Parliament okays purchase of sh200b shares from Roko by Gov’t

Parliament has approved the proposed government purchase of 150,000 preference shares in Roko Construction Limited worth sh 202 billion amidst protest from a section of MPs.

On Thursday, the Deputy Speaker of Parliament Thomas Tayebwa told MPs that he had received communication from the Executive that if the government proposal is not approved by the House during the sitting, Roko was to cease operations.

Before the MPs could discuss Tayebwa’s communication, the Deputy Speaker put a question on the proposal by the government and he indicated that the ‘Ayes’ had taken the day.

This was amidst commotion on the floor with some MPs raising the issue of lack of quorum while others shouted that they had not taken a vote.

Tayebwa immediately adjourned the House to Tuesday next week.

This left a section of MPs mainly from the Opposition on their feet as the Deputy Speaker walked out of the Chambers.

These were seen with their Leader of Opposition, Mathias Mpuuga holding a short meeting in the Chambers.

The development comes after a day when parliament, steered by Speaker Anita Among stayed approval of the proposed purchase of shares in Roko after the presentation of a report by the Finance Committee and a minority report by Butambala County MP, Muhammad Kivumbi.

Both reports set conditions for the government to fulfill before the purchase of shares would be approved.

In his report to Parliament, MP Keffa Kiwanuka, the Finance Committee Chairperson recommended that Roko should be expeditiously audited, as a condition precedent to signing the Share Subscription Agreement (SSA), by the Auditor General to particularly look at and certify the material assets, debtors, creditors, governance and management.

He noted 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.

“Whereas the Committee is satisfied with Roko’s own assessment and government’s assessment based on its interface with Roko and Roko’s creditors, as condition precedent if this bailout is agreed, the Committee strongly recommends that Roko should be expeditiously audited by our Auditor General. This would require that 800 million Shillings is made available for this work,” said Kiwanuka.

The Kiboga East MP also recommended that the Share Subscription Agreement (SSA) should be amended to include reporting arrangements to parliament on the performance of the company, after the bailout, every after six months.

He also said that government prioritizes payments for all outstanding arrears to contractors and that payments for work executed by contractors are paid promptly, to mitigate the impact of cash flow constraints as a result of delayed payments.

Kiwanuka recommended that government acquires the preference shares in Roko taking into consideration the different issues highlighted.

Kivumbi in his minority report dissented on several issues like lack of due diligence, the case for majority shares and equity, risk of preferential shares, numerous court cases of Roko, unfair selection of Roko, and insensitive timing of the proposal, and others.

“In the recent past due to failure to undertake due diligence, the same Roko Construction Limited together with FINASI entered into an agreement with the government to construct a specialized hospital in Lubowa.

To date no substantial progress has been registered and this prompted the House to reallocate sh 319 billion that was proposed for promissory notes.

This too reaffirms the need to contract a competent firm to undertake due diligence before the House pronounces itself on the proposal,” reads part of the minority report

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