A special forensic audit ordered by the Office of the Auditor General (OAG) and Parliament will focus largely on reports of corruption and mismanagement at the National Housing and Construction Corporation Limited (NHCCL).
The audit follows queries raised by the parliamentary committee on Commissions, Statutory Authorities and State Enterprises (COSASE), which has been examining various NHCCL reports.
The committee, headed by Kumi MP Patrick Amuriat Oboi, found that the company had mismanaged two projects worth billions of shillings – Naalya Pride, and the purchase of land in Kireka.
Sources told us that under the Naalya Pride project, NHCCL entered into a joint venture with a Malaysian firm to construct houses in Naalya.
Three years ago, NHCCL reportedly got a loan of $5.4m (Shs 14bn) from Housing Finance bank to build houses near Quality supermarket in Naalya. But the project seems to have stalled under unclear circumstances.
On the Kireka land, in Kasokoso, MPs contended that NHCCL entered into a deal with a firm, Kireka Estates, to gain possession of the land but it has spent Shs 13bn so far (in trying to get the land), whose cost had been put at Shs 7bn.
The MPs want to know why and how the NHCCL spent such astronomical amounts of money, when the firm previously owned this land under the leasehold system.
MPs show interest
The committee first picked interest in the matter in January, when Amuriat wrote to Finance Minister Maria Kiwanuka, urging her to look into NHCCL affairs. This followed the committee’s examination of several reports from the OAG, which pointed at a possibility of gross mismanagement in a number of projects.
For the Naalya project, a source on COSASE told The Observer, the committee sought to know why it had stalled despite funds being available. However, our source said, management of NHCCL did not appear to have convincing answers.
The committee was also concerned that the firm had spent Shs 13bn in trying to possess the Kireka land in Kasokoso whose value had been put at Shs 7bn by an independent valuer.
“The above two projects are just examples of a number of projects run by NHCCL that demonstrate lack of good governance and prudent business practice,” read Amuriat’s letter to Kiwanuka, dated January 17, 2013.
Amuriat recommended a forensic audit of the projects by the Auditor General to determine the extent of the loss. The committee also recommended that the NHCCL be restructured to set up a new management team.
Accordingly in June this year, the OAG appointed a team of six auditors to conduct a special audit of the NHCCL projects. According to a letter, dated June, 4, 2013, signed by Edward Akol on behalf of the Auditor General and addressed to the managing director of NHCCL, the OAG noted: “During the review of the Auditor General’s reports on the company [NHCCL] by COSASE and its interactions with management, the committee raised concerns on the management of the entity.”
The Auditor General directed that the company hands over all necessary information.
“I anticipate that you will avail the team all the records and information needed for the audit in accordance with the provisions,” Akol wrote.
However, sources told us that the ongoing restructuring exercise has delayed the audit. Efforts to get a comment from the NHCCL management were futile. We were told that after the expiry of Libyan national Mohammed Benomoran’s contract early this year the firm had not got a substantive chief executive officer.
However, this week the NHCCL board said in a public notice that it was undergoing a restructuring exercise aimed at making it more efficient. Last week, Company Secretary Jane Okot p’Bitek Langoya reportedly resigned.
In the statement, the board warned that some senior people in management were trying to use the changes to carry out a smear campaign in the media.
“This should not be the case because restructuring the company is a transparent process with positive intentions…,” the notice said in part.