The National Social Security Fund (NSSF) board of directors and the top management have trashed the parliamentary probe report that asked them to resign with immediate effect, calling it a mere advisory document.
NSSF board chairperson, Peter Kimbowa says that until the appointing authority makes a decision, they will not act on the report, which he says ‘was devoid of context" and, as such, misrepresented a number of facts about its operations and investments.
“We welcome positive criticism with an intention to build not tear down. We are waiting to hear from the executive", said Kimbowa who was accompanied by the acting managing director, Patrick Ayota.
The report called for the overhaul of the entire board and sanctions against top managers including the former managing director Patrick Byarugaba, Ayota, head of corporate affairs, Barbara Arimi, and the chief finance officer, Stevens Mwanje.
Some questions that arose during the investigations by the select committee included the appropriation of Shs 1.8 billion between board members, minister of Gender, Labour, and Social Development, Betty Amongi, and representatives of workers’ organizations. The report was last week adopted by parliament and called for the resignation of the implicated officials, and the sacking of Mwanje whom, they say, lacked the requisite qualifications.
Ayota told the today Monday, that there are some positives in the report, but that it left many issues hanging.
“Whereas we appreciate the committee’s efforts to obtain information from the fund, in many instances, it appears that not all the information was used. For instance, the case of Uganda Clays Limited,” he said.
NSSF is one the main shareholders in the clay products manufacturer and came in at a time when it was on a continuous downward trend more than 10 years ago.
“We considered the risk of letting the company collapse with the fund’s initial investment against injecting capital of Shs 11 billion to help it survive and return to profitability. The fund chose the latter, and the loan was approved by the NSSF board and the then minister of Finance, Planning, and Economic Development,” he said.
Ayota explained that though the law bars NSSF from direct lending, this loan was approved before the Uganda Retirement Benefits Regulatory Authority (URBRA) Act, which introduced the limitation was passed. He says the company had since returned to profitability and was ready to start repaying the loan.
The management also questioned some conclusions made by the MPs including that the employer geo-mapping exercise failed, yet it was completed and is functioning. Ayota wonders why they did not consider the information filed with them by NSSF.
“Many examples such as the case of staff restructuring, payment of performance bonuses, corporate social responsibility, and legacy investments like West Nile Golf Club and Workers House land title fall into this category,” said Ayota.
He also faulted the MPs for failing to understand the financial management practices of the parastatal, and the fact that budgeting is different from spending.
“The committee ignored the context within which we operate and assumes that we operate like a government ministry. The committee assumed that budgeting means spending, which is far from the truth. Before any funds are committed, the user department must provide justification for the procurement process to commence or satisfy the accounting officer, among others, of the value for money. Just because an item appears on the budget does not mean the money has to be spent”.
In some instances, Ayota said, the committee did not consider the provisions of the laws governing NSSF like the waiver of penalties, which is at the discretion of the managing director as provided for by law.
“The fund does not exist to hamstring or cripple businesses. Where an employer demonstrates and commits, through a binding agreement, that they will pay arrears, along with interest earned, the managing director exercises his discretion to waive the penalties.”
The other inaccuracy in the report, according to Ayota is the Shs 40 billion that was suggested to be given to the Grain Council of Uganda.
“There is no any such thing as a Shs 40bn loan to the Grain Council, never. We would like to venture into agriculture financing, yes. That’s urgent, to boost production and access to markets, but we have not loaned out money to the grain council!” he said.
On his part, the board chairman said he was pleased that the report never cited theft of funds by anyone as had been alleged in public media.
“From the report, there is neither evidence nor conclusion that any individual at the fund had stolen member funds, despite the numerous allegations in the media purporting bribery and mismanagement of funds,” said Kimbowa.
He added that the board had been vindicated by the committee report that “the famous Shs 6 billion was never disbursed, nor was the Shs 1.8 billion shared among board members”.
He called this an affirmation that members’ savings can be trusted with the fund. Kimbowa however, while noting the report’s agreement that the fund had grown from Shs 1.7 trillion in 2010 to Shs 1.75 trillion, faulted the MPs for not explaining “how this growth happened, how it can be sustained, and how we can ensure that the fund continues to grow to the benefit of the savers”.
On the performance of the investments, the report found that the Arua-based West Nile Golf Club investment consumed Shs 2.3 billion but was never developed. Kimbowa said that this cannot be used to judge the performance of the whole investment portfolio of 210 investments.
“Only one of these has lost value and that is the Arua investment property. In our opinion, the fact that the committee had to go back almost two decades to find one investment that has lost value is not a bad performance per se,” he said.
Kimbowa said they will wait for the president’s action on the report.
“The parliamentary committee report was advisory. We will stay put until when the president takes action”.