamuturaki to refund with immediate effect Sh50m she received for trips to destinations where the Airline flies but only visited two out of about seven. When she appeared before the Committee, she could not verbally explain why she did not return the money to the company treasury and also never delivered a written explanation as requested.

“The committee observes that no refund has been made to-date for the funds allocated for the destinations that the CEO did not visit. It is criminal for a public official to receive funds for a certain activity and the activity doesn’t happen, and the funds don’t get refunded” the Committee observed.

Bamuturaki is also held liable for causing a financial loss of Sh156m that was spent on online bloggers hired to do public relations stories for the Airline.

The bloggers under the Independent Online Journalists Association (INDOJA) had been hired at a monthly consideration of Sh13m. The contract was signed between Bamuturaki while serving as a Commercial Manager and Andrew Irumba the head of the online publication, Spy-Uganda on December 24, 2021.

This, the Committee observed, was done without the knowledge of the Corporation Secretary.

The CEO’s troubles in this case stem from her sanctioning of payment of Sh117m upfront to the online bloggers for the period of April to December 2021 yet the contract was signed in December 2021.

Ssenyonyi’s COSASE observed that the responsibility of marketing the Airline for the Public Relations Manager, Shakila Rahim Lamar who distanced herself from participating in the procurement of the online bloggers.

“Jennifer Bamuturaki should be held responsible for this irregular contract, and she should refund the Sh156m that was spent on the online bloggers” it is recommended.

Cornwel Muleya the former CEO who is battling corruption charges has also not been left off the hook by COSASE which wants him to be held personally liable for sanctioning procurements without contracts committee approval.

Muleya, a Zambian national on December 14, 2020 sanctioned a Purchase Order number 0021 that was made to Collins Aerospace for the supply of in-flight equipment at $25694 without approval of the contracts committee.

It is understood that the Inspectorate of Government is also investigating the direct procurement of a vehicle for the South Sudan station at Sh103m. The MPs who rejected the explanation of the management team about the direct procurement have argued the IGG to expedite the investigations so that those involved are punished and also made to make good of the loss that might have been made in fluctuating the price of the car.

Financial losses

The national carrier has been in the news for posting a financial loss of about Sh500m in its first year of operations. The management has attributed the losses by the young Airline to the advance effects of the Covid-19 pandemic.

But the MPs said it is irregular to blame the initial losses to Covid-19 but also lack of functional management systems at the inception of the company. In order to avoid losses going forward, the Committee has recommended the establishment of strong partnerships, opening more routes, review of the business strategies, establishing performance indicators and targets to staff, and, carrying out cost reduction strategies.

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