The opposition in Parliament has contested a vote on the proposed government purchase of preference shares in Roko Construction Limited.
The vote was made amidst commotion in Parliament as a section of legislators contested a declaration by the Deputy Speaker of Parliament Thomas Tayebwa 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 worth 202 billion Shillings 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 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 sought 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. 800 million Shillings was needed for the job.
But the Minister never gave feedback to the House on the matter before it was presented for a vote on Thursday. The Leader of the Opposition in Parliament Mathias Mpuuga said that the matter is going to be taken up in line with Ugandan laws, noting that he had not been consulted about adjusting the Order Paper to include the matter.
He said that the Hansard of Wednesday was very clear on how that matter would be processed when the speaker ordered the Minister of Finance to consult and present a report that responds to the issues in the main report presented by the Finance Committee and the minority report by the Shadow Minister of Finance Muwanga Kivumbi.
Butambala County MP Muhammad Muwanga Kivumbi had earlier recommended that approval of the share purchase is halted until due diligence is undertaken by independent, competent and professional accounting firms.
Kivumbi 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.
“The vote was erroneously put, I think this is the limit to which abuse of office and power can go. No one in his sensible sense can do what was done. First of all, when you look at the procedures of parliament…he is wrong, you first have to officially amend the order paper to put an item,” Kivumbi said.
He adds that the Speaker also needed to ask MPs to vote on both the Majority and Minority report separately before a general vote on the Minister’s motion is announced.
State Minister for Finance, Henry Musasizi says that government is now ready to enter into the share agreement with Roko following the approval of parliament. He notes that they will incorporate the concerns of MPs in the agreement.
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.
