The Uganda National Roads Authority (Unra) paid US$ 6.4m to a wrong company- China Railway No 3 Engineering Group Uganda Limited that it thought had been given a road construction contract.
Unra is said to have wired the payment to China Railway No 3 Engineering Group Uganda Limited between July 2015 and June 2016 for work on the Kanoni-Sembabule road through the accounts numbers 90300 0924 5110 and 90300 0924 5188 in Stanbic Bank in Kampala; the lawmakers on the Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) learnt.
However, the contract of the road construction was between Unra and China Railway No 3 Engineering Group Company Limited which is a China-based company.
Unra’s Director of Legal Services, Ms Mary Kuteesa confirmed the reports and said that an official of the China-based company had told Unra to pay the Uganda ‘affiliate’ the money.
“The letter that Unra relied on to make the payments is authored by the then authorised officer of the company that Unra contracted,” Ms Kuteesa confirmed while appearing before Cosase.
She then added that the letter which was addressed on June 12, 2014, to the director of procurement of Unra, asked Unra to make payments to two accounts, one for the local currency and the other for foreign currency and though China Railway No 3 Engineering Group Uganda Limited says the China-based company delegated it. It says that the delegation was done even before China Railway No 3 Engineering Uganda, was formed.
China Railway No. 3 Engineering Group Uganda was incorporated in Uganda on June 10 2014.
However, the power of the attorney by China Railway No 3 Engineering Group Company Ltd to the Uganda ‘affiliate’ is dated October 15, 2013.
“The power of attorney (to China Railway No 3 Engineering Group Uganda) was given to it before it [China Railway No. 3 Engineering Group Uganda] was formed,” Cosase’s chairperson Abdu Katuntu (Bugweri), said.
China Railway No 3 Group Uganda Limited’s Managing Director, Li Chum in his opinion said that the two companies are one and the same, an opinion he reconsidered after consulting his lawyer. He continued and said that at times, the parent company in China bids for contracts and once it bags them, finds local companies to do the work.
Now that Cosase is investigating the issue, China Railway No. 3 Engineering Group Uganda Ltd has reportedly transferred shares to the China-based company.
The amount Unra paid to China Railway No 3 Engineering Group Uganda is almost the same that was paid to Eutaw in 2014- a fictitious company. Unra is now trying to recover at least US$ 5.2m from a representative of Eutaw.