The Opposition caucus in parliament has set up a team of five lawyers to challenge the proposed government purchase of preference shares in Roko Construction Limited.
In a closed-door meeting on Friday, the Opposition Caucus chaired by the Leader of Opposition, Mathias Mpuuga discussed the procedure used by the House on Thursday evening to approve the government purchase of 150,000 preference shares in Roko worth 202 billion Shillings.
The caucus resolved on two processes that include challenging the approval of the deal and petitioning the Speaker of Parliament Anita Among, seeking a review of the decision taken when the Deputy Speaker, Thomas Tayebwa was presiding over the session that approved the purchase of preference shares.
The petition signed by 32 MPs and a formal notice by the LOP Mpuuga to move a motion challenging the vote had been filed at the Speaker’s office on Friday evening.
The motion says that the decision by the Deputy Speaker to put a vote on the government proposal contravened the rules of procedure. The Opposition then sought among others, a report from the Minister of Finance as directed earlier by Speaker, Among detailing action taken and measures put in place on whether to give a loan or grant to Roko.
Also demanded by the Opposition in the motion is for the House to vote on both the majority and minority reports of the committee of finance on the proposal and that the question be properly put on whether the House should approve or disapprove the proposal by the government.
if the petition to the Speaker fails, the five-member team of lawyers would take up the matter and pursue a court process. Some of the lawyers on the team are Mawokota South MP, Yusuf Nsibambi, Mukono North MP, Abdallah Kiwanuka, Mukono Woman MP, Hanifa Nabukeera, and Kyadondo East MP Nkunyingi Muwada.
A vote on the proposed government purchase of preference shares in Roko was made on Thursday amidst uproar in Parliament as a section of opposition MPs raised objections.
Deputy Speaker of Parliament, Thomas Tayebwa had told MPs that Roko would cease operations if the government proposal for the purchase of 150,000 preference shares had not been approved.
As they objected to the procedures, Tayebwa announced that the Ayes had taken the day, thus approving the purchase of preference shares in Roko Construction Limited. The same approval had been delayed on Wednesday awaiting a report on actions and measures taken by the Finance Minister from concerns raised earlier by the Finance Committee, a minority report, and MPs.
In his report to Parliament, the Finance Committee Chairperson Kefa Kiwanuka recommended that Roko should be expeditiously audited, as a condition precedent to signing the Share Subscription Agreement by the Auditor General to particularly look at and certify the material assets, debtors, creditors, governance, and management.
He also highlighted 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. 800 million Shillings were needed for the job.
Butambala County MP, Muhammad Muwanga Kivumbi recommended that approval of the share purchase is halted until due diligence is undertaken by independent, competent, and professional accounting firms.
Kivumbi also the Shadow Minister for Finance noted, in a minority report, that due to failure to undertake due diligence, the same Roko Construction Limited together with FINASI had in the recent past entered into an agreement with the government to construct a specialized hospital in Lubowa, a project which never took off.
The minority report further recommends that government should acquire 51 percent of the ordinary shares of Roko Construction Limited as a condition for the acquisition of preference shares.
The proposal for the purchase of Roko shares was first tabled before parliament two weeks ago when the Minister of State for Finance, Musasizi indicated that Roko is facing severe liquidity challenges that have constrained its ability to execute contracted projects and adversely affected payments to its suppliers.
Roko currently has projects with signed contracts worth 1.064 trillion Shillings of which 696.6 billion Shillings are government projects. The company’s indebtedness, as of May 31, 2022, stood at 202.4 billion Shillings. It also has contingent liabilities from bank Guarantees for ongoing projects worth 130.9 billion Shillings while its indebtedness to financial Institutions totals 35.7 million Shillings and USD 20.7 billion and dues to local suppliers stand at 46.8 billion Shillings.
Roko’s liquidity situation arose primarily from delayed payments on major projects, failure to refinance expensive Shilling loans with cheaper external financing, the impact of the COVID-19 pandemic on the construction industry, escalation of financing costs, weak Corporate Governance, and inadequate management.
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