The Opposition in Parliament has petitioned Speaker Anita Among challenging a vote on the proposed government purchase of preference shares in Roko Construction Limited.
The petition written by Leader of Opposition, Mathias Mpuuga and endorsed by 32 MPs followed a Friday Opposition Caucus meeting in which they discussed the procedure used by the House on Thursday evening to approve the government purchase of 150,000 preference shares in Roko worth 202 billion Shillings.
Speaking after the caucus meeting, LOP Mpuuga said that they had offered leadership to petition the entire House to deliberate on the decision of the presiding officer so that history can capture them rightly.
“We don’t want to be misrepresented as part of a conspiracy to defraud the public. Assuming Roko is deserving and I want to believe so like any other company that would probably need help, we want to do it lawfully and neatly,” he said.
The Nyendo-Mukungwe MP noted that they won’t not allow anybody to overrun parliament.
By Friday evening, the Speaker’s office had received a notice from Mpuuga to move a motion on Tuesday next week to review the decision of Deputy Speaker, Thomas Tayebwa.
“Pursuant to Rules 56 and 87 (2) of the Rules of Procedure of Parliament, take notice that I intend to move a motion for the House to review the decision of the Deputy Speaker on the proposal by the government of Uganda to acquire 150,000 preference shares in Roko Construction Limited worth approximately 207.13 billion,” reads a notice signed by Mpuuga.
The motion seen by Uganda Radio Network- URN wants parliament to resolve that the decision by the Deputy Speaker to put a vote on the government proposal contravened the rules of procedure and that it should be reviewed by the House.
He also seeks to have the Minister of Finance report back to parliament as directed by Speaker, Among detailing action taken and measures put in place on whether to give a loan or grant to Roko.
Mpuuga also wants the House to vote on both the majority and minority reports of the committee of finance on the proposal to acquire shares in Roko and that the question be properly put on whether the House should approve or disapprove the proposal by the government.
The motion is seconded by Butambala County MP, Muhammad Muwanga Kivumbi and the Bukonzo West MP, Atkins Katusabe.
A vote on the proposed government purchase of preference shares in Roko was made on Thursday amidst commotion in Parliament as a section of legislators raised objections. Deputy Speaker Thomas Tayebwa had told MPs that Roko would cease operations if the government proposal for the purchase of 150,000 preference shares had not been approved.
As they objected to the procedures, Tayebwa announced that the Ayes had taken the day, thus approving the purchase of preference shares in Roko Construction Limited. The same approval had been delayed on Wednesday awaiting a report on actions and measures taken by the Finance Minister from concerns raised earlier by the Finance Committee, a minority report, and parliament MPs.
In his report to Parliament, the Finance Committee Chairperson Kefa Kiwanuka recommended that Roko should be expeditiously audited, as a condition precedent to signing the Share Subscription Agreement by the Auditor General to particularly look at and certify the material assets, debtors, creditors, governance and management.
He also highlighted inadequate and insufficient due diligence by the government noting that the Uganda Development Corporation (UDC) which was requested in November 2019 to initiate the process of acquiring equity in Roko through the necessary valuation of the Company was not allocated funds to do so. Only 800 million Shillings was needed for the job.
Butambala County MP, Muhammad Muwanga Kivumbi recommended that approval of the share purchase is halted until due diligence is undertaken by independent, competent and professional accounting firms.
Kivumbi who is also the Shadow Minister for Finance noted, in a minority report, that due to failure to undertake due diligence, the same Roko Construction Limited together with FINASI had in the recent past entered into an agreement with the government to construct a specialized hospital in Lubowa, a project which never took off.
The minority report further recommends that government should acquire 51 per cent of the ordinary shares of Roko Construction Limited as a condition for the acquisition of preference shares. But Kivumbi shares that he had been tipped that a vote was coming up in Parliament in total disregard of their earlier decision by Parliament on the same. He described the Roko deal as illegal and erroneous.
But the Minister never gave feedback to the House on the matter before it was presented for a vote on Thursday.
The proposal for the purchase of Roko shares was first tabled before parliament two weeks ago when the Minister of State for Finance, Musasizi indicated that Roko is facing severe liquidity challenges that have constrained its ability to execute contracted projects and adversely affected payments to its suppliers.
Roko currently has projects with signed contracts worth 1.064 trillion Shillings of which 696.6 billion Shillings are government projects. The company’s indebtedness, as of May 31, 2022, stood at 202.4 billion Shillings. It also has contingent liabilities from bank Guarantees for ongoing projects worth 130.9 billion Shillings while its indebtedness to financial Institutions totals 35.7 million Shillings and USD 20.7 billion and dues to local suppliers stand at 46.8 billion Shillings.
Roko’s liquidity situation arose primarily from delayed payments on major projects, failure to refinance expensive Shilling loans with cheaper external financing, the impact of the COVID-19 pandemic on the construction industry, escalation of financing costs, weak Corporate Governance, and inadequate management.
It’s on this basis that President Yoweri Museveni directed the Minister of Finance to negotiate the Government’s acquisition of shares to salvage the company and allow it to implement outstanding project contracts.
