Officials from the Uganda Retirement Benefits Regulatory Authority (URBRA) have informed the select committee probing the alleged mismanagement of National Social Security Fund (NSSF) that the Shs11 billion unsecured loan extended to Uganda Clays was illegal.
On Wednesday, 08 February 2023, the committee learnt from NSSF management that the loan was disbursed to Uganda Clays in 2010 has not been repaid and has accumulated to Shs20 billion.
URBRA management appeared before the same committee on Thursday, 09 February 2023 and the Director Legal Services and Secretary to the Board, Rita Nansasi revealed that Section 68 of the URBRA Act restricts savers groups from extending loans to private companies.
“It is illegal for NSSF to give loans to private companies,” she said.
According to the Auditor General’s report, the loan has been written off and the Committee Chairperson, Hon. Mwine Mpaka asked URBRA to provide details of individuals who sanctioned the decision.
“If you write off a loan, it means the company cannot make the money to pay it back. If you are writing it off, how are members’ funds protected? How did NSSF give a loan to a company that was making losses?” he asked.
The Chief Executive Officer (CEO) URBRA, Martin Nsubuga however, said that the loan has been restructured adding that Uganda Clays has since handed over a land title to NSSF as security.
“We are aware that the loan has been written off but it does not mean its recovery has stopped. Our interest is to protect savers’ funds. URBRA performed an onsite visit and has demanded for a loan re-payment plan,” said Nsubuga.
Committee chairperson, Hon. Mwine Mpaka
This prompted Mwine Mpaka to inquire whether the land title given as security is equivalent to the loan amount to which Nsubuga responded that no valuation was been performed on the land.
“What is making you comfortable that all is well? Is the land from Uganda Clays worth the loan,” Mwine Mpaka wondered.
Hon. Karim Masaba
Hon. Karim Masaba (Indep., Industrial Division, Mbale City) however, cast doubt on the possibility of recovery of the loan saying that the URBRA report indicated NSSF’s credit losses at Shs3 billion.
“According to what you have presented to us, the balance on loans is Shs3 billion. This means the Shs11 billion loan will not be recovered unless Uganda Clays decides to pay it back out of goodwill,” said Masaba.
The legislators also criticised URBRA for failing to address a petition by the National Organisation of Trade Unions on alleged illegal NSSF board representation.
NOTU petitioned URBRA accusing the Secretary General of the Central Organisation of Free Trade Unions (COFTU), Sam Lyomoki of self-nomination to the NSSF board.
“The Minister of Finance wrote to URBRA requesting for vetting of nominees to the Board. URBRA vetted Lyomoki who nominated himself. URBRA confirmed the same person who nominated himself and the minister acted on URBRA’s advice,” Mwine Mpaka said.
Nsubuga however, said that the petition was received two weeks ago after Board members were vetted.
“We did not have the petition at the time of assessment of nominees. When we received the petition, we informed this committee that investigations are being undertaken,” he said.
This compelled Hon. Richard Gafabusa (NRM, Bwamba County) to reveal that URBRA received the petition on 01 September 2021.
“This is a letter with your stamp indicating received; is there another URBRA we are interfacing with? Is there another petition apart from this one?” Gafabusa asked.