Parliament to probe Uganda Telecom over “poor and unstable” management

Parliament on Thursday voted to set up a seven-member select committee to investigate the activities of Uganda Telecom Limited after Nandala Mafabi, a Forum for Democratic Change MP, asked the House to audit the company’s accounts for the last four years and investigate its operations over the same period to prevent it from “sinking.”

A report tabled by the MP for Budadiri West – and also former leader of opposition in parliament – in a plenary session of the parliament said that in the last four years the telecom company “has continuously been on a freefall that has now reached alarming levels.”

Mafabi listed twelve causes for the company’s decline, which he said started after the Libyan Revolution of 2011 which deposed that country’s government and led to a civil war. The Libyan government has a majority shareholding in UTL, 69%, while the Ugandan government owns the rest of the shares.

The report cites “poor and unstable management” as one of the causes of the company’s troubles. “After the Libyan crisis (2011), UTL has had frequent changes in top management: six managing directors (MDs) to date (an MD per year); eight chief technical officers (CTOs) or one CTO in nine (9) months,” Mr Nandala said in the report.

It faults the telecom’s executives for irregularly selling off the company’s property, charging it excessively for property through “bad agreements, collusion and fraud,” and conflict of interest.

“On privatization, UTL inherited a lot of assets (buildings, land and equipment),” the report said. It adds that starting two years ago, most of the assets were “sold off at supersonic speeds” or are lined up for sale, and that this is “going on unabated.”

Mr Mafabi, in the report, lists two prime plots of land sold off by the company; the first, in Kampala’s Industrial Area, was sold at a price of Shs17.15 billion, while the other, Nsambya,  was sold at Shs5.48 billion. Eleven more plots of land in Kampala have also been evaluated and are currently on the market, the report adds.

It also cites three contracts awarded by the company to entities owned by top officials.

Mr Mafabi also said that the company is struggling with huge debts it has failed to service. These include Shs22.244 billion owed to the Uganda Communications Commission for unpaid spectrum fees, Shs8 billion owed to MTN Uganda for interconnection charges, and unpaid taxes to Uganda Revenue Authority to the tune of Shs58.424. The telecom also owes $7.06 million to China’s Huawei Technologies Limited and Shs16 billion in unremitted NSSF contributions, according to the report.

In addition, the telecom’s executives are accused of “paying themselves huge salaries and allowances on top of other benefits” so much that they are the best paid executives in the sector.  In September this year, Mr Mafabi said in the report, the board chairman’s allowance was increased from Shs5.17 million per month to Shs17.25 million a month.

It adds that the managing director, chief financial officer, chief legal officer, and chief human resource officer altogether earn Shs420 million per month. “The lowest gets Shs60 million per month and the highest Shs150 per month,” Mr Mafabi said “This is 1/3 of the salary bill for the about 500 UTL workers.”

Mr Mafabi also drew attention to the company’s old network equipment, which he said has not been refurbished since 2008, leading to loss of customers. “Despite the network now being very old and requiring an overhaul/replacement, the investors have not put in any money to the company,” he said in the report. This has “resulted into poor services,” and “many customers have abandoned using the company’s services.”

Uganda Telecom did not respond to requests for comment.

In addition to auditing and investigating company, members of parliament also voted to prevent former junior finance in charge of privatisation, Aston Kajara, UTL board members Stephen Kaboyo (also the board chair) and Moses Mwase, and James Wilde, the company’s chief financial officer from leaving the country until the committee is done with its probe.