By Xinhua

JUBA – South Sudan and Uganda have agreed on mechanisms to boost trade between the two countries through enhancing infrastructure development and cross-border trade electricity transmission.

South Sudan’s Minister for Energy and Dams, Dhieu Mathok, said the government concluded a two-day discussion with their Ugandan counterparts and the two countries have to cooperate in cross-border electrification and road connectivity.

He said Uganda has agreed to supply electricity to the South Sudan border towns of Nimule and Kaya, adding that a Memorandum of Understanding (MOU) has been developed and it will be signed after consultations with leaders of both countries.

“We have discussed the MOU and finalised the MOU, which is awaiting approval. Hopefully, we will be able to finish what we agreed by the second week of August,” Matok said while speaking on state-owned radio on Thursday,.

Simon D’Ujanga, Uganda’s State Minister for Energy, said his country will extend 400KW of power transmission line into South Sudan to ease trade.

The two countries also agreed to undertake road construction projects in the border town of Kaya aimed at opening up new trade corridor between Uganda, the Democratic Republic of Congo and South Sudan.

“We want our goods to move freely on the roads. So we have agreed to discuss how to work together so that we can give opportunity to the people of the two countries to enjoy the resources that we have,” said Rebecca Joshua, South Sudan’s Minister of Roads and Bridges.

Monica Azuba Ntege, Uganda’s Minister of Works and Transport said they agreed on technical cooperation on cross-border electrification and transport will promote trade and development through improved connectivity.

“This will help very much in integrating our countries and at the same time in the development of the areas in connectivity, tourism, trade and access to market,” Ntege said.

By Yasiin Mugerwa

Beijing — A consortium of eight Chinese enterprises yesterday signed agreements with Tian Tang Group to invest in Mbale Industrial Park, eastern Uganda.

Tian Tang Group was given the mandate to develop 619 acres of the industrial park in order to speed up job creation in the country.

The park, with a total investment of $600m (Shs2.2 trillion), is expected to house 30 enterprises and create 12,000 jobs for Ugandans.

“These agreements are an indication that we mean business and we are committed to this project,” Tian Tang Group chairman Paul Zhang, who is also the proprietor of Nanjing Hotel in Kampala said.

He added: “We would like to assure the government of Uganda that as a company, we are going to invest in the development of Tangshan Mbale Industrial Park and we will also attract investors to create the jobs for the people of Uganda.”

The eight companies are going to invest in; fruit processing and beverage production, rice processing and production, sanitation supplies manufacturing, wood processing and furniture manufacturing, glass manufacturing, household appliances manufacturing and solar pumping system, among others.

The investors led by Tian Tang Group and Sinoma, a company that is going to establish a cement factory also in Mbale are expected to visit the country in August on a fact-finding mission.

Tian Tang Group is working with the Finance ministry to bring investors to Uganda.

The signing of the agreements in Tangshan City, a largely industrial city on the eastern coast of China, was at the climax of the First Tangshan Mbale Industrial Park Investment Promotion Conference that was witnessed by more than 200 Chinese entrepreneurs and officials.

Tangshan, home to China’s five pillar industries, namely fine iron and steel, basic energy, high quality building materials, equipment manufacturing and chemical industry is 154km from the Chinese capital, Beijing.

Unlike other companies, Daily Monitor understands that CCCC Tianjin Dredging Co. Ltd, a wholly-owned subsidiary of China Communications Construction Company (CCCC) has signed a cooperation agreement with Tian Tang Group to jointly develop Tangshan Mbale Industrial Park.

The ceremony was also attended by State minister for Privatisation and Investment Evelyn Anite, State minister for Trade Micheal Werikhe, the area mayor Li Qinfeng and former Ambassador to Uganda Zhao Yali, among others. The mayor later held bilateral talks with Ms Anite.

Talking about the agreements, Mr Li promised to market Uganda’s investment opportunities under Tian Tang Group’s initiatives in Uganda framed as “the belt and road”.

He said the investment agreement with the eight enterprises will actively guide competitive industrial capacity to invest in Uganda and help the Ugandan government to create jobs for the people.

“Development is the permanent theme while cooperation is the tide of the area,” Mr Qinfeng said, adding: “The agreement provides a platform for mutual understanding and bilateral exchanges for common development. We wish that Tangshan Mbale Industrial Park and enterprises from Tangshan jointly create a brilliant future for mutual benefit.”

Speaking at the Tangshan Mbale Industrial Park conference, Ms Anite and her counterpart Mr Werikhe wooed Chinese investors and highlighted the country’s investment opportunities.

“The people of Uganda cannot wait to receive more and more investors from China,” Ms Anite said,

She added: “We appreciate your willingness to be part of the drive to transform the Ugandan economy and create the employment opportunities that are badly needed in our country.”

While Uganda is a very rich and naturally endowed country with abundant natural resources, Ms Anite said, less has been done to exploit the available opportunities. She reiterated that Uganda presents a huge business potential for investors.

This potential exists in infrastructure (especially in energy, roads and railway, ICT and oil and gas).

“We are here to indicate to you some of the potential areas through which you can intervene and reverse this situation so that as a country we are able to enjoy the benefits from these natural resources that continue to remain below the surface,” she said.

She listed the key natural resources that need urgent exploitation as oil & gas, limestone, gold, sand, water resources, phosphate, copper, iron ore; investment in Standard Gauge Railway and Uganda Airlines projects.

On his part, Mr Werikhe he asked Chinese investors to take advantage of the new agreements to invest in agro-processing businesses and help Ugandan government create jobs.

“We have several varieties of bananas, fruits, good soils, good political and stable macro-economic environment and the market is available. We also provide land and other incentives to investors who come to do business in our country across all sectors of our economy,” he said.

Background

On July 7, 2017, the ministry of Finance signed an agreement with Tian Tang Group for development of an industrial park and Free Zone in Mbale, eastern Uganda. The ministry promised government support and asked Tian Tang Group and other Chinese investors who signed the investment agreement to use the opportunity to promote value addition in Uganda and create jobs for the people of Uganda.

By By Alex Malanga

The government has unveiled measures aimed at preventing the total collapse of privatised factories.

A 19-day ultimatum was issued yesterday to investors running non-performing privatised firms to kick-start production or risk losing the factories.

Other measures announced by Industry, Trade and Investment minister Charles Mwijage include controlling sub-standard and counterfeit products and curbing under-valuation and under-declaration of goods.

The two measures are expected to enhance fair competition in the market.

Mr Mwijage said a team comprising officials from his ministry and the Home Affairs and Finance and Planning ministries had been formed to ensure the initiative was implemented as planned.

The government admitted making mistakes in the past, noting, however, that everything was now under control and that Tanzania was on track as far as the industrialisation goal was concerned.

Some of the mistakes made in the past include failure to make follow-ups on privatised companies and protect local industries from unfair business practices.

An assistant director for investment and research in the Ministry of Industry, Trade and Investment, Ms Elli Pallangyo, said out of 156 industries which were privatised between 1992 and 2004, a total of 54 were inoperative.

Mr Mwijage said the government would repossess all idle privatised factories after next month’s deadline expires.

“We will have to repossess former state-owned industries sold to private investors who have failed to run them after August 15, this year,” he told reporters.

“The government sold these factories to private investors on the understanding that they develop them. We won’t tolerate those who would not have abided by what we agreed.”

Mr Mwijage said dormant factories would be repossessed and handed over to serious investors, adding that leaving them idle would be contrary to the government’s industrialisation agenda.

Since the Fifth Phase government took over in November 2015, industries valued at Sh5.2 trillion had been set up.

A total of 224 manufacturing projects valued at $822.2 million were registered by the Tanzania Investment Centre (TIC) from November 2015 to March 2017. The investments created 19,935 jobs.

A total of 128 projects worth $1436.9 million and employing 13,120 people were registered by the Business Registration and Licensing Agency (Brela) .

Forty-one projects were registered under the External Processing Zone Authority (EPZA).

Mr Mwijage said three teams had been formed to make follow-ups on privatised industries, with the first one consisting of experts and regional commissioners.

The second team comprises experts, regional commissioners and permanent secretaries from his ministry and the Home Affairs and Finance and Planning dockets.

The third team comprises experts, ministers and permanent secretaries from the three ministries.

Regional commissioners, Mr Mwijage said, would visit all privatised factories to establish whether they were operating or not.

“Feedback will then be forwarded to me for action after the August 15 deadline,” he said.

Mr Mwijage urged those who had failed to run privatised factories to hand them back voluntarily instead of waiting for the government to forcibly repossess them.

“We harbour no malice. We only want to ensure that all dormant factories resume production.”

The government, Mr Mwijage said, was committed to generating more foreign currency and jobs for the youth through industries, adding that 65 per cent of Tanzanian youth aged up to 35 were unemployed.

In November 2015, the government summoned investors who had bought public farms and factories in a new move to review failed privatisation.

The government said in a statement that some of the investors had not developed the privatised firms as agreed, lacked investment plans or changed them without permission.

President John Magufuli yesterday said investors who had bought former state-owned manufacturing firms should surrender them to the government if they were unable to run them profitably.

“I repeat my call to those who have failed to run privatised factories, including the CCM MP here in Morogoro, to return them to the government,” Dr Magufuli said in Morogoro as he was returning to Dar es Salaam from a tour of Kagera, Kigoma, Tabora and Singida regions.

“It is time we handed the factories over to those who can run them effectively and employ our people,” he said.

ANALYSISBy Murray Hunter and Alison Tilley

It also has a sinister provision that will make it easier for State Security to undermine privacy and freedom

This is the second part of a two-part series on the problems with the Cybercrimes and Cybersecurity Bill. Parliament has given the public until 10 August to comment on the Bill. Read Part One Cybercrimes Bill threatens our freedom if you missed it.

The government says that the Cybercrimes and Cybersecurity Bill is needed to help fight cybercrime and to make South Africa’s cyberspace more secure against attempted crimes. But some of the provisions it puts in place could make us less secure.

This is important, because we all have the right to cybersecurity. When we use computers or phones, and send messages on WhatsApp or Facebook, or browse websites, we need protection for our right to privacy, our right to freedom of expression and our right to access information.

But sometimes when it comes to your cybersecurity, the government agency is not just the protector – but also the threat.

Does the Bill protect our information?

The Bill tries to protect us from people who want unauthorised access to our devices. Section 2 creates a new crime in this regard, which is intended to criminalise people who get access to your data without your permission.

Sound good, right? Unfortunately not, because this provision is so broad that it criminalises people who may mishandle other people’s personal data through carelessness, not through deliberate hacking attempts.

South Africa already has a pretty good, pretty new data protection law – the Protection of Personal Information Act, which exists to protect your data and make sure companies and individuals who handle other people’s personal data don’t misuse that information or violate their privacy. But POPI, which was signed in 2015, has not yet been fully rolled out.

The new Cybercrimes Bill will tread all over POPI’s legal territory. The state should put resources into making POPI work. Instead it is creating a law that overlaps with and undermines our new data protection law. This makes us less secure.

Does it secure our devices?

The Bill tries to make sure that people who have the technology to break into our devices are stopped. Section 4 of the Bill, titled Unlawful acts in respect of software or hardware tool, makes it a crime to have any software that is used to overcome the security measures of a person’s device.

Sounds good, right? Unfortunately not, because this misunderstands the nature of providing internet security. This provision is the same as making it illegal to have a set of lockpicks or a crowbar. The people who test the security of our systems do so by trying to break those systems from the outside, using software that could now be criminalised by this Bill. Many times, they do so without the authorisation of the owner of that network or software, because it’s usually a company or government institution that thinks it knows better. This kind of security testing has made us safer, and prevented many acts of cybercrime. Because this Bill can’t tell the difference between actual cybercriminals and security testers, it will discourage people from testing internet security systems, and ultimately make the internet less safe.

Does it secure our networks?

What the Cybercrimes Bill doesn’t do, and can’t do, is develop the expertise inside the police to detect and solve cybercrimes, and the expertise in the state to create better defenses to cybercrime.

Nonetheless, the legislation tries to ensure that the private sector secures its networks, and that where it does not, the state can step in. One way the Bill tries to do this is by giving State Security structures the power to declare any device, network, database or other infrastructure a “critical information infrastructure” and put legal obligations on these entities (including private companies) to meet government security standards and submit to security audits.

Once an entity has been declared “critical information infrastructure”, the State Security Minister can issue directives on the classification of data held by that entity, the storing and archiving of that data, physical and technical security standards, and “any other relevant matter which is necessary or expedient in order to promote cybersecurity”.

There’s a lot of devil in this detail. Among other things, it could mean that information held by the company that connects you to the internet could now become classified as a national security secret. The “any other matter” provision could mask serious misdeeds that undermine privacy and internet freedom: most notably, the risk that State Security could grant itself backdoor access to private networks or give itself new surveillance and monitoring powers.

One red flag: this provision bears some resemblance to the ‘critical information infrastructure’ policy in article 31 of China’s new cybercrimes law.

Does it protect against surveillance abuses?

Right2Know has shown the widespread abuse of communications surveillance in South Africa: the state is spying on its own citizens and failing to respect people’s privacy. Our main surveillance law, RICA, is meant to ensure that state surveillance operations only happen with the approval of a specially appointed judge. But Right2Know has criticised RICA for lacking transparency, having faulty oversight, requiring the storage of everyone’s communications metadata for years, and, most importantly, enabling a number of very dodgy surveillance operations that targeted journalists and other individuals.

The Cybercrimes Bill tries to do one thing that makes us safer from surveillance abuses: it closes a loophole in RICA that has allowed magistrates to authorise interceptions of thousands of people’s cell phone records, bypassing the specially appointed RICA judge. This form of surveillance happens many thousands of times a year. The Cybercrimes Bill tries to close the loophole to ensure the protections in RICA, however weak, apply to all the information that your network provider has about you, including who you called and messaged as well as what you said in the call or message. But because tens of thousands of surveillance warrants are issued by magistrates every year, compared to just a few hundred a year by the RICA judge, the Bill will simply result in swamping the RICA judge and undermining his or her oversight.

The Cybercrimes Bill fails to take other meaningful steps to fix the loopholes in RICA and other harmful provisions that have enabled the state to spy on its citizens and use surveillance as a tool for repression. Until it does that – it does not protect us against surveillance abuses.

No public interest defence

There are some “cybercrimes” that make society better: the leaking of secret government information that exposes human rights abuses, or the leaking of the Panama Papers that exposed money laundering and tax evasion, are clearly in the public interest. Any cybercrimes law should also have a public interest defence, to protect those who breach systems in order to serve the public, expose wrongdoing, or challenge abuse of power.

South Africa needs policies, laws and practice that actively promote cybersecurity, protecting ordinary internet users against both private cybercriminals and state-sponsored surveillance programmes. This Bill may have some of the right intentions, but it doesn’t get us there.

Hunter is with Right2Know. Tilley is with the Open Democracy Advice Centre.

By Kayode Tokede

Lagos — The nation’s foreign reserves reached U.S.$30.5 billion last week as a result of increased global oil prices, checks by LEADERSHIP on the Central Bank of Nigeria’s website have revealed.

Data from Organization of Petroleum Exporting Countries (OPEC) revealed that basket of 14 crudes stood at $47.48 per barrel last week from $45.21 a barrel it opened in July.

Experts said world economic growth in 2018 is forecast at 3.4 per cent, the same level of growth forecast for 2017.

“This reflects a continued strengthening of the global recovery which is becoming more balanced, with stability in the oil market remaining a key determinant. Global growth in 2017 is expected to be around 1.27 million barrel per day, broadly unchanged from previous month, average 96.4 million barrel per day”, they said.

According to report, Nigeria’s crude oil production had been stuck on 1.8 million barrel per day and has now recorded an additional 200,000 barrels per day.

In June, the foreign reserves dropped by $41 million or 0.13 per cent to $30.29 billion when it opened in June to close at $30.33 billion.

Analysts had attributed the steady fall in the foreign reserves to CBN’s aggressive interventions in the foreign exchange market aimed at boosting naira and stabilizing the exchange rate.

The CBN in April opened a new special foreign exchange window dedicated to investors, exporters and end users.

According to analysts, external reserves of $30.5 billion will cover imports for a period of over six months.

In a circular entitled, ‘Establishment of Investors and Exporters Window’, the CBN claimed this new window was introduced to boost liquidity in the foreign exchange market and ensure timely execution and settlement of eligible transactions.

In its economic report for May, CBN said the external sector weakened in the month under review due to the decline in crude oil prices from an average of $52.90 per barrel in April 2017 to $51.04 per barrel.

Increased shale oil production in the United States and supply by non-members of the OPEC both contributed to the fall in crude oil prices.

The report said, “Consequently, foreign exchange inflow through the CBN, at $2.26 billion, declined by 21.4 per cent below the level in the preceding month, but was 27 per cent above the level in the corresponding period of 2016. The decline relative to the level in the preceding month was driven by fall in both oil and non-oil proceeds.

“Overall, the net outflow through the Bank in the month of May 2017 was $0.76 billion, in contrast to a net inflow of $0.71 billion and $0.09 billion recorded in the preceding month and the corresponding period of 2016, respectively”.

It noted that aggregate foreign exchange inflow into the economy amounted to $5.78 billion, representing five per cent decline below the level in the preceding month, but showed an increase of 30.8 per cent above the level in the corresponding period of 2016.

The report further noted: “The development relative to the preceding month reflected the fall in inflow through the Bank. Inflow through autonomous sources and the Bank were $3.52 billion and $2.26 billion and, accounted for 60.9 per cent and 39.1 per cent of the total, respectively.

“Non-oil sector inflow, at $1.39 billion (23.1 per cent of the total), fell by 30.2 per cent, below the level in the preceding month. Autonomous inflow rose by 9.8 per cent, above the level in April 2017.

“Aggregate foreign exchange outflow from the economy, at $3.18 billion, rose by 38.8 per cent and 70.4 per cent, above the levels in the preceding month and the corresponding month of 2016, respectively.

“Thus, foreign exchange flows through the economy, resulted in a net inflow of $2.60 billion in the review month, compared with $3.79 billion and $2.55 billion, in April 2017 and the corresponding month of 2016, respectively,” it added.

ANALYSISBy Zachary Donnenfeld

The government of Ethiopia is currently constructing the Grand Ethiopian Renaissance Dam (GERD). Once complete, the GERD will be the largest hydropower facility in Africa (about 6 000 MW) – nearly triple the country’s current electricity generation capacity – and represent a potential economic windfall for the government.

The benefits for Ethiopia and for many electricity-importing countries in East Africa are clear. However the implications for downstream countries aren’t all positive – and need to be better understood.

In 2016, about 30% of Ethiopia’s population had access to electricity and more than 90% of households continued to rely on traditional fuels for cooking. Traditional fuels can cause respiratory infections, and according to the World Health Organisation, acute lower respiratory infection is the leading cause of death in Ethiopia.

So the benefits of better access to electricity in Ethiopia are clear. But creating a larger supply doesn’t mean demand will automatically follow. In Ethiopia, where 70% of the population lives in rural areas and relies on subsistence agriculture, the government must also invest in developing human capital to increase incomes and stimulate the demand for services. The standard of living needs to improve before Ethiopians can consume additional electricity – unless it’s completely subsidised by the government.

The government may also anticipate a boost to revenues through electricity exports from the dam. Several power purchase agreements have already been signed with neighbouring countries, including Djibouti, Kenya, Rwanda, Sudan and Tanzania.

There is a need for more rapid progress along various dimensions of human development in Ethiopia, as highlighted in a recent ISS report produced for the United States Agency for International Development. But there are concerns about how this dam will affect downstream states, particularly Sudan and Egypt.

Although Sudan was initially opposed to the dam’s construction, the country has recently warmed to the idea. This could be because Sudan has agreed to purchase electricity from the dam, while the two countries have also agreed to collaborate on a ‘free economic zone’. While bilateralism has proved effective with Sudan, multilateral negotiations haven’t been particularly fruitful.

Signed in 2015, the Khartoum Agreement ostensibly mapped out a way forward, but implementation of the deal hasn’t been easy, and cracks are starting to show. In May this year, the Middle East Monitor concluded that Egypt, Ethiopia and Sudan had just finished their 14th round of unsuccessful discussions about how to manage the Nile River.

At that 2015 meeting, officials from the three countries agreed to proceed with an impact assessment that was to be completed within 15 months. After 17 months, the report has yet to be publicly released. There is still no independent feasibility study, cost-benefit analysis or environmental impact assessment.

This is worrying since Ethiopia could begin filling the dam at any time. The Ethiopian government expects it will take roughly five or six years to fill the GERD reservoir. However, Diaa Al-Din Al-Qousi from Egypt’s Ministry of Water Resources and Irrigation believes that a period of 12 to 18 years is needed to guarantee water security for Egypt. This is quite a discrepancy.

A recent report from the Geological Society of America said a period of between five and 15 years seemed reasonable, apparently giving credibility to both sides. But the same report noted that the ‘Nile’s fresh water flow to Egypt may be cut by as much as 25%, with a loss of a third of the electricity generated by the Aswan High Dam’, which would be bad news for Egyptians.

Also, many Egyptian officials fear that the increased evaporation from the sheer size of the dam could affect water security in the country – already one of the most water-stressed in the world.

Ethiopia maintains that the GERD project has been conducted with adequate transparency and involvement from the relevant stakeholders. It also highlights that Egypt hasn’t signed the Cooperative Framework Agreement (CFA) of the Nile Basin States, whereas Ethiopia has.

Since Ethiopia announced it would go ahead with construction of the dam in 2011, Cairo has voiced disapproval. At various stages, Egypt has demanded that Ethiopia cease construction, threatened action at the United Nations Security Council, and claimed that it is protected by a 1959 treaty, even though Ethiopia didn’t sign the treaty. The treaty essentially divides the river between Sudan and Egypt, leaving nothing for Ethiopia, where more than 60% of the Nile’s water originates.

With its national livelihood depending on the Nile, it’s difficult to anticipate what Egypt’s reaction might be should Ethiopia proceed with its plan to fill the dam. Egyptian Foreign Ministry spokesman Badr Abdelatty recently told Reuters that Egypt had ‘no other resources … we will not allow our national interests, our national security to be endangered’. This brings back memories of former president Mohamed Morsi’s ominous 2013 speech, in which he declared that if the Nile ‘loses one drop, our blood is the alternative’.

Analysts at the Texas-based consulting group Stratfor have concluded that Egypt’s reaction will, in part, be determined by its political leadership. But they also stress that ‘whatever its political inclination, a large-scale reduction in water from the Nile would be intolerable to any Egyptian government’.

Ethiopia has a right to exploit its own natural resources to support much-needed human development projects, but can it afford to compromise its relationship with downstream states, particularly Egypt? The government of Ethiopia has done well to finance and promote this project. The question now is how best to manage the possible implications with downstream states.

TANZANIA Revenue Authority has issued the Acacia Mining notice to pay the government close to 425.28tri/- (190 billion US dollars) being unpaid taxes, penalties and accrued interest from 17 years of operation in Tanzania, the mining company announced yesterday.

It said in a statement it has been sent a tax bill from the Tanzania Revenue Authority totalling around 190 billion US dollars for unpaid tax and penalties from its Bulyanhulu and Buzwagi mines in the country, which the London-listed company disputes.

The TRA claims a total of approximately 40 billion US dollars of alleged unpaid taxes and approximately 150 billion US dollars of penalties and interest owed, the mining company said.

It said however it disputes the assessments issued in respect of allegations of under-declared export revenue following findings of the First Presidential Committee announced on 24 May 2017 and the Second Presidential Committee announced on 12 June 2017.

“As we have stated previously, Acacia refutes each set of findings and re-iterates that it has fully declared all revenues…Acacia disputes these assessments. The Company is considering all of its options and rights and will provide a further update in due course.”

The Tanzania Revenue Authority (TRA) spokesperson, Richard Kayombo declined to comment on the reports saying they do not make public tax payers affairs.

“Tax payer affairs are not made public. We communicate directly with them,” he told the ‘Daily News’ over the phone.

Acacia Mining, the largest gold mining in Tanzania is locked in a bitter dispute with the government over allegations of undervaluation of their exports of mineral exports, tax evasion and operating illegally.

Acacia has refuted the findings and re-iterates that it has fully declared all revenues “and is still yet to receive copies of the reports issued by either of the presidential committees.

” Both subsidiaries, BGML and PML, have already referred these allegations to international arbitration. Shares in the company, at the London stock market are declining and according to Financial Times, the mining company dropped another 10 per cent on Monday after a series of analyst downgrades.

Acacia Mining owns and operates Tanzania’s three major mines — Bulyanhulu, Buzwagi and North Mara. Tanzania is Africa’s third-largest gold producer after South Africa, Ghana and Mali.

ANALYSISBy Ivan Okuda

Kampala — Uganda’s central bank is on trial. Real estate magnet Sudhir Ruparelia is on trial. Meera Investments Limited is on trial. The Judiciary, too, is on trial.

When Bank of Uganda (BoU) took over, put under receivership and eventually sold Crane Bank Limited, until recently billed one of Uganda’s big three banks, it would have been farfetched to envision a critical legal battle out of the fog of uncertainty that followed the sudden twist of events for one of East Africa’s moneyed businessmen, once tiered by Forbes magazine as East Africa’s richest man at $1.1 billion.

And yet, sure as night followed day, BoU managers and Mr Ruparelia, who have since October 2016 when the former took over the bank, have been in back and forth meetings with President Museveni chairing some.

At the heart of those meetings at least on the surface, was a win-win situation for both the central bank and the businessman.

The more the two sides met, the foggier the solution engineering got. The last meeting happened a fortnight ago at State House Entebbe.

Days later, local media was awash with headlines reporting a first in Uganda. The BoU had filed a case in the commercial division of the High Court against Mr Ruparelia and his investment arm Meera Investments Limited.

Case file HCCS No. 493 of 2017 (Crane Bank Limited (In Receivership versus Sudhir Ruparellia and Meera Investments Limited) is unique. First, it is the culmination of stalled talks between government of Uganda and Mr Ruparelia.

Uganda, like any other Commonwealth countries, has an adversarial court system. People sue after failing to agree. At times out of anger. Sometimes to blackmail. You either win or lose.

There is no middle ground as each side desperately makes moves to outsmart the other. For a businessman who had grown in his trade, almost attaining larger than life status, the case represents frosty relations between the businessman and the Kampala establishment, erstwhile two darlings.

On Thursday July 13, 2017, BoU, as Receiver of Crane Bank Limited and regulator of the banking sector announced it had sanctioned the filing of a suit against Ruparelia and Meera to recoup funds that, “were fraudulently extracted from, as well as losses that were caused to Crane Bank.

The suit seeks to recover a total of $93.8 million and Shs60.3 billion, together with the Freehold titles to Crane Bank’s branches, general damages, interest and costs”.

In this suit, the BoU instructed MMAKS Advocates and AF Mpanga Advocates (Bowmans Uganda) to represent Crane Bank.

Court filing fees of Shs398.2 million were assessed and paid to Uganda Revenue Authority.

It is good business for the lawyers but a trying moment for BoU which now finds itself embroiled in suits that punch holes in its own regulation.

This week, the central bank was dragged to court by a citizen, Mr Derrick Nsereko, who wants court to declare BoU officials culpable of statutory negligence and failure to comply with the Financial Institutions Act, claiming, “the central bank acted in bad faith, negligently and in breach of duties in giving the bank a clean bill of health”.

Bank of Uganda, in 1995, licensed Crane Bank to carry out business of a financial institution, only to shut its operations and sell it to dfcu in 2016.

A day before that National Bank of Commerce (NBC), owned by businesspersons, among others, former premier Amama Mbabazi, current prime minister Ruhakana Rugunda, retired Justice of the Supreme Court George Kanyeihamba and Amos Nzeyi, wrote to the deputy registrar, commercial division of the High Court requesting for the Sudhir file. They were given a copy of the voluminous file the next day and on Friday sued Mr Ruparelia and BoU.

In a way, the hunter is not only hunted, but also haunted by its past actions.

“Our clients have learnt that BoU, which revoked the NBC banking licence and sold its assets to Crane Bank on September 27, 2012, is now accusing its proprietors of engaging in serious bank fraud committed before and after the sale of NBC. Our clients believe that the rush take over, winding up, liquidation, closure and sale of NBC to Crane Bank without following the due process of law, is a continuation of and/or part of the fraud orchestrated by Crane Bank and its proprietor, which is the subject of the suit,” NBC lawyers Fred Muwema, Severino Twinobusingye and John Mary Mugisha said in their letter on Monday July 17, 2017.

In November 2016, after Crane Bank had been taken over by BoU, NBC shareholders protested against it being sold to dfcu, pointing to a petition they had filed in the Constitutional Court challenging the takeover of their bank and hand over to Crane Bank.

BoU ignored their protests and proceeded to handover Crane Bank to dfcu. They argue Mr Ruparelia and BoU are culpable for the loss and damage caused to NBC.

The closure of NBC is itself clothed in controversy and goes deep into the shadowy politics in Kampala. One of the reasons the case has not been cause listed, according to sources in the Judiciary, is what in Uganda is commonly called, “orders from above”.

The invisible above, whoever they are and whatever their interests, is not interested in seeing the matter disposed, sources say.

So this is a test for the courts. To hear or not to hear the NBC shareholders who for the last five years have been denied audience before court?

And yet, to settle the issues NBC raises now would be to once and for all settle their earlier plaint that, among others, challenged BoU’s closure, winding up and liquidation of the bank as well as Crane Bank’s takeover of the assets.

There are political calculations in there as Mr Museveni and his erstwhile political soul mate Mbabazi are yet to remove the barrier to an over 40 year comradeship fractured by the once all powerful minister’s attempt to pull the rug from under his commander in chief’s feet when he threw his hat in the ring in the 2016 general election.

He garnered 1.3 per cent of the total votes cast, lost a petition in the Supreme Court and has since retreated to his expansive Mukono farm, few kilometres from the capital and private work, often time at Crested Towers attending to private business, only watching from one of Kampala’s tallest buildings, the goings on in the country’s politics from his glass window before strolling back to his palatial Kololo home to imbibe what appears the waters of early retirement.

Some analysts argue NBC’s closure was tied to neutralising a possible financial muscle for Mbabazi’s presidency project and the case stalling is more political than case backlog, the standard explanation from the Judiciary.

The commercial division of the High Court, a fairly more efficient division, now has to deal with that reality too.

At the centre of this, however, is BoU. Unless Mr Ruparelia opts for an out of court settlement or the matter is resolved at mediation, now a key component and requirement of litigation as part of the Judiciary’s alternative dispute resolution model of settling civil disputes, the matter going to full blast trial is worth the bated breath.

“Much as Sudhir will be on trial, the Central Bank too will be on trial. It will be interesting to watch the defence Sudhir comes with and the witnesses that will testify,” veteran lawyer Peter Walubiri told Sunday Monitor in an interview on Thursday.

The Sudhir-BoU legal showdown is akin to, in more ways than one, the situation the Central Bank of Kenya found itself in late last year.

The Daily Nation reported that in December 2016 a complaint to the ethics and anti-corruption agency calling for investigation of Central Bank of Kenya governor Patrick Njoroge over alleged abuse of office filed by a law firm owned by Ahmednasir Abdullahi, acting for his Nairobi Law Monthly publication, raised questions about decisions the governor took on Imperial, Dubai and Chase banks, which had been placed under receivership.

By that time there were at least seven cases in court cross filed between Imperial Bank directors, shareholders, depositors against either the CBK, the governor, KDIC and the Capital Markets Authority. Out of this, only two rulings have been made with CBK appealing on one.

But Uganda is not Kenya. Sometimes, or just perhaps often time, scandals such as this can be well managed, if not choreographed with the controllers of the country’s political direction sitting back, watching the moves in the courts of law with a remote and changing channels to suit their needs.

When the multibillion shilling Office of the Prime Minister and Ministry of Public Service corruption scandals erupted a few years ago, heads rolled. But whose head rolled and how far appeared to be determined by forces beyond the court process.

Convicting the culprits who have since appealed, Justice Lawrence Gidudu asserted the fraud to steal Shs88.2 billion was hatched in the Public Service, smoothened in Finance ministry and executed in Cairo Bank where the money was finally paid out to ghost pensioners.

In either case, there were sacred cows on who the arm of the law’s reach was limited by politics. Large scale scandals like these are also a delicate meeting point between the law and politics.

How that balance plays out in the Sudhir-BoU case and the subsequent suits therein, will be an interesting space to watch.

What is true, however, is that the Judiciary in Uganda also finds itself on trial as it did in 2006 when four time presidential, Dr candidate Kizza Besigye challenged Mr Museveni’s election and nearly got an annulment by a difference of one justice.

Retired Justice Kanyeihamba has since recounted the delicate nature of that case and how the chips were down.

The direction the case takes could largely be shaped by the configuration of politics and the power play. How for instance, if BoU’s allegations are anything to go by, was the bank able to run for years with that rot? Add to that the National Social Security Fund (NSSF) too coming out at the last hour to bemoan how the bank was not complying with its statutory obligations to remit workers’ savings in the excess of Shs39 billion.

A senior manager at NSSF told this writer in an interview: “Sudhir was untouchable then and we couldn’t do much.” To be beyond the reach of such institutions is to be at proximity with the powers that be. What happened to that relation?

Mr Walubiri says: “I think it is important in the sense that it will show whether the Central Bank performed its duties well, and whether it can be trusted if there is a default to recover money because they authorised an audit when it went into receivership so this will be a test of how thorough the audit was. It is a very important case that will test if the standards set can be implemented.”

He adds: “One would be interested to know whether the bank was doing a good job at supervision, how did this take place without Central Bank’s knowledge? The audited reports the Central Bank apparently didn’t reveal everything that went on in Crane Bank. Was Ruparelia so skillful to cheat that much and go unnoticed?”

Ironically, the Central Bank office located at the heart of the capital, on Kampala road, is a spitting distance away from the headquarters of the once successful Crane Bank that spread wings to Rwanda.

If there was a stench at the bank, it would have accosted the nostrils of the regulator faster, being its closest neighbour, except if the power play insulated either side from the same.

The Ernest & Young case in which the audit firm attempted to block Kenya’s Capital Markets Authority from summoning it as part of its probe on accounting malpractices at Uchumi is instructive on how proactive the regulator can get.

Will BoU for instance, turn its guns on the audit firms that Mr Walubiri says gave it the impression all was well? The audit firms now find themselves in the dock too.

Releasing its financial statement, which was audited by KPMG in May 2016, for instance Crane Bank announced its paid-up capital stood at Shs210b, which was almost 10 times the BoU requirement of Shs25b. Shortly after BoU announced its financial health had become so feeble that it held less than Shs12b of the required amount. Who fooled who?

For now, Justice David Wangutusi, who will hear this matter, has a blockbuster case on his hands. The court has a chance to shape jurisprudence the way the Supreme Court in the USA did with the Lehman Brothers case.

The court could also shape accounting and audit practice as the USA court did with the Enron case.

The Enron scandal, publicised in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and dissolution of Arthur Andersen, one of the five largest audit and accountancy partnerships in the world. In addition to being the largest bankruptcy reorganisation in American history at that time, “Enron was cited as the biggest audit failure”.

The courts have their work cut out. If that, however, will depend more on the politics than the facts and law remains to be seen in what promises to be one of the most important cases in Uganda’s recent civil litigation history.

Accusations

Fraud. BoU states that the property mogul fraudulently took out $92.8m (about Shs334b) and another Shs8.2 billion of depositors’ money from Crane Bank for personal gain.

Breaking the laws. The Central Bank submitted evidence showing that Mr Ruparelia had been violating the laws which had been put in place to regulate and prevent commercial banks from failing or collapsing.

Failure to make payments. According to the court documents, BoU accuses Mr Ruparelia of failing or refusing to remit morethan Shs52 billion in workers’ contributions to the National Social Security Fund.

By Green Muheya

The Blantyre Magistrate Court gave bail to former Minister of Agriculture, George Chaponda, alongside Director of Transglobe Export Produce Limited, Rashid Tayub.

Another accomplice in the case Grace Mijiga Mhango has today been granted bail by Lilongwe Magistrate’s Court after she was arrested in Lilongwe yesterday and spent a night at Lilongwe Police Station.

Senior resident Magistrate Shyreen Yona has granted the bail. Mhango, charged with forgery, was represented by Chrispin Ndalama.

The Anti-Corruption Bureau (ACB) on Wednesday arrested Chaponda, Mhango and Tayub for their alleged involvement in the dubious maize purchase from Zambia.

The trio were separately interrogated on Wednesday and spent a night in Police before being given bail on Thursday evening.

In Blantyre Senior Resident Magistrate Simeon Mdeza granted bail to Chaponda, 74 and Tayub nearly 6pm/

Defense attorney, Jai Banda, said he was happy that his clients were given bail and that the team is ready to defend the case that is scheduled to be heard from 9th to 14th August, 2017.

“Our grounds for bail application were that the two accused knew in the past that ACB is investigating them and never run away. They also have big businesses in Malawi hence no need for them to run away,” he said.

He continued to say “The condition for a bail is that they provide Mk200,000 bond cash each, K2 million non-sureties each, surrenders their travel documents to ACB, should report to ACB every fortnight and should inform the bureau whenever leaving Blantyre.”

ACB’s Deputy Director, Reyneck Matemba, said the bureau did not object to bail because they have finished their investigation which the suspects cannot tamper with it.

Matemba further said considering that bail is a right for everyone; the two also deserve to enjoy it as everyone can do besides the nature of the case.

“When the bureau arrested them, it had already finished its investigations and I don’t think they can tamper with any evidence that we have set as part of the case. The case will continue while on they are on bail from 9th to 14 of August, 2017. On the same case, the Lilongwe Magistrate court has also given bail to CEO of Grain Traders Association, Ms Grace Mijiga Mhango who was arrested in Lilongwe on Wednesday over the same issue,” he added.

Meanwhile Matemba said the bureau will consolidate the charging sheet so that all should answer their cases at one place.

Matemba said when the bureau called defense lawyers last week asking for their clients to appear before ACB, Chaponda and Tayub chose to appear in Blantyre offices while Mijiga opted for Lilongwe.

Chaponda, a former diplomat and lawyer, was sacked in February after he was implicated in a deal to import $35 million worth of maize from neighboring Zambia.

At the time, 8 million people in Malawi, nearly half the population, faced severe food shortages caused by drought.

Chaponda was placed under investigation following a recommendation by a presidential inquiry into the procurement deal. The inquiry found he had flouted procedures by hiring a private broker to import the maize, which is the main staple of Malawi.

He is also accused of sourcing the grain, in contravention of ministerial rules, for personal gain.

Corruption has been prevalent in Malawi’s public sector, and in 2013 several high-ranking officials were implicated in the “Cashgate” scandal, which involved large-scale looting of government coffers.

International donors pulled the plug on aid of around $150 million after auditors said at least $30 million was stolen from state coffers over a six-month period.