The National Social Security Fund is in negotiations with property mogul Mugoya Isabirye, the owner of Mugoya Estates to “equitably share the assets of the defunct joint venture” the two entered into in 2004 to construct 5,000 housing units.
The Workers Fund, according to inside sources, is reportedly willing to pay Sh9 billion to Mr Mugoya. In an email response to our questions on Friday, NSSF conceded that they were in talks with the Ombudsman to get a go ahead to end the joint venture.
“NSSF initiated discussions with James Isabirye (Mugoya) to equitably share the assets of the defunct joint venture subject to approval of the NSSF Board and Government,” said Mr Victor Karamagi, the NSSF publicist.
NSSF has asked the Inspector General of Government to give it a no-objection to wind up Nsimbe Holdings Ltd and distribute the assets thereafter. The NSSF boss, Richard Byarugaba, on December 22 last year confidentially wrote to the Ombudsman, Raphael Baku, seeking authority to begin negotiations with Mugoya Isabirye, the owner of Mugoya Estates which had entered into a joint venture with NSSF.
Mr Baku, however, replied on March 30 this year that “…we are unable to grant you the no- objection because all matters pertaining to Nsimbe Holdings Ltd are subject of an ongoing Constitutional Appeal in the Supreme Court...
“The matter, is therefore, subjudice,” reads Mr Baku’s letter, adding that the IGG shall cooperate with NSSF to map a way forward only after the appeal is withdrawn and a notice served to the IGG.
Sunday Monitor, however, understands that after the written exchange, the duo have held one-on-one talks with Mr Byarugaba impressing upon the IGG of the need to conclude the controversial Nsimbe Estates deal.
In 2004, the deal provoked public fury after Mr Mugoya was given 51 per cent shareholding for his contribution of Sh8.5b worth of 843 acres of land on Masaka Road, but critics said his contribution was worth Sh4b.
On November 5, 2007, the Constitutional Court ruled that the multi-billion Nsimbe deal was illegal because NSSF had entered the joint venture without clearance from the Attorney General, the government legal adviser.
The $225m project for 5,000 housing units was being undertaken by Nsimbe Holdings, a joint venture between Mugoya Estates and Premier Development Company, a subsidiary of the National Social Security Fund.
Mugoya Estates had purportedly contributed Shs8.5b worth of land for the deal, giving it 51% ownership of the venture while Premier contributed Shs8.2b to form Nsimbe Holdings Ltd.
In the deal which started in 2004, NSSF paid $4,561,058 (over Shs8 billion). But allegations of financial impropriety in the transaction were made and the project was suspended on the recommendation of the IGG.
In 2005, the then IGG Justice Faith Mwondha, declared the project illegal and done in bad faith. Some officials of the Fund were prosecuted and others like the former Gender Minister Zoe Bakoko Bakoru had their cases dropped after she became a fugitive. She fled to the US to escape prosecution in a case that was riddled with political undertones.
Our sources say some bureaucrats are suspicious of NSSF’s motives in trying to open negotiations when the matter is still in court. Although NSSF did not answer our question on what Mr Mugoya demands and what proposals they had made to him, Mr Karamagi said on Friday: “The Fund hopes to recover its investment in the joint venture.”
Our investigation found out that NSSF was considering continuing with the project alone, but Mr Karamagi was noncommittal, saying: “A decision on what to do with the Nsimbe project land will depend on the nature of our exit agreement with Mugoya, and the Fund’s investment policy priorities under the RBA/ liberalisation era.”
The workers’ body is one of the richest public entities, with over Shs2 trillion of workers’ savings, but perennially suffers the misfortune of engaging in scandalous development projects including the Temangalo land saga (worth Shs11 billion) and the money-swallowing Pension Towers under construction on Lumumba Avenue in Kampala. The “intelligent building” as described by then NSSF boss Chandi Jamwa was to cost Sh36 billon, but the costs more than doubled before its foundation was complete.