A.G Muwanga’s Audit Report Exposes Corruption At KCCA, Pins Authority On Selling Gov’t Schools

A.G Muwanga’s Audit Report Exposes Corruption At KCCA, Pins Authority On Selling Gov’t Schools


By Mable Nakibuuka


A report by the Auditor General John B. Muwanga has exposed untold rot at the Kampala Capital City Authority, (KCCA), which includes financial misappropriation, shoddy works and other negligent acts which have resulted into loss of government funds through embezzlement and self-enrichment through kickbacks.

The  audit report for the financial year ended June 2017, indicates that at the time of the audit KCCA was heavily indebted with outstanding trade and other receivables amounting to UGX.47,156,334,104, having reduced from UGX.53,014,155,403 the previous year.


Out of the stated receivables it was noted that property rates decreased from UGX.42,043,077,310 to UGX.38,764,388,235 while ground rent decreased from UGX.13,469,029,766 to UGX.13,160,468,157.

The Auditor General observed that although there was a decrease in receivables, most of them have been outstanding for a long time.


Accumulation of Legal Costs

During the year under review, KCCA had budgeted UGX.16,325,999,995 for legal costs. However, the entity spent funds totaling UGX.27,813,517,819 as reflected in note 26 of the financial statements. This was mainly attributed to Garnishee orders from court amounting to UGX.13bn.

The A.G further noted that Management made a provision of legal costs UGX.17,533,623,980 mainly arising from court judgment made in the prior years and disclosed contingent liabilities (Note L1) amounting to UGX.57,730,258,293 in the financial statements, an indication that legal costs are likely to escalate further.

It should be noted that delays by the Authority to offset interest-bearing judgments in a timely manner may lead to nugatory expenditure resulting from accumulated interests.

However, Management explained that the delay to settle interest-bearing judgments in a timely manner was mainly on account of the long court process and inadequate funding provisions.


Under-collection of Revenue

The Uganda Government Financial regulations, 2003 section 2.15.1 (i) requires the Accounting officer to ensure that there are efficient and effective arrangements for revenue collection from the public.

It was observed that the Authority planned to collect UGX.112,699,000,000 during the year under review.

However, only UGX.88,894,496,280 was collected, representing a revenue shortfall of UGX.23,804,503,720 (21%), yet under-collection of revenue affects  the Authority’s ability to undertake the planned activities.

Management explained that under collection was due to the non-operationalization of some proposed interventions for example UGX.4.5bn expected to be realized from the conclusion of the Central Division valuation roll was not realized due to delays in commencement of valuation exercise, delays in approval of street parking fees and delayed implementation of Business Licensing Act 2015.


Land Titles for Gov’t Grant Aided Primary Schools Under KCCA

A review of the status of land titles for all the 79 Government Grant Aided Primary Schools in the Authority revealed that 55 school titles are not under the control of KCCA but are controlled by Faith Based Institutions, Government institutions, Non-Governmental agencies and Private entities.

It was observed that KCCA had undertaken steps to ensure MOUs are signed with the respective landlords in order to guarantee the use of the land for purposes of the school.

However, 39 schools were still prone to change of use or removal. There is a risk of losing the schools land if the pending issues are not resolved in favour of KCCA.

Management explained that KCCA continues to engage different stakeholders to secure KCCA land for example secured lease agreements for Buganda Road P/S, Nakasero P/S and Old Kampala P/S with ULC and will continue to engage ULC for the other remaining schools where KCCA has lease offers.

Part of the Auditor General’s Report exposing rot at KCCA


Unjustifiable Lump sum Prices for Items in the Activity Schedules (UGX.4,430,009,188 Minimum)

It was observed that KCCA signed Lump sum contracts for Design Update and Construction of Roads in Lots 1, 2 and 4.


The activity schedules for the lump-sum contracts that provide for detailed breakdowns of the activities revealed lump sum prices that are unreasonable and unjustifiable for some roads. The prices are built up from quantities that cannot be practically executed on some of the roads.

Audit noted that for these contracts, payments were made on percentage completion of the lump sum items in the activity schedules, without any breakdowns.

This method of payment is inconsistent with PPDA Regulations 2014 (15)(3) which states that; “Payment for a lump sum contract shall be linked to clearly specified outputs or deliverables, which include deliveries of supplies, evidenced by the appropriate delivery documentation, reports, drawings, bills of quantities, activity schedules and any other outputs or deliverables appropriate to a contract. The total cost of increased lump sum prices, arising out of impractical/unjustifiable quantities, is UGX.4,430,009,188.

Management explained that their choice of the Lump sum contracts holistically took into account risks faced by both the contractor and Client (KCCA) where the risk of estimation of quantities was on the side of the bidders, implying there may be cases where quantities are above requirement and others where they are below requirement; this was contractor’s risk.

Double Payments for Items (UGX.101,464,550)

In the Contract for Lot 2, Item 14.06 (d) required establishment of horizontal control (UTM) with Arc 1960) ellipsoid) and vertical control ( measured as heights above sea level) preparation of a strip map, production of construction drawings for approval including longitudinal profile, cross sections at 25m chainage intervals, taking invert levels of drains, setting out the road reserve and drains, taking levels of road formation, sub-base, base and paved surface, production of as-built drawings and preparation of a final survey report at a provisional sum cost of Shs202,929,100 of which Shs101,464,550 has been paid. These activities are part of a contractor’s routine works, and more so for a design and build contract, as they provide a basis for design and construction.

This payment is therefore considered a double payment, considering the fact that the contractor was paid design fees, and the Consultant paid design review fees. There was no record of the authorisation to use the provisional sum availed to audit to justify the double payment.

Management explained that this was not a double payment as surveys conducted as part of the design are completely different from the surveys that are performed during construction to control the works which is continuous activity from beginning to completion of the works.

However, it is important to note that the activities explained by management such as “Establishment of horizontal control (UTM with Arc1960 as ellipsoid) and vertical control (measured as heights above sea level)” are largely a design activity and cannot be construed as a purely implementation activity. Its cost is expected to be embedded in the design price.



Loss of Key KCCA Assets In Some Contracts

It was observed that for some of the contracts executed in many of the contracts, KCCA will lose out on a number of assets that would have reverted to the Authority after conclusion of the projects;

For instance, in the improvement of junctions’ project undertaken by China Railways Seventh Group (CRSG), KCCA signed a contract which results in loss of assets worth UGX3,780,000,000.

These include; surveying equipment worth Shs50,000,000; Laboratory equipment for the Engineer worth Shs130,000,000 and fully furnished and equipped offices for the Engineer worth Shs3,600,000,000.

KCCA stated in the contract documents that these items will revert to the contractor after the project. This is inconsistent with the contract provisions detailed in GCC 1.1.5 (Works and Goods). These items do not fall under items listed as “Contractor’s Equipment” and are categorically excluded.

Management explained that both bills for the KIIDP project Survey Equipment and also for the Laboratory Equipment were erroneously included in the works Contract even though all the equipment were to return to the Contractor upon completion of the Contract.

Undocumented Changes in Priced Activity Schedule and Designs

It was observed that in the contract for Lot 2 and Lot 4 there were undocumented changes in the priced activity schedules for these contracts;

Lot 2 contract by Energo Projekt Niskogradnja, had the activity schedules priced culverts laid on Class A bedding, instead of Class B bedding on Waligo Road.

Lot 4 implemented by Sterling Civil Engineering Ltd, had a number of stone pitching cross sections showed vertical instead of the designed slopes.

On Mengo Hill Road, most of the manholes have not been constructed to the right shapes and reinforcement was not placed at the designed positions.

Management should ensure that any changes to works are clearly documented on all official submissions, including on activity schedules and documents relating to payments.


Avoidable Expenditures (UGX60,000,000)

Three (03) of the lump-sum contracts, required the Contractor to provide a four-wheel drive double-cab pickup vehicle for the Employer at costs varying from of UGX129,000,000 -155,000,000.

Although under best practices, vehicles for the Employer do not constitute part of “Contractors equipment”, KCCA allowed the successful bidder, at negotiation stage, to front an argument that he thought the vehicles would belong to him after the end of the contract.

The result is that KCCA committed to incur an additional UGX30,000,000 for each of two vehicles, a cost which could have been avoided, if best practices had been followed.

The bidder should have sought clarification at bidding stage, not at negotiation stage. KCCA incurred an additional obligation of UGX.60,000,000 for the vehicles for the Employer during negotiations, which could have been avoided.


Lack of Detailed/Accurate Engineer’s Estimates

For Contracts (Lot 1, 2 and 4), detailed Engineer’s Estimates were not availed to the audit team, despite the request for them.

Where these have been filled on the PP Form for the Estimates, there are no detailed breakdowns and the majority have significant variances from the signed contracts, suggesting that they may not have been prepared well.

This is the case even in Lot 2; where the current Project Manager’s Representative was commissioned eight (08) months earlier to undertake full designs for the roads constituting this lot.


Interest on Delayed Payments (UGX.427,767,009)

For most of the Contracts, payments were delayed, leading to huge interest costs incurred on the contracts.

The total interest costs incurred so far on Lot 4 is UGX200,710,496 while for Lot 1 is UGX227,056,513.


Defective Works

During physical investigations, the audit team noted a number of defects in the on-going works. These included scouring of drainage channels for the drainage projects, cracks in stone pitching, collapsed headwalls, honeycombing to some concrete members including haunches and damaged road signage to mention but a few.


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