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November 28, 2018

How the Ugandan mafia is stealing from Chinese investors

By Ugandan journalist Christopher Kiwawulo, first published in New Vision.

Several Chinese investors have lost billions of shillings in well planned dubious moves orchestrated by well connected crafty Ugandan mafias, New Vision has established. In some of the cases, the mafias collude with officials in public offices including those in courts of law to frustrate cases that Chinese report against them. 

Investigations can reveal that whereas some mafias solicit bribes from the Chinese, other shrewd ones take advantage of the Chinese’s ignorance of Ugandan laws to steal their money, especially in land matters.

Fleeced, sometimes with no course for redress in sight after getting no help from authorities, some of the distraught Chinese investors have turned to reporting the shrewd government officials to President Yoweri Museveni for action while others have not done so for fear of victimisation.

The mafias contact the Chinese investors in the name of helping them overcome government bureaucracy before fleecing them. In some cases, government officials employ services of agents who take advantage of court processes to secure court orders through which the Chinese lose money.

“Some government officials or their agents engage the unsuspecting investors with all sorts of promises like taking them to meet the President, securing for them free land or expediting processes to secure for them licences and tax holidays,” revealed a source privy to the mafia dealings in the President’s office.

The cases are many and varied, although our investigations could not find a definite total figure of the cases as they are reported to different entities and some of the Chinese do not report their cases to authorities.

A Chinese national told New Vision that they sometimes do not report for fear of vengeance from the mafia groups, especially those in public offices where they have to go for certification or clearance of their documents.

Chinese investments

Besides the cordial relationship China has enjoyed with Uganda for the past 56 years, China ranks first in terms of foreign direct investment in Uganda.

As of July this year, Chinese companies had investments worth US$4.2b (sh16 trillion) in Uganda, making China Uganda’s largest source of foreign investment, according to Wan Li, the Director-General for African Affairs at China’s foreign affairs ministry.

Besides individual investors, Chinese are putting up multi-billion dollar investments in industrial parks countrywide. So far, they have set up industrial parks in Namanve and in districts of Mbale, Tororo and Nakaseke.

In Nakaseke, they are building a US$600m (sh2.29 trillion) industrial park that is expected to accommodate 80 firms and employ up to 16,000 people by 2025.

In Tororo, Guangzhou Dongsong Energy Group has invested US$620m (sh2.36 trillion) to produce cement, glass, steel, free bricks, and fertilizers with 1,700 jobs created.

Investors duped

Some of the Chinese investors are duped into joining illegal deals with the promise of protection from officials who wield power, but the same officials end up tipping off their colleagues who extort money from the Chinese.

Investigations have established that whereas some Chinese investors collude with immigration officials to secure work permits for their Chinese workers cheaply through the back door, many Ugandan officials have turned this into a money-making venture. This sometimes results in the arrest of Chinese without documents.

“We were told to bring in our Chinese workers on the promise that the officials at Immigration would help process their visa documents later. But we were shocked when a patrol came here full of policemen and arrested our workers,” said a Ugandan who works with a Chinese company located in Nakawa division, Kampala.

In October 2016, police arrested three suspects, among them two senior officials from the Ministry of Internal Affairs, for alleged fraudulent sale of work permits and passports on the black market.

Police identified the suspects as Ambrose Atwine and Sam Tugume, both attached to the Directorate of Citizenship and Immigration Control (DCIC), while their accomplice Ambrose Ahimbisibwe, whose nature of business was not disclosed, operates in Kampala.

The suspects, who were said to be operating with a racket of about 15 officers at the Ministry, were reportedly arrested while selling work permits to Chinese, among other foreign nationals.

Sources privy to the investigations revealed that the suspects were nabbed as they allegedly extorted money from the Chinese under the pretext of legalising their stay in Uganda.

During the scam, the arrested officials reportedly asked for a US$819 (sh3m) bribe, prompting one of the victims to tip off the Internal Affairs Ministry senior staff, who coordinated the officials’ arrest from Kisementi in Kamwokya, a city suburb. As a result, 46 foreigners with illegal documentation were rounded up in Kampala, 40 of them Chinese.

Chinese pay to meet the President

Whereas President Museveni has open hands for investors, investigations show that some Chinese are charged an ‘access fee’ to meet him, and those who do not pay are not allowed a chance to see him or are fobbed off.

Impeccable sources revealed that some Chinese have paid between US$20,000 and US$50,000 to secure an appointment with the head of state.

In one incident, the source revealed, the President’s handlers were embarrassed when a Chinese who had paid and was lined up to meet the President was unable to meet him because he had an urgent trip abroad.

Out of desperation, the Chinese are said to have openly complained; “ Mr President, does it mean we shall have to pay again to meet you? We paid a lot of money for this appointment Mr President.” This reportedly incensed the President who promised to meet the investor, but also take action on his handlers. It is not clear if he has already taken action.

According to an official from the President’s office, who preferred anonymity, there are several cases where various investors, a majority of them Chinese, have complained about government officials to the President’s office but the official could not tell the exact number. She said many run to the President after failing to get help elsewhere.

When asked about complaints lodged by Chinese to the President, the senior presidential press secretary, Don Wanyama, was hesitant to comment on the matter.

Mafia invades UIA

New Vision has learnt that some cases are reported to the Uganda Investment Authority (UIA) or the Investment ministry.

It later emerged that some of the issues the Chinese investors complained about included land that they paid for but lost after they were duped by Ugandan officials, some of whom claimed to be officials from UIA. These officials claimed they would secure Chinese investors land at Namanve Industrial Park upon paying a small fee since many investors competed for the land.

Namanve Central Forest Reserve originally covered 3,200 hectares, but government de-gazetted 400 hectares and gave them to UIA as an industrial park, which investors were to apply for at no cost as long as they presented evidence of having an investment threshold of US$250,000. However, it turned out that many of the Chinese investors paid for land at Namanve.

Although 431 investors applied for the land, 277 bidders were allocated, granted on the basis of submitted investment proposals. More than 75 companies have since lost the allocated plots for failing to develop them as had been agreed.

Nakapiripirit rock case

One of the most recent cases involves Chinese investors, China Road and Bridge Corporation (CRBC), who recently made a passionate plea to President Museveni seeking protection against speculators whom they accused of taking advantage of court processes to make them lose money.

CRBC sought Museveni’s intervention in what they called unfair charges based on false claims against their earnings from the 93.3 km Moroto-Nakapiripirit road project in North Eastern Uganda.

CRBC is currently in court battling with Welt Machinen Engineering Limited, a company linked to Minister of State for Minerals Peter Lokeris, over what should have been their pay for road construction works. Welt is owned by two directors, Ben Koriang Lokeris and Felix Apo Oroma, both Lokeris’ children.

In 2013, CRBC won a contract from Uganda National Roads Authority (UNRA) to construct the road at US$80m (about sh305.6b), which the Chinese firm completed last year.

But as the Chinese firm worked on the road, it was sued by Welt, which claimed ownership of Kamusalaba rock in Nakapiripirit district from where CRBC got gravel to construct the road.

Welt accused CRBC of blasting the rock to construct the road without authorisation from the owners (Welt). As a result, Welt lodged a claim of US$5.9b (sh21.7b) out of the total project amount, which was expeditiously granted in the High Court.

The Uganda National Roads Authority (UNRA) released the money to the High Court Registrar’s account number 003130058000001. Documents show that US$2.45m (sh9b) was released on January 24, 2017, and another US$3.1m (sh11.6b) was released in June 2017.

However, part of the money (over sh9b) was released from the High Court Registrar’s account to Welt under questionable circumstances, which CRBC protested in the Court of Appeal prompting the freezing of the remaining money amounting to over US$3m (sh11b).

Sources revealed that the suspicious release of the money before CRBC’s appeal could be heard and against all protests was made possible by a racket of top officials in government, judiciary, and UNRA. Documents show that the payment of US$3.1m (sh11.6b) was released by a UNRA accountant called Evelyn Ssenkeezi.

CRBC project manager, Fan Wei, therefore wrote to the President complaining about the same. In his letter to Museveni dated June 26, 2017, Wei said they secured permission and paid US$13,649 (sh50m) to Nakapiripirit local government to get gravel from Kamusalaba rock for the road project.

According to Wei, they agreed with Nakapiripirit district local government to use the rock in an agreement that the two parties signed on May 13, 2013. The then Nakapiripirit district chief administrative officer, Moses Bahemuka Kisembo, confirmed they signed an agreement with CRBC and granted them permission to use the rock.

Kisembo said this was endorsed by the entire district leadership, which his deputy, Jobs Lomenen Ilukol, also confirmed. The Lorengedwat sub-county chief, Tonny Okello Agaza, said he consulted community members who also agreed to lease the rock to the Chinese.

Documents show that Welt secured a mining license on June 4, 2013, a month after CRBC had signed an agreement with Nakapiripirit authorities. Welt paid US$55 (sh200,000) for the one-year contract and their license was signed by Edwards Katto, the acting commissioner for Geological Survey and Mines Development in the Energy Ministry that minister Lokeris is in charge of.

To date, the Chinese are wondering how Welt secured ownership of the rock, and expeditiously secured a court ruling granting them over US$5.73m (sh21b) of the money they were supposed to be paid for constructing the road.

Commenting on a petition by CRBC, the senior presidential press secretary (Wanyama) said, “The petition was received and it will be attended to.” He, however, added that, “Since the matter is still in courts of law, it will be subjudice for the President to act (before it is disposed of).”

Pastor’s wife defrauds Chinese

In another case of fraud lodged at Buganda Road Court, a Chinese national, Wu Weiling of Mama Mia Investments sued Sandra Katebarairwe and others for allegedly defrauding him of US$68,530 (sh262m).

Katebarairwe, 40, the wife of Pastor David Ngabo of the Forum for Democratic Change party, in March 2017 appeared before Buganda Road Chief Magistrate, James Ereemye, on charges of fleecing a Chinese national of his money.

She was charged with obtaining money on false pretenses, forgery and uttering false documents and denied all the charges.

Prosecution alleges that on July 8, 2016, at Rwenzori Towers in Nakasero, Katebarairwe and others defrauded Wu Weiling of Mama Mia Investments of US$68,530 (sh262m) pretending they would rent him space at Imperial Botanical Shopping Mall whereas this did not occur.

She later secured bail, with Kampala Mayor and city lawyer, Erias Lukwago, Benon Mugerwa and Henry Ssempigga, standing in as her sureties.

When the case came up for judgement on August 1 this year, one of the sureties informed the court that Katebarairwe was out of the country and is expected to be back soon.

This prompted the magistrate, Charles Yeteise, to adjourn the case and issue criminal summons against her. To date, however, Katebarairwe is still missing, and her sureties now face arrest.

Mubende Chinese tree project

Since early 2017, a 2,500-acre tree planting project, Farmosa, that covers seven villages in Mubende district, has been a source of conflict between residents and a Chinese investor, Martins Chang.

At the height of the dispute, the Farmosa project manager, Stephen Tumwine, was murdered in a case of mob justice after locals accused him of cutting down their food crops with impunity to plant trees.

Chang says he was also attacked, though he survived. Chang owns Quality Parts Company Limited, a firm under which Farmosa tree project falls. The project is on Block 61, plots 25, 27, 29, 37 and 39 in Buwekula County, Mubende.

There are about 180 families living on the land in the villages of Kyedikyo, Kaswa, Butoro, Nyamayindi, Bikoni, Ngabano and Kicucura within Madudu and Butorogo sub-counties.

The land has hook pines and macadamia tree species from which Chang says they will get timber upon maturity. The trees grow up to the height of 40 metres and are ready for harvesting after about 30 years.

Purchased in 2011 from Princes Henry Kimera and David Simbwa, ownership of the land has since been disputed and according to local authorities, some squatters have declined to be compensated. The leaders say squatters claim they are the rightful owners of the land.

Due to too pressure from the squatters, Chang in April 2016 sought the intervention of Buganda Land Board (BLB), which gave him a lease on the land.

In an April 22, 2016 letter signed by Barnabas Ndawula, the BLB head of legal services, Buganda said they have no interest in the land.

“We acknowledge that we have no interest in the aforementioned land and by copy of this letter, our branch manager Mubende is hereby instructed to notify the tenants accordingly if any,” Ndawula wrote. The letter was copied to the then Mubende Resident District Commissioner, Florence Tibeyunga.

However, some squatters allegedly ignored the letter and instead threatened to harm Chang and his workers. Sources revealed the squatters’ actions were instigated by a few individuals whose motive was to extort money from Chang with a promise of calming down the locals.

For Chang and many investors like him, the irony lies in the lack of knowledge about Ugandan land laws. Section 29 of the 1998 Land Act recognises categories of land occupants as the lawful and bona fide occupants.

Whereas the law does not allow foreigners to own land in Uganda, they can lease it and become lawful occupants, just like Chang did. They then pay ground rent (busuulu) to the landlord. Bona fide occupants are those who have lived on a certain piece of land 12 years before the formulation of the 1995 Uganda Constitution.

Chinese Embassy

Time and again, the Chinese government has expressed willingness to support its countrymen who seek to invest in Uganda.

But when Sunday Vision asked Fang Yi, the Chinese Embassy political affairs officer, whether there are cases of Chinese investors who have gone to the embassy to seek help over Ugandans who want to steal from them, he said, “The Embassy has no related information to share with you.”

However, New Vision has independently learnt that some Chinese have complained to their Embassy and were offered consular services like helping them to get lawyers.

Government position

President Museveni has on several occasions warned politicians and civil servants against maligning and sabotaging investors, saying he would deal with them firmly as this is ‘Kisanja Hakuna Mchezo’ (a term for no jokes). Museveni argued that such sabotage indeed is an impediment to development.

In May this year, President Museveni directed the Minister for Privatisation and Investment, Evelyn Anite, to launch a toll-free hotline (0800100770) aimed at fighting cases of corruption among government officials who sabotage investment.

At the launch, Anite said the installation of the hotline that is housed under UIA’s one-stop centre, was an immediate directive from the President. The hotline is manned by UPDF officers. Anite said the hotline was active, and that it was making progress towards fighting saboteurs of investment.

Asked about complaints specifically lodged by Chinese, Anite told New Vision that although she handles many investors, her office receives at least five Chinese lodging complaints daily.

“I usually ask the Chinese to stop giving out money to those who ask them for bribes and instead come to my office for help. I have always attended to them and I am happy to continue helping them,” she noted.

Anite said the investors throng her office every day and that she gives them awareness messages that help them avoid the mafias who target their money.

“Some of them get dubious lawyers or people who pose as lawyers who end up stealing their money. In case they have court cases, I usually refer them to the Attorney General’s office to get them good lawyers rather than crooks.”

On land that Chinese lost at industrial parks, Anite said this results from speculators who get the land and sell it to Chinese when the investment grace period has elapsed or is about to elapse.

“The law says one is supposed to invest on this land within 18 months. If they have not done anything on the land within that period, the land reverts to the government, that is the law. So, it might be that such people dupe the Chinese when they realise that the 18 months are about to elapse,” she explained.

Before former UIA executive director, Jolly Kaguhangire, was sacked, she told New Vision that she personally received at least 10 complaints from Chinese investors since she assumed office in April 2017 up to June 2018. Kaguhangire said the complaints were both verbal and written, and that the authorities were following them up.

She noted that most of the complaints relate to investors being disturbed by Ugandan officials regarding land in industrial parks.

“They usually report to me and I go to the ground to establish the facts, then I sort out their complaints,” she explained, adding that UIA’s core task is to boost investor confidence. Although serious steps have been taken, more needs to be done as mafias are still on the prowl.

Govt officials netted

There have also been a number of high profile cases in which investors have accused senior government officials of soliciting bribes from them.

On January 30, 2017, finance ministry officials John Charles Ogol, a principal finance officer and Geoffrey Turyamuhika, a senior economist, were arrested after they allegedly solicited a bribe of US$300,000 (over sh1b) from a Chinese investor.

According to the prosecution, the duo, while at the ministry of finance headquarters in Kampala, being public officials solicited a bribe of US$300,000 from one Hassan Sserunjogi, who was representing Guangzhou Dongsong Energy Group.

The money was allegedly in exchange for expediting documentation concerning the financing and construction of a power sub-station and transmission line for Guangzhou’s project in Osukuru hills, Tororo district, where the Chinese applied to mine phosphates.

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