PRESS STATEMENTMay 03, 2013The Fund has received information relating to a report submitted by an anonymous individualto t...
The Namirembe land in question had no access road, a fact confirmed by the Commissioner for Surveys& Mapping and which was...
of the penalty as provide for in the NSSF Act. A number of employers have responded and are paying thearrears in installme...
RICHARD BYARUGABAMANAGING DIRECRTOR
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PRESS STATEMENT: NSSF's Response To Press Reports on IGG Investigation

The Fund received information relating to a report submitted by an anonymous individual to the Inspector General of Government (IGG), containing a number of unsubstantiated allegations. The Fund is open to any investigation by the IGG. We will provide the required information to enable the IGG carry out investigations. We commit, in line with transparency and accountability, to cooperate with the IGG to conclusively investigate the allegations. Nevertheless, we wish to clarify that these allegations are absolutely false and are intended to tarnish the reputation of the Fund.
Published on: Mar 4, 2016
Source: www.slideshare.net


Transcripts - PRESS STATEMENT: NSSF's Response To Press Reports on IGG Investigation

  • 1. PRESS STATEMENTMay 03, 2013The Fund has received information relating to a report submitted by an anonymous individualto the Inspector General of Government (IGG). The report contains a number ofunsubstantiated allegations against the Fund, which have been reported in the media today.The Fund is open to any investigation by the IGG. We will provide the required information toenable the IGG carry out investigations.We commit, in line with transparency and accountability, to cooperate with the IGG toconclusively investigate the allegations.Nevertheless, we wish to clarify that these allegations are absolutely false and are intendedto tarnish the reputation of the Fund.1. Buying of Umeme SharesThe Fund has purchased a total of 131.5 million shares in Umeme to date through the initial publicoffering and secondary market transactions, resulting in an 8.1% holding of the total shares.Our investment in Umeme was undertaken in line with our investment procedures and after a thoroughdue diligence. The investment was approved at all levels of authority from management up to theMinister of Finance, Planning and Economic Development. Currently, Umeme is trading at UGX 315, up14.5% from the listing price.With all the Fund’s trades in the secondary market executed at UGX 275, the Fund’s average purchaseprice inclusive of trading fees is only UGX 276. The value of our investment has therefore appreciated byUGX 5 billion in less than 6 months.Umeme declared a dividend per share of UGX 15 for the year ending 31 December 2012, implying adividend yield of about 1.97 billion.2. Disposal of land at NamirembeThis land was purchased in 2008 at UGX 650m, together with other plots in Ndeeba, Arua, Gulu, Hoima,Mbarara and Masaka. The idea was to build branch offices countrywide. The Fund resolved to dispose ofall the plots as they were idle assets tying up money that would otherwise be earning income. Thisresolution was adopted and approved by the Board of Directors.
  • 2. The Namirembe land in question had no access road, a fact confirmed by the Commissioner for Surveys& Mapping and which was not taken into account at the time of purchase in 2008 as boundaries werenot opened then. The impaired value on account of lack of access road has now been confirmed by theChief Government Valuer.The Fund did not deem it necessary to apply for an access road because it was not intending to developthe land, and the prospective buyer owned all the surrounding land [Plot 436], reason why PPDAapproved direct disposal to that bidder; furthermore, the Fund had by then already contractuallycommitted to sell the land to the buyer.The land sale was authorized by PPDA, Contracts Committee, Accounting Officer and the SolicitorGeneral. The land was valued at UGX 600m by the Chief Government Valuer while the Fund sold it atShs. 650 Million. The hitherto locked up value of the land is now invested in income generating assets.3. Joint Venture with SBI for planned housing estate at LubowaThe Fund purchased over 563 acres of land at Lubowa, Kampala to develop a modern housing estate in2003. In 2004, a Joint Venture company Victoria Properties Development Ltd, was formed to implementthe housing estate.The JV was unfavourable to us because it made SBI a majority shareholder in the company yet NSSF wasto provide both the land and cash for the project. After a lengthy negotiation, SBI agreed to forego itsrights under the Joint venture agreement in exchange for the design and supervision contract withoutcompetition. These JV dissolution terms were approved by the board of directors, Contracts Committee,Management Investments Committee, PPDA, and the Solicitor General paving way for progress on theproject.Designs have been completed and submitted to Wakiso District Council for approval to pave way forconstruction. The US$ 1 million loan was to the joint venture, NOT SBI and the money was spent by thejoint venture company to prepare a master plan for the project. The guarantee SBI issued for 51% of theloan expired and the JV Company was wound up. The loan was deemed a sunk cost and written off bythe NSSF Board of Directors.Upon dissolution of the JV, the ownership of the Master Plan was transferred to NSSF, together with allunspent balances on the JV bank account worth approximately Shs. 40 million.The Fund is fighting encroachers on that land who include Pastor David Kyambadde and HassanKatamba of Resurrection Life Church and Mathias Jumba. A bailiff engaged by the Fund to evict theencroachers was violently assaulted, injured and his vehicle destroyed .The matter has been handled byoffice of the RDC, Police, DPP, and is due in court. Furthermore, a Surveyor from the Commissioner,Surveys and Mapping has also been engaged to determine the extent of encroachment and identify allencroachers on the land so that they are dealt with at one go.4. Waivers to contributions defaultersIn 2011, the Fund launched an Amnesty and Whistleblowers campaign to encourage employers whowere defaulters to pay their employee’s NSSF contributions and in turn, the Fund would offer a waiver
  • 3. of the penalty as provide for in the NSSF Act. A number of employers have responded and are paying thearrears in installments, which has resulted into our increased monthly contribution rates.URC was sued way back in 2008 by NSSF represented by Crane Advocates. After a protracted litigationand lengthy audit, URC admitted it owed arrears being under remittance of standard contributions inrespect of its workers from 1995 to 2001 plus interest. URC agreed to pay on condition the penalty iswaived, and appealed through the Hon. Minister of Finance for a waiver. The penalty was 6 times thevalue of the arrears. As part of our relationship model, a consent judgment was entered under whichthe MD waived the penalty [NOT contributions] and asked URC to meet legal expenses, on condition thePrincipal and interest are paid by 30th May 2013.The first instalment of Shs. 3.89 billion has been remitted, and the lawyer’s fees paid off by URC. Bottomline is workers contributions have been recovered by the lawyers at no cost to the fund. The case is stillpending in court for a portion of the arrears that URC disputes I.e. contribution arrears in respect of itsworkers from 1995-2006 and is awaiting Judgment.The “waivers of contributions” was a subject of a recent IGG investigation (report of 7thMarch 2013);where the IGG identified some very historical weaknesses in the controls and procedures and thesewere immediately addressed. Though the IGG identified these weaknesses, it was also clearlyestablished that there were no personal gains or motives behind these lapses.5. Staff issues and remunerationThe Fund has clear and empirical performance targets and a performance appraisal system. Thecircumstances under which a member of staff may be let go due to poor performance are also veryclearly stipulated in the Staff Handbook (duly approved by the Board). At other times, a person may belet go in response to business needs. NSSF closed 4 branches it was no longer tenable to have staff atmanagement level without branches to manage.The Fund regularly conducts training as part of staff development. To date, 84% of all current staff havebeen trained following the FUND’s staff TRAINING and development strategy.The whistleblower alleges that the Fund paid UGX 11.4 million phone bill of the Corporation Secretary.This is an office line, used for official communication. When roaming, the charges are substantiallyhigher due to the fact that the service providers charge incoming and outgoing voice and data. It is nottrue that the handset is replaced “every 3 months.”6. Land title for National Farmers Federation landThis was a BOOT agreement signed in 2008 for construction of a 12 storey building on the UNFF at Plot27 Nakasero Road, Kampala. The cost of the project approx. US$12 Million would be provided by NSSFand recovered from rent over a period of 25 years after which the property would be retransferred toUNFF. UNFF appealed to NSSF to reconsider the investment and management has held a series ofmeetings on an amicable dissolution. Management is verifying the costs of terminating the Jointventure, including Stamp Duty, Rent and rates. KCC requires a valuation of the plot before advising onthe applicable rate. However, the title has no acreage indicated on it and therefore cannot be valueduntil that matter is clarified.
  • 4. RICHARD BYARUGABAMANAGING DIRECRTOR

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