A select committee investigating the alleged mismanagement of the National Social Security Fund (NSSF) has started its mandate by examining circumstances under which the fund resolved to invest in UMEME Limited.
During the Initial Public offer of UMEME shares at the securities exchange in 2012, NSSF purchased shares worth Ugx 36billion which gave it a shareholding of 8.1 % in the utility company.
It made a subsequent investment of Ugx 34billion in May, 2014 which increased its shareholding to 14.3%.
But the fund has consistently been accused of investing in UMEME without following the right procedures which would include among others seeking approval from the Solicitor General.
Instead the advice was sought long after the transaction was concluded, according to correspondences tabled before the committee.
As such the solicitor general objected thus; “Since the transaction is already concluded, National Social Security Fund does not need the Legal advice of this office. Seeking Legal advice from this office is not a mere formality.”
NSSF acting Managing Director Geraldine Ssali told the committee that the decision to invest in the IPO was approved by the Fund’s Management Investment Committee, which recommended it to the Investment and Projects Monitoring Committee of the Board.
The NSSF Board approved the investment in consultation with the Minister of Finance, Planning and Economic Development as provided for under Section 30 of the NSSF Act before the investment was executed, she explained.
This section states that: “All monies in the Fund, including the reserve account, which are not for the time being required to be applied for the purpose of the Fund shall be invested in such investments as may be determined by the board in consultation with the Minister of Finance.”
She further stated that the Fund sought legal advice from the solicitor general prior to subsequent investments in UMEME, a clearance which was provided on 9th May 2014. “Therefore this investment was executed in conformity with the relevant laws, the Fund’s internal policies and procedure,” Ssali added.
The select committee however learnt that NSSF sought advice on the second purchase and the solicitor general granted permission which was subject to the approval of the Finance Minister and the NSSF Board.
The Finance Minister rejected the request but was over powered by the NSSF Board members who voted on the purchase.
Committee chairperson Vincent Ssempija requested for additional documents concerning the purchase of Umeme shares for thorough examination by the committee.