VZCZCXRO4210
RR RUEHGI RUEHRN RUEHROV
DE RUEHKM #1220/01 2471135
ZNR UUUUU ZZH
R 031135Z SEP 08
FM AMEMBASSY KAMPALA
TO RUEHC/SECSTATE WASHDC 0668
INFO RUCNIAD/IGAD COLLECTIVE
RUEHXR/RWANDA COLLECTIVE

UNCLAS SECTION 01 OF 02 KAMPALA 001220 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT PASS TO USAID AND TO MCC/MALIK CHAKA 
 
E.O. 12958: N/A 
TAGS: PGOV KDEM KCOR UG
SUBJECT: UGANDAN SECURITY MINISTER IMPLICATED IN LAND 
SCANDAL 
 
¶1.  (SBU) Summary: A scandal involving Uganda's National 
Social Security Fund (NSSF) has generated heated hearings in 
Parliament and exposed what appears to be another case of 
high-level Ugandan government corruption.  The scandal 
centers on land NSSF purchased in early 2008 without proper 
attention to procurement procedures at an apparently inflated 
price from a company owned by Minister of Security Amama 
Mbabazi, who is also Secretary General of the ruling National 
Resistance Movement (NRM) party.  Minister of Finance Ezra 
Suruma apparently approved the deal.  While the controversy 
has engendered public anger and feverish media attention, 
many Ugandans, frustrated by the government,s failure to act 
in the past, believe it is unlikely that officials will be 
held accountable.  End Summary. 
 
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LAND DEAL: MADE IN THE SHADE 
---------------------------- 
 
¶2.  (SBU) Parliament summoned NSSF officials on August 22 for 
an explanation of a land purchase NSSF made in March this 
year.  According to media reports of the Parliamentary 
hearings, the NSSF purchased 464 acres of land in Wakiso 
district, just outside of Kampala, from businessman Amos 
Nyezi and Arma Ltd., a company in which Minister of Security 
and NRM Secretary General Mbabazi has a large stake. 
Parliament has focused on three alleged improprieties with 
the purchase: 1) improper procedures used to purchase the 
land; 2) the inflated price NSSF paid for it; and 3) the 
benefits coming to a range of high-level government figures. 
 
¶3.  (SBU) According to press reports, the Ugandan Public 
Procurement and Disposal of Assets (PPDA) authority did not 
approve the purchase, and no minutes exist of a final private 
board meeting (attended by NSSF Chief David Chandi Jamwa and 
Finance Minister Suruma) authorizing the transaction.  The 
NSSF board members present have since said publicly they were 
under political pressure to approve it.  The price NSSF paid 
for the land is also under investigation.  The NSSF paid USD 
14,750 per acre, as opposed to a market value of USD 
8,900-11,000 that three independent auditors placed on it. 
In addition to the benefits to Mbabazi, Minster of Finance 
Suruma appears to have benefited, as he is partial owner of 
the National Bank of Commerce, which was the recipient of 
some funds received from the sale.  (Note:  Suruma is Vice 
Chairman of the National Bank of Commerce.  End Note.) 
Finally, on Wednesday, August 28, Parliament learned that 52 
of the 464 acres in the deal do not actually exist, a problem 
that NSSF officials were unable to explain, leading Members 
of Parliament to begin asking for the resignation and/or 
arrest of the officials in question.  The Committee on 
Commissions, Statutory Authorities and State Enterprises 
(CSASE), is hearing the case, and the NRM Parliamentary 
caucus summoned Mbabazi back from his trip to the United 
States early to appear before them on September 1 to explain 
his involvement in the deal. 
 
¶4.  (SBU) Appearing before the NRM Parliamentary caucus in a 
closed door meeting reported in the press, Mbabazi vowed to 
resign if found guilty of wrong doing for his involvement in 
the deal.  A group of NRM members demanded Mbabazi resign 
now, however, to allow investigations to proceed and to avoid 
fallout that could damage the NRM in the run-up to national 
elections in 2011. 
 
¶5.  (SBU) In a meeting with Embassy officers on August 28, 
Auditor General (AG) John Muwanga expressed his frustration 
that Parliament's recommendations to the government are often 
ignored, saying scandals often disappear or get bogged down 
in court after hearings stop.  Muwanga explained that, 
although a range of institutions, including the Auditor 
General, the Inspector General of the Government, and the 
PPDA, exist to counter corruption, the government often does 
not act on Parliament's required recommendations issued at 
the end of committee hearings.  Committee recommendations, 
for example, are sent to the Finance Ministry for action, and 
the Finance Ministry is required by law to issue a Treasury 
Memorandum explaining what actions the government has taken 
to follow up on the committee's recommendations, Muwanga 
said.   But, he added, "The Finance Ministry has not issued a 
Treasury Memorandum since, I think, 2000 or 2001."  Thus, 
though some institutions are active in government oversight, 
the "cycle of accountability" is not complete, Muwanga said. 
 "If you get the cycle of accountability right then 
everything falls in place, but we do not have it," he said. 
 
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Comment 
 
KAMPALA 00001220  002 OF 002 
 
 
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¶6.  (SBU) This case, brought to light by a whistleblower, has 
become a lightening rod for public frustration with 
high-level government corruption and compounds widespread 
anger with NSSF, which invests mandatory pension 
contributions and has mainly lost money on its investments 
over the years.   In this case, the conflicts of interest 
appear egregious, not only because of Mbabazi's role, but 
because Finance Minister Suruma would be required in his 
Treasury Memorandum to report on actions taken against 
himself for approving and benefiting from the purchase. 
Politically, it has served to galvanize both the opposition 
and younger members of the ruling NRM, who have been trying 
to oust Mbabazi from the leadership of the party.  While it 
will be difficult for Museveni to ignore this case, given its 
magnitude and implications for the party, most Ugandans 
remain skeptical that Mbabazi and Suruma will be sanctioned. 
BROWNING