By: Giles Muhame

Uganda Revenue Authority (URA) made payments of over Shs 6bn to high ranking government officials in different ministries as a reward (akasiimo) for winning the Heritage/Tullow oil Capital Gains Tax (CGT) case.

Tullow Uganda Ltd and Heritage Oil and Gas Ltd each owned 50 percent of a petroleum exploration licence in Uganda.

When Heritage sold its interest to Tullow for $1.5bn, the deal required the consent of the Ugandan Government – and it required Heritage to pay capital gains tax on the deal of $405m.

When Heritage disputed that tax was payable, the government made its consent conditional on 30 percent of the disputed tax being paid as a deposit and the balance being secured by a bank guarantee.

But when the sale completed, Tullow paid the balance into an escrow account under the control of Tullow and Heritage instead. The government was not satisfied with these arrangements and refused to consent to the sale.

Tullow disputed the URA’s assessment of $473 million of CGT payable following the farm-downs and appealed against the assessment before the Uganda Tax Appeals Tribunal (‘TAT’) and commenced an International Arbitration in September 2013.

In July 2014, the TAT rejected Tullow’s appeal and assessed Tullow’s CGT liability for the farm-downs at $407 million less $142 million previously paid.

In its 2014 accounts, Tullow recorded a contingent liability of $265 million in relation to the dispute.

Tullow subsequently appealed the TAT ruling to the Ugandan High Court and continued with its International Arbitration claim.

Following discussions with the Government of Uganda and the URA, Tullow agreed to pay $250 million in full and final settlement of its CGT liability.

This sum comprised $142 million that Tullow paid in 2012 and $108 million which the firm said would be paid in three equal installments of $36 million.

The first of these was paid upon settlement and other installments were set for 2016 and 2017.

The aftermath

ChimpReports has learned that after emerging victorious in the CGT case, URA made huge payments to government lawyers and other staff who participated in the legal battle against Tullow.

Officials said had the Ugandan government not taken aggressive steps; it would have missed millions of dollars in capital gains tax.

It is also reported that Tullow associates tried to bribe then URA boss Allen Kagina to ignore the tax but angrily turned down the offer before reporting the matter to the president.

However, questions are being asked about who authorised the questionable payments and what criterion was used in their disbursement to government officials.

According to URA’s monthly payroll of August 2016, the tax body’s Chief Executive Doris Akol received Shs 242m as a reward for winning the case.

On the same payroll, Akol received Shs 40m (gross) as her monthly salary.

Therefore in one month, Akol went home with a staggering Shs 282m (before taxes).

All the figures mentioned in this story reflect amounts of money the officials received before taxes or other deductions were subtracted.

Akol led URA’s legal department that managed the capital gains tax case before being appointed by the president to run the tax collection body.

The former Permanent Secretary in the Ministry of Energy and Mineral Development, Kabagambe Kaliisa bagged Shs 133m.

The then Deputy Attorney General, Fred Ruhindi received Shs 93m.

Interestingly, Shs 393m was wired on the bank account of former Permanent Secretary Finance Ministry, Chris Kassami after he had passed on.

Contacted, Akol asked ChimpReports to obtain a clarification from the URA spokesperson Sarah Banage.

Banage confirmed that indeed the tax body effected payments after the capital gains tax was won.

“Yes, it’s true, we paid some people basing on a directive from the Attorney General,” said Banage.

Asked what criterion was used to make the disbursements, Banage answered: “Everything was based on a directive from the Attorney General. You need to talk to his office. They have all the details.”

We telephoned Attorney General, William Byaruhanga at the end of 2016 but said he was in Hague.

He promised to follow up the matter on return to Uganda.

Efforts to obtain clarification from were yet to bear fruit as he fell short of responding to our telephone calls.

On the list of the paid government officials is the current Finance Ministry Permanent Secretary Keith Muhakanizi who received Shs 108m.

Former Attorney General Peter Nyombi received Shs 226m.

Lawrence Kiiza, a senior official in the Ministry of Finance was paid Shs 102m while Martin Mwambutsya, a Senior Attorney in the Ministry of Justice and Constitutional Affairs took home Shs 232m.

Ernest Rubondo, who heads the Directorate of the Petroleum Authority of Uganda, received Shs 266m.

Solicitor General, Francis Atoke was given Shs 234m while URA lawyer, Ali Ssekatawa got Shs 242m.

The Director of Legal Affairs at the Solicitor General’s office, Christopher Gashirabake, got Shs 242m.

Honey Malinga, who served as Vice Director of the Petroleum Exploration & Production Department (PEPD), was handed Shs 262m.

Moses Kaggwa, a Member Commissioner for Tax Policy Ministry of Finance, got Shs 234m.

Moses Kibumba, a private tax expert having formerly worked with URA for 21 years as a tax auditor, received Shs 93m.

Moses Kajubi who was serving as URA Commissioner, Domestic Taxes, got Shs 226m.

Peter Muliisa, a URA lawyer with a masters in Petroleum Taxation and Finance, was paid Shs 234m.

Rodney Golooba and Samuel Kahima, all lawyers with URA, received Shs 222m and Shs 224m respectively.

Harriet Lwabi Musoke, a senior official at Ministry of Justice and Constitutional Affairs, bagged Shs 242m while Harriet Tukamushaba who works in the same office received Shs 99m.

KCCA Director Jenifer Musisi, who had previously served as head of the legal department at URA, was given Shs 121m.

Robinah Nakakawa, a commissioner at URA, took home Shs 242m while Elizabeth Nakkungu of the Justice Ministry received Shs 238m.

Principal State Attorney George Kallemera got Shs 232M.

Others are Syson Ainembabazi of URA legal department (Shs216m), Assistant Commissioner Tax Investigations, Irene Bashabe Kyomuhendo (Shs 210m) and URA Manager Customs Audit, Agnes Nabwire.

Questions government must answer

1. Why would government officials paid handsomely to defend the people’s interests reward themselves with huge sums of money for doing the work they are paid for?

2. If indeed the money was meant to reward and motivate staff, what criterion was used to make the payments?

3. If the decision to reward these officials was administrative, how come doctors or government soldiers who save lives on a daily basis do not receive bonuses?

4. If these payments were in good faith, why wouldn’t URA and Attorney General’s office didn’t share this information with the public in the spirit of accountability?

Chimpreport