KAMPALA. The Ombudsman has directed Energy minister Irene Muloni to cancel a mining licence granted to a Chinese firm, Hui Neng, to extract phosphates from Osukuru hills in Tororo District on account of a fraudulent tendering process.
“In light of the specific findings above and the broad objective of this investigation, it is the conclusion of this office that the failure to receive the application for a mineral exploration licence as submitted by the complainants and the eventual grant of the licence to Hui Neng was the result of grave and what were also most likely to be fraudulently motivated actions and failures to apply proper procedures both at the Tororo DLG (district local government) level and at the DGSM [directorate of geology, survey and mines],” Justice Irene Mulyagonja, the Inspector General of Government (IGG), noted in a confidential report seen by this newspaper.
The IGG ordered Ms Muloni to ask the Chinese company to “show cause” why its multi-billion mining licence for exploration of phosphates in Osukuru hills should not be cancelled amid the irregularities.
Mr Edwards Katto, the director of Geology, and Tororo District deputy chief administrative officer Swaibu Balaba, both implicated in conniving to award the mining licence to Hui Neng, were tasked to explain why “they should not face disciplinary action for knowingly facilitating the apparent fraudulent process.” Only the substantive CAO or any duly authorised officer should have signed off the licence at the district, the dossier says.
The investigations into the award of the licence for carbonatite exploration in Tororo followed a complaint by Mr Stuart Smith and Mr Grant Hayward, directors of a rival Canadian company Frontier Exploration, which petitioned the IGG that tendering procedures were circumvented to favour the eventual winner.
The IGG directed Mr Katto to receive the rival firm’s application locked out in the initial bidding process, or show “justifiable cause why this cannot be done.” The orders are yet to be implemented. Ms Fang Min, the proprietor of Fang Fang Restaurant said to be close to State House, reportedly brokered the deal for the Chinese firm before falling out with some company directors whom she has sued.
Ms Fang told this newspaper that she would only give her side of the story after the case she filed is decided.The investigations
The IGG spokesperson, Mr Ali Munira, confirmed the inquiries and said a final report is pending. Mr Katto in an interview with this newspaper denied any wrongdoing and claimed witch-hunt, before referring all inquiries to Energy ministry permanent secretary Kaliisa Kabagambe who said he had not yet seen the IGG report and would not comment.
The complaint
The Canadians in the complaint noted that following the expiry on June 23, 2013, of the exploration licence for mineral deposits at Osukuru Carbonatite Complex in Tororo held by Nilefos, a subsidiary of Mukwano Group of Companies, their company was the first to erect temporary beacons in the exploration area after sign off by Tororo Chief Administrative Officer, Mr Oswan K. Vitalis. We could not independently verify this claim.
The Mines directorate staff, allegedly acting on the orders of Mr Katto, reportedly declined to receive the application of the Canadian firm.
Proprietor of the Frontiers say they were surprised later to learn that the licence, which was “legally flawed and was never endorsed by the Tororo CAO but the deputy CAO”, had instead been granted to their rival company Hui Neng Mining Limited on August 2013.
The IGG report indicates that it is evident that Mr Hayward and Mr Smith attempted to submit their application for the exploration licence for Osukuru Hills Tororo at the DGSM Security Registry on June 26, 2013.
The duo twice petitioned minister Muloni, seeking administrative review but she did not respond. They later sued. The second response letter from the ministry instead was signed by PS Kabagambe, who reportedly advised them to abandon their claim.