Three Justices of the Constitutional Court on Tuesday ruled out that City tycoon Hassan Basajjabalaba should refund over shs142 billion that was illegally given to him as compensation from government after cancelling contracts to manage and redevelop several markets in Kampala.
Legal Brains Trust of Uganda dragged Basajjabalaba to court alongside five of his companies including Haba Group, Victoria International Trading Company, Sheila Investments, Yudaya International Limited and the First Merchant International Trading Company for being compensated by government for losing contracts to manage and redevelop Owino, Nakasero and Shauliyako markets, and the Constitutional Square yet in the actual sense the said contracts were illegally entered into without the advice of the Attorney General.
On Tuesday, in a majority decision of 3:2, justices of the Constitutional Court ruled that the tenders to run Nakasero, Shauriyako and Owino markets were unlawfully awarded to Basajjabalaba without the mandatory approval and consent of the Attorney General .
The judges also ruled that the then city governing body, Kampala City Council was wrong to tamper with the Constitutional Square which is the breathing space of the public by awarding to an individual(Basajjabalaba).
“All the impugned contracts and leases between Basajjabalaba and government were null and void having been executed in contravention of the Constitution as set out in this judgment. No compensation was payable under the impugned leases and contracts which were illegal and therefore null and void,” Justice Kenneth Kakuru said on behalf of the two other judges.
“All the money paid as compensation by government under the impugned contracts and leases shall be refunded by the respondents jointly and or severally to government through the office of the Attorney General.”
According to the case, between January 2000 and December 2011 Basajjabalaba and his companies entered into contracts with KCC to manage, own and redevelop the markets but traders protested against the deal prompting the businessman to appeal to President Museveni who referred the matter to the Attorney General.
Consequently, an interdepartmental evaluation committee set up to review the claims recommended Shs54.7b compensation, but the then Attorney General Khiddu Makubuya, proposed a payment of compensation in the region of Shs142.7b and Shs29.9b for Nakawa market, which had not been part of the contracted markets.
Audit firm KPMG concluded that Basajjabalaba’s companies were not entitled to compensation but the then Finance Minister, Syda Bbumba wrote to Bank of Uganda okaying the payments.
The central bank Bank then issued various letters of comfort to Bank of Africa, Tropical Bank, Bank of Baroda, and Orient Bank, which Basajjabalaba’s companies used to as security to get the loans but later defaulted .
The banks however used the letters of comfort from Bank of Uganda to recover the money.
The judges however questioned the entire process as being a corruption insisting that Basajjabalaba was not entitled to any compensation.
The court therefore ordered that each of the four financial institutions including Bank of Africa, Tropical Bank, Bank of Baroda, and Orient Bank, pay a fine of $10 million to Bank of Uganda within 30 days for being party to the corruption scheme.
“The Bank of Uganda is hereby directed to recover the above sums by debiting the accounts of each of the said offending banks,” the judges ordered.
The court ordered that the exact amount to be refunded to government shall be ascertained and apportioned by the High Court.