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How NSSF Has Been Mismanaging Tax Payers Funds

How NSSF Has Been Mismanaging Tax Payers Funds

The  Inspectorate of Government (IG) received a complaint from the minister of Gender, Labour and Social Development containing allegations of mismanagement, abuse of office and corruption by the former Managing Director (MD) of the NSSF,  Mr Richard Byarugaba.
The minister’s complaint contained issues, some of which will be addressed by the office of the Auditor General (OAG) while those contained in this document are of the IG mandate.

The IG further received a copy of a complaint from the representatives of workers, NSSF savers and labour unions on the state of affairs at the NSSF that was addressed to President Museveni. 
Those issues were similar to most of the issues raised by the minister.
While the IG was investigating the allegations, other issues emerged which the IG also handled.

Further the IG received communication from Parliament forwarding some issues for investigation.
This report is addressing all the issues under the categories mentioned above.

1.1 Minister’s complaint
i. The MD made an exaggerated budget of Shs400b for purchase of land at Nakigalala. He indicated that this purchase was approved by the President, the Minister of Finance, Planning and Economic Development, and the NSSF Board, which was not the case. Further, there were ownership disputes over this land.

ii.  NSSF performance had been declining over the past years and there was a declining trend from 32 percent in 2010 to 11 percent in June 2022 which was exhibited, among others, by stagnation of membership of savers over the last five years.
iii.  The MD took a commission in exchange for waiving NSSF contributions for workers of the Uganda Railways Corporation and Uganda Broadcasting Corporation. The MD also arbitrarily reduced the penalty that Tororo Cement was supposed to pay, in exchange for money for his personal benefit.

iv.  The minister reviewed the NSSF budget for the FY 2022/2023 as required under the NSSF (Amendment) Act and made proposals. However, the MD refused to implement these proposals. He failed to adjust the budget to implement the new law and instead provided money to fly over 80 staff to Dubai in November 2022 for team building.
v.  The IG previously investigated and found culpable, some managers at the Fund, including the MD and issued directives in respect of the property sold at Bakuli, but the recommendations of the Inspector General of Government (IGG) were not implemented. 
The MD caused financial loss to the Fund by selling a plot of land at Bakuli at a value less than it was bought by the Fund.

vi. The MD and his cohorts like the Head of Investments used the budget as a means of siphoning money out of NSSF through exorbitant expenditure on foreign trips.
vii. The number of contributors to the Fund had stagnated yet there was significant growth of the economy in the construction, plantation agriculture and industry sectors. The MD was invited to register workers in Kapeeka  Industrial Park as members of NSSF, but he ignored the invitation.

viii. The MD attempted to defy the President’s directive with regard to the Yusuf Lule Road real estate project. He also disregarded PPDA’s technical and legal guidance on the same project.
ix. The management and discipline record of the former MD, Mr Byarugaba under Boards previously headed by Mr Ssekono, Mr Patrick Kaberenge and the current chairman, Dr Kimbowa, was poor.

x. There was a systemic failure of the pension administration system which had not been addressed. There were also irregularities in the procurement of this system.
xi. The disputes between the Fund and people claiming ownership of land where NSSF Lubowa housing project is situated were engineered by some corrupt elements within NSSF. They were conniving with the masquerader claimants, in anticipation that they would share the compensation they would eventually get from the Fund.

xii. During the purchase of MTN and Quality Chemicals shares by NSSF,  there was a kickback that was paid to the MD and the investment team.
xiii. A bribe of  Shs3b was paid by M/s CATIC Construction in exchange for the contract to build the Mbuya CITADEL Apartments. The money was paid to the MD and the head of procurement,  Mr Gerald Mugabi, who used his share to build a hotel in Kagadi called Hotel Seyaife Courts.

xiv. The MD received gratification from M/s Symbion in form of redesigning his house in Mbuya in exchange for business, specifically the contract for the proposed development of Yusuf Lule Road plot.
xv.  The MD had been taking bribes that could be ascertained through cross border trails.  
Further, that he and his associates were beneficiaries of a 5 percent commission paid by CRCEG, through De Point Consultants Ltd, a Bank in Mauritius, and finally to Barclays Bank in London.

1.2 Other issues
The following issues emerged in the course of investigations:
i. Reported irregularities in the payment of member benefits for the last three and a half  financial years.

ii.  Mr Benoni Katende, the  chief information officer and Mr Geoffrey Sajjabi, the chief commercial officer, were irregularly recruited without the requisite qualifications. 
Mr Elijah Kitaka was  irregularly recruited as a consultant with NSSF shortly after he had retired from NSSF.
iii. Mr Sajjabi influenced the recruitment of  several of his relatives into the Fund.
iv. Reported irregularities in the procurement function in the Fund during the last three and a half financial years.

v. NSSF made irregular donations of funds to the National Organisation of Trade Unions and the Central Organisation of Free Trade Unions- Uganda.
vi. Corporate social responsibility funds were irregularly approved and paid out as bribes to various stakeholders.

vii. Irregular payments were made to some NSSF Board members who had retired from the Board.
viii. The Fund irregularly contributed 10 percent  NSSF contribution to Board members, yet they were not NSSF employees.
ix. Mr Richard Byarugaba solicited for a bribe from Mr Anil Kuruvilla,  the director of Sybyl Ltd.
x. NSSF failed to implement the President’s directive on source of funding for  Uganda Retirement Benefits Regulatory Authority (URBRA) and continued advancing funds from NSSF to URBRA.

xi. NSSF was irregularly processing a payment of Shs1b as an out of court settlement for a court case against the former deputy managing director, Ms Geraldine Busuulwa Ssali.
xii. NSSF Board irregularly increased its remuneration.
xiii. Board members did not possess the core competences required to supervise the Fund.
xiv. Some employee contracts were irregularly terminated by the former MD, Mr Byarugaba.
xv. Dr  Peter Kimbowa used NSSF funds to acquire buses for his personal business.
xvi. The interest rates paid to members each year were lower than what should have been paid.
xvii. Unexplained salary disparities between staff occupying similar positions.
xviii. NSSF made irregular payments to staff who exited the Fund under voluntary early retirement program.

xix. During the FY 2015/2016, the Fund launched a sham smart card which did not offer any value to members. The said smart cards were printed at an exorbitant cost.
xx. NSSF invested significantly in point of sale pay machines that were similar to “pay way” machines and placed them at different supermarkets across the country. However, this project failed and the machines were withdrawn and scrapped.

xxi. A plot of land in Mbarara City that belonged to the Fund was sold at less than the market value. The difference was taken by the MD and the head of procurement.

1.3 Recommendations from the select committee of Parliament
 The IG received a copy of the letter from the Clerk to Parliament dated March 30, addressed to the Prime Minister/Leader of Government Business with recommendations from the Select Committee of Parliament that investigated the state of affairs at NSSF. The following issues were forwarded to the IG to investigate:

i. The IGG immediately investigates, with the possibility of prosecuting the following officers namely; Mr Leonard Mpuuma, Mr Onegi Obel, Ms Egunyu Asemio Fiona Lucy, Mr George Baitera Maiteki, Mr David Nkojo, Mr Alfonse Ojja – Andira, Mr Lyelmoi Otong Ongaba, Mr Aloysious Ssemanda, Ms Rosemary N. Senabulya, Mr Francis Tumuheirwe, Mr Martin Bandeebire and Hon. Zoe Bakoko Bakoru who were involved in conceptualising and executing the casual transaction which led to the loss of Shs2.3b invested in West Nile Golf Club for the possible offences of loss of public property, abuse of office and causing financial loss contrary to sections 10, 11 and 20 of the Anti-Corruption Act, 2009.

ii. Mr Byarugaba, Mr Patrick Ayota, Mr Stevens Mwanje and Ms Barbara Teddy Arimi who were members of the NSSF management that participated in the initiation of Shs1.8b  budget for donations, much as they did not participate in the final approval, should step aside with immediate effect for investigation by the IGG, for the offences of abuse of office, corruption and conspiracy to commit a felony with a view of immediate prosecution.

iii. The NSSF Board terminates the employment of Mr Geoffrey Waiswa Sajjabi with immediate effect and the IGG investigates all departments at NSSF to establish whether there are recruitments in contravention of the NSSF human resource manual and the Anti-Corruption Act, 2009.
iv. The IGG should investigate, with the view of prosecuting officers namely; the former Managing Director, Mr Richard Byarugaba, Mr William Okabo, Mr Daniel Batekereza, Ms Joan Asio, Mr Chancemille Liki and Mr Brian Tindimwebwa for their involvement in the conceptualisation, procurement and installation of the Geo Mapping System which caused a financial loss of  Shs748,861,114.

v. The IGG should conduct an investigation on the former MD, Mr Byarugaba; the Acting MD, Mr Patrick Ayota; chief investment officer, Mr Gerald Paul Kasaato; the chief commercial officer, Mr Sajjabi; the technology and enterprise solution officer, Mr Benoni Katende; the chief people and culture officer,  Mr Milton Owor ; the chief risk officer, Mr Edward Ssenyonjo; the head of internal audit (ex- officio), Mr George Barigye; head of finance, Mr Stevens Mwanje; head of marketing; head of procurement, Mr Gerald Mugabi; corporate affairs officer, Ms Arimi and should report back to Parliament within 60 days from  March 9.

vi. The IGG should investigate the following persons namely; Ms Sarah Walusimbi,  Mrs Agnes Kunihira,  Mr Richard Bigirwa, Mr Mwanje, Mr Collin Babirukamu, Mr Edgar Birungi, Mr Moses Emodu, Ms Pauline Nagadya, Mr Gerald Mugabi, Mr Joseph Kalinaki, Mr Simon Kule, Mr Daniel Batekereza and Ms Geraldine Ssali Busuulwa who were involved in the  more than Shs2.6b smart card project and more than Shs133m customer self-service touch pad with a view of prosecuting them.

2.0 IG findings

Price exaggeration
It was established that the NSSF budgets for the FY 2019/2020 and FY2021/2022 all indicated that NSSF planned to spend Shs250b for strategic land purchase, under investment capital expenditure. The NSSF budget for FY 2022/2023 indicated that the Fund planned to spend Shs400b for strategic land purchases as listed below;

i) Land at Nakigalala which was estimated at Shs 250b
ii) Land located at Naguru belonging to the Uganda Police Force, estimated at Shs150b.

The estimated cost of Nakigalala land in the FY 2022/2023 budget remained Shs250b as it was in the budget of FY 2019/2020 and FY 2021/2022 and not Shs400b   as alleged.

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