June 26, 2013

Lawyers asked to Explain UGX 6Billion Debt collection Fees

Kampala Associated Advocates has been asked to explain circumstances under which they won a lucrative CAA debt collection contract
Kampala Associated Advocates has been asked to explain circumstances under which they won a lucrative CAA debt collection contract

The Parliamentary Standing Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) has put lawyers from Kampala Associated Advocates (KAA) to task to explain how they got a debt collection contract with the Civil Aviation Authority (CAA) and how they increased the debt collection fee from a 2.5 percent to 10 percent to collect a 54billion shillings debt from Ministry of Finance that CAA had failed to collect.

The collection of the 54bn debt sourced Kampala Associated Advocates 5.4bn which the committee members said was too expensive for the tax payers and CAA and that KAA did not put into consideration of the PPDA Act the provided for debt collections and the percentage of fees to be required.

The query comes from the auditor general’s report of 2009 when KAA was contracted allegedly in writing without competitive bidding to collect debts on behalf of CAA.

According to KAA lawyer Matsiko Joseph the contract was given to the company on 25th February 2009 by CAA to collect the 54bn debt from government in which there was a variation from the earlier contract.

KAA lawyer Mpanga explained the increment of the debt collection fee from 2.5% to 10%, which indicates a 300% increase in the fee saying that KAA went through the due process and explanations were made to CAA as the contracting agency to increase the collection fees given the circumstances with in which they were to follow to get the debt paid.

Mpanga added that the specifics of what the debt collection had before was different and given that they are a self accounting body and they have to collect revenue from the assets they have and that it was in this perspective that they expected that these are that kind of debtors that CAA had and given the economic issues they had to increase fees.

Lawyer Matsiko said that enumeration of lawyers and advocates Act is a matter of law and our courts have had occasion to determine the percentage lawyers are entitled to citing that in one case the court of appeal decided and set a 10% as a reasonable instruction fees to a lawyer.

He said that this is not the only case were more than even 10% is charged and that the law requires that where there is mitigation a 10% is required.

MP Brenda Nabukenya, a member of the committee, questioned why KAA continued to enter into contract without ascertaining the laws governing the debt collection contracts and the amount they were to collect and circumstances.

She alleged that it seemed that these lawyers were after getting a contract without putting into consideration of circumstances and then after decided to change the charges within the contract.

MP Cryspus Ayena questioned the ability for KAA to collect a debt with so much ease given the fact that CAA had failed to collect the debt for years since both CAA and Ministry of Finance are government companies and given the report from the auditor general that had noted that collection of this date was highly doubted given the years it had spent, he noted that there was something suspicious with the ease KAA had to collect the debt.

The chairperson of the committee Patrick Amuriat told KAA to report to the committee tomorrow and provide the contract which was provided by CAA with debtors and also provide evidence of the payments made to them during the debt collections

Enable Notifications    Ok No thanks