SPECIAL REPORT: Inside the NSSF crisis 

KAMPALA:  The NSSF board held an emergency meeting on January 17, 2023, in Kampala to resolve a leadership crisis that has raised questions about the governance of the Fund and tested the confidence of its members.

The extraordinary board meeting came days after the leaking of a letter in which Gender and Labour minister Betty Amongi made serious allegations of corruption and mismanagement against NSSF former MD Richard Byarugaba.

Mr Byarugaba’s contract expired on December 1, 2022. He and his deputy, Patrick Ayota, had reached the retirement age of 60, but were eligible for reappointment. Ms Amongi reappointed Mr Ayota, 63, to a five-year contract as deputy MD and acting MD but has deferred reappointing Mr Byarugaba, despite a recommendation from the board.

Instead, the minister directed the NSSF board to initiate an investigation into the allegations against Mr Byarugaba. Board chairperson Peter Kimbowa wrote to the IGG on December 27 to initiate the investigation.

“The details of the petitions to the Minister and the preliminary documents related to the allegations including whistle-blower reports shall be forwarded to you by the Minister in confidence,” he wrote.

Apart from the allegations of corruption, the minister accuses Mr Byarugaba of poor performance, defying presidential directives, poor strategic investments, as well as “misrepresentation and defiance”.

“This has constrained me from renewing the contract of the Managing Director Mr. Richard Byarugaba until you provide me with concrete responses addressing all the concerns raised above,” she wrote in a December 7 letter to the NSSF board chairman.

In the January 17 extraordinary meeting, the board directed Mr Kimbowa to urgently respond to the minister’s letter. “These allegations are not against the MD,” a board member who attended the meeting said. “They are against the Fund and we need to respond. Why should we keep quiet?” The official spoke on condition of anonymity because they are not authorised to speak on behalf of the board. 

Ms Amongi confirmed to this newspaper that she had directed the board to ask the IGG to investigate the matter. In a response to wide-ranging inquiries from this newspaper, NSSF spokesperson Arimi Barbara Teddy said: “The questions that you have raised may be subject to ongoing investigations by the IGG and therefore we are not at liberty to discuss them.  It is therefore prudent that we await the IGG’s investigation.

“We assure our members that we are operating normally. We continue to receive member contributions, make investments and pay out benefits to qualifying members.”

NSSF later issued a public statement about the matter. 

In her letter, Ms Amongi said she had changed her mind about reappointing Mr Byarugaba after a December 7, 2022, meeting between the board and retired Gen  Caleb Akandwanaho aka Salim Saleh, the overall coordinator of Operation Wealth Creation who is also President Museveni’s brother, at his base in Kapeka, near Luwero, about 60 kilometres from the capital, Kampala.

“However, after our meeting at Kapeka yesterday, you note that there were serious issues that have been raised on top of all the other issues I discussed with you severally,” she wrote. “In view of the above, the concerns which were raised after the approval of the appointment of MD during the Kapeka meeting, and other new issues ought to be re-examined by the board and clarity provided before I appoint him as recommended.”

However, two board members who attended the meeting said separately that the minister’s letter did not accurately reflect the discussion between Gen. Saleh and the NSSF Board.

“The minister’s letter only has a passing resemblance to the discussion we had in Kapeka,” one of the two officials said. They asked to speak anonymously because they are not authorised to speak on behalf of the board. 

This newspaper has seen a copy of Gen. Saleh’s presentation to the NSSF board. It does not include the corruption and mismanagement allegations levelled against the former Fund managing director.

The Road to Kapeka 

The meeting between the NSSF Board and Gen. Saleh followed months of a behind-the-scenes power fight at the Fund. We trace the origins of the fights and the different power centres.

On December 6, 2022, board members of the National Social Security Fund travelled to Kapeka, to meet with Gen Saleh. On paper, Gen. Saleh is the coordinator of Operation Wealth Creation, a loosely regulated programme set up for army veterans to distribute agricultural inputs. In reality, he is widely seen as the most powerful person in the country after his brother, President Museveni.

The journey to Kapeka had started at least seven months earlier, in May 2022, when Minister Amongi declined to approve the NSSF budget as presented by the board. The amendment to the NSSF Act had come into force in January 2022 and expanded membership of the Fund to voluntary savers and firms with fewer than five employees.

In a May 30 letter addressed to Mr Byarugaba, the minister said the NSSF budget should consider sensitisation and engagement of employers and workers, strengthening compliance of labour laws, establishing a mechanism for monitoring the welfare of workers, including use of an online system, and establishing a corporate social responsibility fund to help low salaried workers impacted by Covid-19.

“This will require some budget allocation under operating funds that will support the joint activities with the ministry in charge of labour, labour unions, federation of employers, private sector, government MDAs and Members of Parliament representing workers and those in the Parliamentary Committee of Gender, Labour and Social Development.”

Mr Byarugaba pushed back in a letter to the minister two weeks later. The submitted budget, he said, already included allocations for these activities. In addition, he said a proposal by the minister to reduce the operating budget by Shs23 billion “will significantly erode our ability to deliver on the budgeted 10.5 percent return to the member”.

This letter and a meeting three days later over the budget failed to resolve the matter. On June 16, Ms Amongi responded in a letter to Mr Kimbowa, the board chairperson.

Once again, she asked the board to rework the budget and pay special attention to “strengthening compliance with labour laws, sensitisation and engagement of employers and workers to scale up the expansion of social security, and engagements of Parliamentarians and other strategic stakeholders”. 

Specifically, she asked the Board to carve Shs6 billion out of the Fund’s operating budget to cater for the areas she had identified. It is this money that has since raised controversy, and which will be revisited later.

However, Ms Amongi wasn’t done. In the same letter, she also blocked Shs400 billion that had been earmarked for strategic land purchases in the budget. The minister asked for it to be parked in fixed income investments awaiting submission of a due-diligence report. This, as our reporting will also show, would also emerge as a source of conflict within the Fund.

Ms Amongi kept Shs76 billion meant to build an office complex at Yusuf Lule Road in the budget but deferred approval for the works pending a resolution of a contractual dispute. This, again, would also emerge as a pain-point between the minister and the NSSF MD.

The minister also pushed for an explanation on a planned staff restructuring exercise at NSSF, as well as plans by the Fund to build a specialised court for the Judiciary to handle social security cases.

By this time, however, relations between the board, the minister, and the NSSF MD had become frosty, officials familiar with the matter say. They were about to become ice-cold.

Retirement plans

Mr Byarugaba and Mr Ayota’s careers were intertwined. They had worked together at Barclays Bank and had been reunited at NSSF when Byarugaba became MD and Ayota chief finance officer. When Geraldine Ssali, the deputy MD left in 2017, Mr Ayota was promoted to the number-two position.

Under them the Fund had grown from Shs2.7 trillion in 2012 to Shs17.2 trillion. In 2018/19 revenues from investments had outstripped collections from members from the first time, and were 29 percent higher in 2021/22. The effects of the coronavirus pandemic pushed returns to members below double-digits for the first time in a decade in 2021/22, but the 10-year average return to members outstripped inflation. 

NSSF was a quiet, money-printing machine, but not everyone was happy with the performance. In mid-July 2022, weeks after the tug-of-war over the budget, both Byarugaba and Ayota were reminded that they had reached (and passed) the retirement age of 60.

The Board had, on July 1, 2022, recommended to the minister to reappoint the two officials given their relatively good performance. For that to happen, however, they had to officially retire, according to the minister. On July 18, Mr Ayota notified the minister of his intention to retire at the end of 90 days. Two days later Ms Amongi accepted the retirement but based on the Board recommendation, reappointed him on a one-year contract, as long as there was no objection from President Museveni.

But no retirement was forthcoming from Mr Byarugaba. He noted, in discussions with the board chairperson and close associates, that he did not have to retire before the end of his contract at the end of the year.

On July 22, 2022, Ms Amongi wrote to Byarugaba noting his failure to retire, and directed him to stop exercising the mandate and functions of the office of the MD NSSF with effect from July 26. “The deputy managing director who has retired and has been appointed on contract will act as managing director,” the minister noted.

A potential stand-off was avoided by a letter an hour later from Deputy Solicitor General Pius Perry Biribonwoha who advised that Mr Byarugaba’s term of office ended on the last day of his contract – December 1, 2022 – not on his sixtieth birthday. But the writing was on the wall.

President intervenes

President Museveni joined the fray on August 6, 2022, with a letter to Minister Amongi urging restraint and wider consultation. “It is better one consults quietly about these appointments before deciding,” he wrote. 

“In the case of NSSF, the present group seem to have done a good job, growing the fund from Shs1.7 trillion in 2010 to Shs17.2 trillion currently. Good performance is not very common in parastatals. Where is occurs, the actors should be appreciated.”

The President proposed a meeting later that month with the minister, the vice president, the prime minister, the finance minister, and the Attorney General, to discuss the matter further. “I have been told that Mr Byarugaba’s term ends in December 2022. Hence, there is still time.”

At the State House meeting, Ms Amongi reported that the board had recommended new contracts for both NSSF top officials, but she had received several petitions, whistle-blower reports, and allegations of mismanagement directed at the MD. She proposed a meeting so that the President could hear directly from the NSSF Board, which was agreed to.

The action now shifted away from the red-carpeted rooms of State House to the dusty brawl rooms of office politics. On September 12, the Inspector General of Police received a strange letter from lawyers acting on behalf of Mr Hassan Lwabayi Mudiba, one of the two NSSF board members representing the National Organisation of Trade Unions of Uganda, Notu, and the general secretary of the Uganda Local Government Workers Union. 

In the letter, lawyers from Mungoma, Mabonga, Wakhakha and Co. Advocates, a small law firm in Mukono, alleged that Dr Sam Lyomoki, a fellow workers’ representative on the NSSF board, had canvassed him not to support the renewal of Mr Byarugaba’s contract when the matter came up at the upcoming State House meeting. 

The lawyers claimed that different people, including another workers’ representative on the NSSF board, had threatened Mr Mudiba with violence. A month later, an officer from the Police directorate of crime intelligence wrote to NSSF seeking to interview key officials. 

The Inspector General of Police directed for proactive investigations into the allegations that Hon. Sam Lyomoki, Mrs Peninah Tukamwesiga and other persons “from State House” have been threatening the life of Mr Hassan Mudiba to the extent of preventing him from executing his duties as the NSSF board member,” the officer wrote. The allegations against the officials have not been proven and they have not been charged in a court of law. The matter is still under investigation.

On October 20 another 22-page petition from a non-descript group that described itself as workers was sent to President Museveni asking for Mr Byarugaba’s contract not to be renewed.

Less than a month later, Usher Wilson Owere, the leader of Notu trade union who was considered pro-Byarugaba, was ousted from office in a corporate coup, for failure to organise meetings.

Meanwhile, the clock was ticking. The allegations against Mr Byarugaba had not been investigated, his contract was running out, and there was still no slot in the presidential calendar for a meeting with the NSSF board. Eventually a decision was taken to appoint Mr Ayota as acting MD. In the meantime, instead of the President, the NSSF board would meet Gen. Saleh, in Kapeka.

Different views

In her 19-page letter justifying the decision to defer the reappointment of Mr Byarugaba, Minister Amongi mentions the word “Kapeka” six times and “OWC” eleven times, yet officials at the meeting say the discussion was not directed at the leadership struggle at the Fund.

“The first thing he said was that he did not want to be drawn into our fights,” an NSSF board member who attended said. “He told us he had invited us to discuss ways in which the Fund could play a more strategic role in the social-economic transformation of the country.”

Gen. Saleh had invited Dr Eria Hisali, associate professor at the School of Economics at Makerere University, to make a presentation to the NSSF board. In it, the academic argued that NSSF was investing a lot of “dead capital” in real estate and could do more if it scouted around for more strategic investments, including in labour to create more jobs.

“An example was given of the Kampala-Entebbe Expressway as another type of infrastructure investment the Fund could undertake that could create more value to the country while protecting the interests and giving a return to its members,” another board member at the meeting said. “We were challenged to look at say the Kampala-Jinja Expressway and also at the oil industry and find ways in which the Fund can contribute to developing the country while also giving returns to its members.”

However, Gen. Saleh reportedly queried how long it has taken the Fund to complete construction of Pension Tower in Kampala, whose construction, he told the meeting he helped launch when he was minister in charge of microfinance. 

The matter is one of the many raised in the minister’s letter following the meeting as being influenced by corruption and appears to have strengthened the minister’s resolve not to reappoint Mr Byarugaba after earlier agreeing to do so in a late-November meeting with the board chairperson.

“However, after our meeting at Kapeka yesterday, you note that there were serious issues that has been raised on top of all the other issues I discussed with you severally,” she wrote. “In view of the above, the concerns which were raised after the approval of the appointment of MD during the Kapeka meeting, and other new issues ought to be re-examined by the board and clarity provided before I appoint him as recommended. 

“Further, among the new emerging issues, I would like to know whether in the process of making your recommendation, you considered them, or had prior knowledge or information about them, and took them into account when making your recommendation.”

Sources at NSSF say the Board has formed a special committee to prepare a response to the minister’s letter and the allegations contained in it. Just before Christmas the NSSF Board finally met with President Museveni at State House. The meeting agreed to stay the decision until after the allegations against Mr Byarugaba and the Fund have been investigated fully. The investigation by the IGG is expected to be completed within two months.

Witch-hunt or mismanagement?

What had started in May 2022 as a small tug-of-war between MD Byarugaba and Minister Amongi over carving Shs6 billion out of the NSSF budget to fund the minister’s pet projects had escalated into an all-out conflict by the end of the year.  

A corporate titan with decades of boardroom experience, Byarugaba had 10 years of impressive financial performance at NSSF in his favour. Ms Amongi, on the other hand, had just over five years’ experience as a cabinet minister but the survival instinct of a politician and, beneath her soft exterior, a gladiatorial mindset.

Deputy MD Patrick Ayota had dutifully handed in his retirement slip as demanded by the minister and been rewarded with a reappointment, as recommended by the board.

Byarugaba, on the other hand, had demurred and chosen to wait for his contract to run out and be reappointed on his own terms.

A fire had been lit and all it needed was fuel. The first log on the fire was, on the face of it, just a twig. In October 2017 Shs37 million had been paid out of the NSSF office in Masaka to someone who impersonated a South African expatriate who had worked in Uganda for a few years. 

An internal investigation found that Sooka Joseph, an NSSF employee, had orchestrated the fraud using his own phone number and bank account. He was fired and prosecuted, then jumped bail. 

As the power fight intensified, the twig started growing branches. Apparently Sooka was now willing to return to the country and testify in exchange for witness protection and a deal with the prosecution. NSSF officials said the matter showed that internal controls worked and that any loopholes had since been closed. On the other hand, Minister Amongi says his testimony is expected to implicate senior officials at the Fund and she has been working to secure his return, as well as audience with senior government officials.

This – competing narratives about the same set of facts – would become a common thread in the accusations and counteraccusations that would follow, some of which are now the basis of the investigation by the IGG and other agencies.  

The biggest, potentially, revolves around Nakigalala Tea Estate, a lush-green expanse that abuts the Kampala-Entebbe Expressway at the Kajjansi exchange. The Muljibhai Madhvani family, which owns the almost-400-hectare tea estate, has been trying to sell it to NSSF for at least three years. 

The current fight within the Fund has brought issues surrounding the land into light.

Minister Amongi accuses Byarugaba of negligence of duty by asking her to approve Shs400bn for the purchase of strategic land yet the Chief Government Valuer had valued the land at Shs246 billion.

She also accuses him of misleading her by telling her President Museveni, Finance minister Matia Kasaija and the board had approved the purchase.

“I requested him to avail me H.E the President’s directive, [Finance] and Boards approval, and Ministry of Lands, Housing and Urban Development valuation and land titles verification reports. He never availed them,” she wrote in her letter deferring Mr Byarugaba’s reappointment.

“When I inquired from the Board, the Board had not approved the purchase of the Land, Hon. Kasaija had also not approved it as minister in-charge of investment, and there was no directive from H.E.”

NSSF officials told this newspaper that they budgeted Shs250 billion for the Madhvani land, Shs120 billion for a separate purchase of land from the Police at Naguru, and Shs30 billion for any other land that would be found suitable.

“She is misreading the numbers,” an official said, asking to speak off-the-record given the sensitivity of the matter. Ms Amongi, however, insisted to this newspaper that the NSSF officials “told me the 400 billion was all for the Madhvani land”.

Land wrangles

Our investigations reveal a more complicated picture. In a due diligence report dated August 2020, the law firm Nangwala, Rezida and Company Advocates cautioned NSSF against buying the land.

“All the pieces of land are subject to adverse possession and are capable of developing serious land disputes and possible litigation,” the report noted. “The registered proprietor needs to first clear all the pieces of land of the adverse possessors before negotiations can commence. Acquisition of these pieces of land would require their being fenced off immediately with a fairly strong fence to bar further encroachment.”

In November 2020, the NSSF management asked its board for conditional approval of purchase subject to resolution of issues raised by due diligence, compliance with procurement rules, and obtaining a value from the Chief Government Valuer, but this was denied.

“The board instructed management to, through the vendor, resolve all issues identified in the due diligence reports and thereafter seek the board’s approval for the purchase of the land,” an extract from the board minutes seen by this newspaper shows.

Mr Patrick Ayota, the deputy NSSF MD, informed the Madhvani’s of this position in a December 2020 letter and Mr Byarugaba followed this up with a detailed similar letter two months later.

In March 2021 Madhvani’s lawyers, Kampala Associated Advocates wrote back to say that the lawsuits by people claiming the land would not succeed, to no avail.

Resurrected

The matter came back to life in June 2022 when the Madhvani’s wrote to Ms Amongi to ask for her intervention. She, in turn, wrote to her Lands counterpart, asking for a due-diligence report on the land, and a valuation from the Chief Government Valuer.

“The company intends to invest the proceeds from the purchase of the land to develop Amuru Sugar Works Limited where the government is partnering with them in a joint venture,” she wrote. “Also avail me with the land title for Amuru Sugar Works Limited. This will help me to justify approving money from NSSF for the purchase of the company’s land at Nakigalala with a sound rationale.”

The response came a month later from Sam Mayanja, the junior lands minister. “The due diligence conducted on the above land reveals that the four pieces of land belongs to [Madhvani] and that the lands are free of any claims or encumbrances,” he wrote.

“I have enclosed copy of the Chief Government Valuer’s report which indicates the value of the above four parcels of land and also clears any issues related to any squatters, claims and encumbrances”.

The valuation report estimated the value of the land at Shs246 billion, but, contrary to what the minister said in his cover letter, it noted that small portions of the land were “physically encumbered by bonafide occupants”.

In addition, the report noted: “The subject properties are held under freehold tenure giving the proprietor good security of tenure. However, this office is yet to be furnished with a search statement in respect of plot 2 Busiro block 374 Nakigalala and has therefore relied on information obtained from the certificate of title availed. It is incumbent upon yourselves to undertake further due diligence to confirm ownership of the same before any financial transaction.”

Before his appointment as minister for Lands, Mr Mayanja was a partner in Kampala Associated Advocates, the law firm that was representing Madhvani in the transaction. He told this newspaper that he had acted independently.

“When I took on the ministerial post, to avoid this kind of situation, I resigned my position as a partner of Kampala Associated Advocates. I’m no longer a partner,” he said. “I used to be a senior partner, but I realised that there could be cases there perceived as conflict of interest and I resigned. So now I have no conflict of whatever has happened there.” 

Although her junior minister had already responded to the letter from Ms Amongi with her in copy, substantive Lands minister Judith Nabakooba also weighed in with another response to the same letter on September 29. She confirmed the Madhvani ownership and added details of a civil lawsuit for ownership of the land that had been ruled in their favour in 2014.

Despite the two letters, neither minister of lands attached the Amuru land title requested for by their counterpart.

With the all-clear from the two lands ministers, the transaction gained momentum and on October 25, 2022, Ms Amongi wrote to Byarugaba restating the five reports she had asked for to enable her to release the money: a due-diligence report confirming no encumbrances; the chief government valuer’s report; approval from the Finance Minister; approval from the NSSF board; and clearance from the Lands ministry about the authenticity of the title.

The minister said she had received clearance from Lands as well as “the title confirming the total of [hectares] free of encumbrances”. Missing, she said, were the Finance and Board approvals. She did not mention the due-diligence report which she had asked for – and which, as noted above, had already warned the Fund to exercise caution.

Nevertheless, Ms Amongi directed Mr Byarugaba to proceed and negotiate with Madhvani based on the chief government valuer’s report, then advise on a final figure to enable her to approve a supplementary budget for the land. 

This, alongside how much money was actually earmarked for the transaction, is likely to be a contentious matter in the on-going investigations. Although Ms Amongi says in her December 7 letter that she was not availed with the valuation report, her earlier letters show that she had received it from Minister Mayanja.

Investigators are also expected to examine the alleged claim that the President had approved the transaction, as well as the claim that the proceeds of the transaction were meant to be reinvested in Amuru. 

Also key to determining the truth of the matter is what the current NSSF board members knew about the transaction and how much they knew about the position of the previous board on the matter. 

At least three different officials interviewed for this report and who were familiar with the matter say there was widespread pressure from many quarters at this time to have the transaction concluded.

“There was interest by some people inside and outside the Fund to close the matter,” an official familiar with discussions on the matter said. He asked not to be named because of the sensitivity of the matter. “Only NSSF has that kind of money to buy land of that size, so it was a make-or-break transaction.

Officials from Madhvani Group declined to comment about the transaction, its connection to Amuru, or any discussions with officials to help push the transaction forward.

“We have not discussed anything with anybody. I can’t discuss this matter now because it is very hot in the news,” Mr K.P Eswar, Madhvani’s director for corporate affairs, said by telephone. “I cannot discuss this matter anymore. I have been advised by my legal team not to discuss that matter.” 

Last-ditch effort

The land itself is not without controversy. At least three different members of the Buganda royal family have, over the years, pressed charges claiming ownership of the land. 

In 2019 an investigation by the Criminal Investigations Department into allegedly fraudulent transactions on the land stalled after officials in the Ministry of Lands refused to make available relevant officers to be interviewed.

When news filtered through that approval had finally been given for NSSF to proceed with the final negotiations, the claimants made a last-ditch effort to block the transaction. 

A week after Minister Amongi’s letter, Mwesigwa Rukutana and Company Advocates, a law firm representing a set of claimants, wrote to the Attorney General and to Uganda National Roads Authority, which acquired some of the land for the expressway, alleging that the Madhvani Group had acquired the land fraudulently.

They drew their attention to a temporary court injunction obtained on October 19, 2022, stopping any sale or transaction on the disputed land. 

A week later, Birungi and Company Advocates, a law firm representing yet another set of claimants to the land, wrote to the Lands minister drawing her attention to an unresolved petition submitted to the Inspector General of Government in December 2021 over the same land. By the time Ms Amongi wrote her December 7 letter accusing Mr Byarugaba of misleading her, the transaction had become too hot to handle. 

Inside-dealing

NSSF signed a memorandum of understanding with the Central Organisation of Free Trade Unions (Coftu) months after a decision had already been taken to give money to the organisation.

Our investigations reveal that NSSF has been giving Shs400 million every year to Coftu and the same amount to the National Organisation of Trade Unions (Notu), the other union that has representatives on the Fund board.

Sources in the Fund revealed that the December 15, 2022, MoU signed with Coftu was to regularise a controversial attempt to increase the amount of money given to the trade union. Coftu is supposed to receive part of the Shs6 billion that Minister Amongi directed NSSF management to carve out of the Fund’s budget for stakeholders, including trade unions.

The directive, which NSSF managers were opposed to, is one of the issues at the heart of the power fight between Ms Amongi and Mr Byarugaba.

Mr Byarugaba and his deputy, Patrick Ayota, are both past retirement age but the NSSF board recommended for their reappointment on the basis of good performance. Although Ms Amongi reappointed Ayota, she declined to reappoint Mr Byarugaba and instead directed the NSSF board to write to the Inspector General of Government and have him investigated on allegations of corruption and mismanagement.

The MoU between the Fund was drawn on December 15, 2022, but signed by Dr Sam Lyomoki, the Coftu Secretary General, two days earlier, on December 13. Mr Ayota signed the MoU on behalf of NSSF.

On December 14, before the MoU had been officially drafted, and before it had been signed by NSSF, Dr Lyomoki wrote to NSSF referencing the MoU and acknowledging the receipt of Shs100 million earlier allocated.

He, however, introduced three new areas for funding and asked for an additional Shs600 million to be paid to Coftu. “There is currently an ongoing consensus building on how much should be allocated this Financial Year to the other three pillars from the Shs6 billion shillings that has been budgeted for the stakeholders,” he wrote.

He asked the Fund to release the balance of Shs300 million earlier allocated, and asked for a Shs600 million share of the now-controversial Shs6 billion.

We were not able to establish whether the money has been paid. NSSF released a statement in the week saying it would not comment on matters that are under investigation by the IGG. On Friday Parliament said it would announce a special committee on Monday to conduct a parallel investigation into NSSF.

Conflict of interest

Questions have arisen over the propriety of the proposed payments to the trade unions and other stakeholders, as well as possible conflicts of interest. Dr Lyomoki, who signed on behalf of Coftu and was involved in the discussion of the MoU, is a member of the NSSF board.

“In effect, a board member has written to NSSF asking for the Fund to pay money to an organisation over which he exercises control,” an official at NSSF said. They spoke on condition of anonymity because they are not authorised to speak on behalf of the Fund. “How will the NSSF management demand for accountability for money given to someone who is supposed to supervise them? It is deeply problematic.”

The budgetary allocation has also raised questions elsewhere in government with technocrats asking whether public institutions should fund organisations that supervise them. 

After NSSF paid more than Shs7 billion to the Uganda Retirement Benefits Regulatory Authority in the 2021/22 financial year, President Museveni stopped the payments. He argued that NSSF workers already pay taxes to the government which should be used to fund government agencies.

Dr Lyomoki defended his conduct in an interview with the Daily Monitor newspaper. “There is partnership involving NSSF and the other two workers federations, Notu and Coftu to empower savers and increase compliance and coverage. Money has not yet been given but, the plan is to give both Notu and Coftu. Whatever is now being reported is against workers by negative forces to mask the truth,” he said.

Asked how he would supervise management that had handed him money, Dr Lyomoki said: “All stakeholders will participate and their legitimate structures. It isn’t money to individuals.”

Dr Lyomoki is not a stranger to controversy at the NSSF, despite only being on the board for just over a year. Our investigations reveal that the NSSF board conducted a special investigation into allegations that Dr Lyomoki had approached the Fund’s head of investments, Gerald Kasaato and demanded for money before the manager’s contract could be renewed.

In an email to Minister Amongi and Finance Minister Matia Kasaija last month seen by this newspaper, NSSF board chairperson Peter Kimbowa noted that Dr Lyomoki “underwent an investigation by a specially selected committee of the Board in response to an allegation of unethical engagement with the Head of Investments.”

In response to the email, Dr Lyomoki wrote: “I shall not attempt to defend or justify myself. The grace of god shall be sufficient in all. You know the truth about the motivation for your letter and the anger of my colleagues towards me. I take responsibility and won’t try to defend myself but request God to forgive all of us and defend my case.”

Governance gaps 

In early August 2022, the members of the executive board and central executive council of the Central Organisation of Free Trade Unions – Uganda (Coftu) were invited to a meeting, on the twenty-sixth of that month. The agenda for the meeting was to nominate two members from the trade union to take up its seats on the board of the National Social Security Fund.

A few days before the meeting, Dr Lyomoki, the Coftu general secretary, wrote to the members to inform them that the meeting had been rescheduled to September 8, 2022. On September 1, 2022, a week before Coftu’s top organ was to meet to pick its nominees, Dr Lyomoki was appointed to the NSSF board. 

Also appointed was Dr Lyomoki’s very close friend, Peninnah Tukamwesiga, for a rare third term on the NSSF board. 

We were not able to establish whether the Coftu meeting eventually took place, or how the trade union picked the two nominees whose names were forwarded to Labour Minister Betty Amongi to appoint. 

In just over a year Dr Lyomoki would be caught up in several allegations of soliciting for money from NSSF managers for himself and from the Fund for his trade union. This, and the power fight between Ms Amongi and NSSF MD Richard Byarugaba have raised fresh questions about the governance of the Fund, the independence of its managers, and the transparency of its investments.

Boarding up trouble

Governance is NSSF’s Achilles’ heel. David Chandi Jamwa, the MD before Byarugaba, is serving a 12-year jail sentence for causing financial loss to the Fund. His predecessor, Leonard Mpuuma, pleaded guilty to the same charge and paid a fine of Shs100 million while his board chairman, Geoffrey Onegi-Obel was charged acquitted of the same offence.

Management failures at NSSF often reflect weak oversight from the board as well as meddling from politicians. Take Mr Jamwa, for example. When he took the reins at NSSF he was just 36 and bursting with ideas, intelligence and enthusiasm. But he was also shot from the hip – and not only at shooting ranges in Las Vegas – took many risks and came under the influence of people keen to dip into the NSSF pie.

A look at the calibre of some former board members is telling. When she wasn’t attending NSSF board meetings, Ms Agnes Kunihira could be found behind her typewriter at RVR, the railway concessionaire. Today Ms Kunihira is a Workers’ MP. Musa Okello, another board member whose highest education qualification was a certificate, could be found at one of the halls of residence at Makerere University where he was a custodian.

The other board members were Henry Mukasa, a records keeper at Scoul sugar factory in Lugazi, Richard Birigwa who was in charge of the laundry at Sheraton Kampala Hotel, and Christopher Kunihita who boasted a certificate in metrology obtained around independence in 1962. However well-intentioned they might have been, they were not the best qualified to supervise a Fund worth trillions of shillings.

As the size of the Fund has grown, the calibre of the board members has improved, but not necessarily the governance. Dr Lyomoki, for instance, spent 20 years in Parliament as a Workers’ MP, and is a medical doctor with three master’s degrees.

Part of the problem is structural. Workers, who contribute five percent of their incomes, have four representatives on the NSSF board; employers pay in double but have only two. The four worker representatives come from the two trade unions but only about 10 percent of the NSSF members identify as belonging to a trade union.

And while the unions boast membership in the millions, workers MPs are, for instance, picked by an electoral college of fewer than 500 people. Given the opaque nature of nomination noted in the example of Coftu last August and September, almost half of the NSSF nine-person non-executive directors are people picked in a non-transparent manner from a very small set of options.

Political pressure

NSSF’s other pain point is interference from politicians who, notably, often do not have significant financial stakes in the Fund or are already catered for by parliamentary or public service gratuity schemes.

Political pressure manifests in at least two ways. Formally it manifests in the form of supervision of the Fund. Until 2004 when President Museveni transferred it to the Finance ministry, NSSF was supervised by the Ministry of Gender, Labour and Social Development. In shifting the responsible line ministry, Mr Museveni argued that Finance had a higher capacity to manage the large sums of money in the Fund, and a lower risk of corruption.

During debate on the NSSF Amendment Bill, MPs proposed to split the reporting lines: Finance would oversee NSSF investments while Gender and Labour would be responsible for policy matters. Mr Museveni warned against the move in a letter to then-Speaker of Parliament Rebecca Kadaga. 

“The proposed arrangement would cause delays in decision-making and create loopholes for corruption,” President Museveni wrote on October 4, 2019. “The Ministry of Gender, Labour and Social Development is represented on the Board of the NSSF. Multiple apex authorities are dangerous for accountability. If things go wrong, whom shall we blame?” Given recent developments at NSSF, President Museveni’s letter was prescient.

Pressure on NSSF can be felt to come from other centres of power. In her 19-page letter deferring the reappointment of Mr Byarugaba despite the recommendation of the board and the reappointment of deputy MD Ayota, Ms Amongi made 10 references to the “chief coordinator of Operation Wealth Creation”, and only three to Matia Kasaija, the minister of Finance with whom she supervises the Fund.

In her letter, Ms Amongi said that to create a bridge between farmers and markets, Gen. Saleh proposed that NSSF makes a “strategic investment” in the Uganda Grain Council, a membership organisation of private sector grain traders. However, NSSF’s top leadership appeared lukewarm.

“You know the initial response from the MD and how he dragged on this matter,” Ms Amongi noted in her letter. “If we can allocate Shs15bn for staff welfare, Shs220bn for operations, USD 1 million for construction of court as corporate social investment, why are we dragging on this contribution of only Shs20bn? Which is a strategic investment proposed by a senior government official! Is there now firm commitment from the MD? I need his answer.”

It is not clear whether Gen. Saleh’s view was a suggestion or a directive and how binding it was on the NSSF team. We were also not able to establish from the Ministry of Finance, which is responsible for approving investments, what they thought of the proposal.

Our investigations, however, reveal the backstory. The Grain Council’s 120 members were looking for working capital of about Shs409 billion. They had already borrowed from the Uganda Development Bank, the Agriculture Credit Facility (ACF) at Bank of Uganda, and other sources. Then they approached NSSF.

NSSF officials were reluctant to invest money in the Grain Council because it was and remains a non-profit entity. Privately, NSSF officials noted the high risk associated with the agricultural sector and noted that the ACF already provided an alternative funding source for such initiatives.

To respond to the political pressure but also insulate themselves from the risk, NSSF developed a business proposal to set up a special purpose vehicle, Thamani Ya Kilimo (Agricultural Value) with 40 percent shareholding each from the Government and NSSF, with the rest of the 20 percent available to other likeminded shareholders. NSSF’s would, at the right time, list its equity on the stock exchange and exit what is an inherently risky industry.

However, the Grain Council members rejected the proposal in a November 25, 2022, letter to Ayota, who had led the discussions between the two entities. “The board was taken aback by the minute and rather insignificant role the council would be made to play in the ownership and management of Thamani Ya Kilimo, only represented by a single member of the board out of a possible eleven,” Henry Kasumba Musisi, the executive director of the Grain Council board noted in a letter to NSSF. 

“The other very major concern expressed by the board is the fact that we would participated in the nurturing of an entity with the capacity to practically swallow us in the future, and an entity we have absolutely no control over. For these reasons, the Grain Council expresses serious reservations on going ahead with the establishment of Thamani Ya Kilimo especially in its current form.” The borrowers had rejected the terms of the lenders. A week later Byarugaba was gone. Another week on, he was under investigation.

ENDS

With reporting by Jane Nafula. This series was first published in the Daily Monitor newspaper, with support from Wananchi Initiative.