CICO STRIKES AGAIN…Firm in Katosi road scam cited in fresh Shs650bn oil road scandal

By Pepper Intelligence Unit

A fresh road scandal has hit the Uganda National Roads Authority (UNRA) and if allegations raised prove to be true, then the road agency headed by Allen Kagina will not attract any sympathy from Ugandans once those advocating for its disbandment under the ongoing government agencies merger program come knocking—because it is incompetent. The saga revolves around how Chongqing International Construction Corporation (CICO), a firm that was involved in the Katosi road scam emerged as UNRA’s best when it came to awarding a number of road projects including those in the oil region.

It is accused of doing shoddy work and being involved in grand scale corruption. There are also concerns on how the firm has been scooping multibillion projects from UNRA without much scrutiny given its tainted name. The same firm had been blacklisted by the African Development Bank.   The same firm had been blacklisted by the African Development Bank.  There are also issues to do with the cost of road per kilometre. This is one of the sticky issues in Kagina reign.

A copy of the petition to the IGG

That whereas Kagina had been tasked to reduce the $1m that was being spent per km to just $0.5m, this hasn’t been the case and instead it has doubled. For instance, in this fresh scandal we are about to unleash each Km cost USD 1,617,464.375 about Shs6.9bn yet the same firm had undertaken previous projects where the cost was lower.

Let’s take a comparison. In 2017, CICO was executing Kasenyi-Mitoma (12.5km) for which the contract price was UGX 49,119,624,174 under UNRA. When you evaluate this per km, it implies that each kilometer costs UGX. 3,929,569,934.

In 2017, CICO was as well executing Kamuli Township Roads (22km) for which the price was UGX 40,918,848,345.46 under UNRA. When you as well evaluate this per km, it implies that each km costs UGX. 1,859,947,652.066.

All these allegations are contained in a whistleblower report to the Inspector General of Government (IGG) Betty Kamya alleging grand scale corruption and shoddy works in 110 Hoima-Butiaba-Wanseko oil

Road project. The same allegations are corroborated by Lawyers from Anguria & Co. Advocates representing East African Litigation Center Ltd who intend to sue CICO and UNRA over the same. They position themselves as an independent company whose among other objectives is investigating, exposing and prosecuting corruption, and ensuring that human rights and constitutionalism are respected. Kamya, however, wants the law firm to leave the IGG to handle the matter. She fears that the court route may take eternity yet she wants to quickly see those responsible go to jail or cough the money.

THE ALLEGATIONS

Titled “GRAND-SCALE CORRUPTION (RE: HOIMA-BUTIABA WANSEKO ROAD PROJECT)”

Below are the allegations being raised verbatim:

“Hon. IGG, I wish to share with your esteemed office the following facts in respect of the above national road project being executed by Chongqing International Construction Corporation (CICO). Hoima-Butiaba-Wanseko Road is a 110 kilometer road project where sub-standard work coupled with high level corruption.

Chongqing International Construction Corporation (CICO) is A Chinese state-owned construction firm that is duly incorporated in china. I invite your office to investigate collusion, connivance and conspiracy between CICO and the Uganda National Roads Authority (UNRA) that has manifested itself in sub-standard works by the contractor to the detriment of the Government of Uganda which stands to lose colossal sums of money.

You may wonder why this complaint or whistleblower report is coming up at such a time when the project has been commissioned and is in its first year of the Defects Liability Period (DLP). Hon. IGG, kindly note that I am a technical person (an engineer by profession). Therefore, as you review this report, please note that I took time, watched closely the activities of the said company in line with the Uganda National Roads Authority and made different Technical Observations as hereunder:

Madam IGG, before I can expressly present my grievances, allow me take you through the said company’s history.

  1. a) In 2014, CICO was part of the Katosi Road Scam where it connived with EUTWAW a briefcase company, to sign a contract with UNRA to upgrade Mukono -Katosi-Kyetume Road and in turn subcontracted 100% of the works to CICO without prior knowledge of the employer. In the ruling delivered by Justice Odonyo, court found that the six entities engaged in an elaborate and complicated scheme to defraud UNRA after evidence indicated that a non-existing company (EUTAW) which has been connived with CICO and did only works estimated  to be 3% valued at 6 billion shillings. The Judge consequently ordered the six entities, including Niu Hong (Country Director of CICO by then) and the non-existing company to refund UNRA. In the same judgment, Justice Adonyo also ordered the six to pay general damages of Ugx 500 million to UNRA.

 

  1. b) The Africa Development Bank Group (AfDB) on Aug 22, 2017 announced the debarment of Chongqing International Construction Corporation for a minimum period of twelve months. An investigation conducted by the AfDB’s Office of Integrity and Anti-Corruption established that CICO engaged in fraudulent practice in bidding for contracts in the context of an AfDB-financed road project in Uganda in order to meet the pre-qualification requirements of the tenders. The firm was also found guilty of inflating its purported experience with similar projects in order to meet the pre-qualification criteria.
  2. c) In light of the above as regards CICO’s long standing history in involvement in fraud and corruption acts and despite the several punishments inflicted onto it, the company has seemingly continued with fraudulent and corrupt acts as I shall present to you.

I do observe that CICO continues to heavily polarize all development projects and in the process, Uganda’s tax payers are footing the bill and will be on the hook for a growing debt pile being used to build roads due to highly corrupt companies such as CICO.

On the Hoima-Butiaba-Wanseko-Road project, you will note:

  1. a) The said project was given to Chongqing International Construction Corporation (CICO) in April 2018 at a sum of USD 179,538,545.59 (UGX. 655,338,212,957.29). Kindly note that the said project was given under a pre-finance model for which CICO was meant to pre-finance the project for one (1) year before UNRA could start paying. The said project was given under direct procurement thus other companies were not given a chance to submit their proposals. As a matter of fact, this made UNRA engineers (names withheld-editor) in combination with CICO to take advantage and engage in fraudulent and corrupt practices in procurement for the said works and thus inflating the figures of the Bill of Quantities (BOQ).

Madam IGG, kindly note that the contract price for the said project was over inflated at the time of bidding since CICO corrupted UNRA officials. Let’s take a comparison on some of the key up-country projects CICO was executing and the ones it won within the same time it signed the Hoima-Butiaba-Wanseko Road Contract.

In 2017, CICO was executing Kasenyi-Mitoma (12.5km) for which the contract price was UGX 49,119,624,174 under UNRA. When you evaluate this per km, it implies that each kilometer costs UGX. 3,929,569,934.

In 2017, CICO was as well executing Kamuli Township Roads (22km) for which the price was UGX 40,918,848,345.46 under UNRA. When you as well evaluate this per km, it implies that each km costs UGX. 1,859,947,652.066.

Fort Portal-Bundibugyo-Lambia Road (103km) which is the same magnitude as Hoima-Butiaba-Wanseko was executed by CICO in 2011 at a contract price of UGX 168,214, 943,915.54 implying each kilometer was valued at UGX 1,633,154,795.296. Even if price variation is put into consideration, it can’t reach the value of the over inflated Hoima-Butiaba-Wanseko Road project.

In light of the above, Madam IGG a kilometer for Hoima-Butiaba Wanseko Project was over valued at USD 1,617,464.375 (UGX. 6,903,968,166.154) which doubles and triples the prices of some of the above projects. “Inside patriotic sources have it that, CICO has made 50% margin on this project i.e USD 89,769,272.79 (327,668,390,915.125)” which consequently can do another road project. It’s evident that some UNRA officers are still receiving their commission for this project, however much the project is coming to an end. You can hence imagine how much money the government has lost to such corrupt officials.

  1. b) Substandard works. In spite of the fact that the figures were inflated, CICO consistently went ahead to practice fraudulent and corrupt act throughout the course of executing the said project by constantly bribing UNRA officials so that it can achieve its objectives of producing poor quality works.

Madam IGG, from the technical aspect, the first thirty (30km) of the said road were poorly done. The same contractor in spite of the fact that they inflated the project cost figures, went ahead to produce substandard works i.e., the layers of the sub-base, base and the wearing course used on this section were extremely thin as compared to the design provided by the Employer. Madam IGG, as you read this paragraph, you may be wondering where the UNRA supervision team was as this transpired.

It’s so shameful that all UNRA Engineers don’t have any love for their country, all they care about is satisfying their stomachs. Madam IGG, if you visited this section as of today, a lot of repairs are being carried out by the contractor. You can imagine this is a road that has just been commissioned and it’s rarely busy. If a traffic count is carried out, barely a hundred (100) cars use it on a daily basis. You can now imagine how the road is going to rapidly fail if heavy trucks heading to the refinery start using it.

Furthermore, these failures are not only on this section, they stretch out throughout the entire road section. If you visit the site recently, you will find in some sections between Kigorobya and Biiso, they are panicking to add on other layers on the wearing course, simply because they are now coming to realize that this project may end their construction vision in Uganda. However, much this is being done, Engineering wise, the road will not serve for the duration for which it was designed, the main layers i.e. the sub-base and base had already been compromised in terms of the layer sizes and consequently the material.

  1. c) Corruption and Labor Authority. Madam IGG, CICO exploits laborers in terms of NSSF and consequently Pay as You Earn (PAYE) remittances. The poor laborers, despite the fact that they always notice this, have nowhere to run to for help since CICO consequently gives millions of money to the labor officers from the Ministry of Gender, Labor and Social Development every time they visit the CICO sites to carry out their routine investigations. In other words, their visits are always aimed at picking money not to solve the workers’ problems. Madam IGG, to elaborate this for a lay man’s understanding, let’s take a look at the example below.

If a CICO worker earns for instance ugx. 250,000, as they pay his NSSF and PAYE, it will not be computed at his monthly salary of ugx 250,000. What they do is to divide the salary by half and thus they will compute NSSF and PAYE based on ugx 125,000. Consequently, the savings for the employee will be affected and consequently the tax of the government in terms of PAYE. Madam IGG, this evident due to the fact that I randomly carried out a survey on more than Fifty CICO employers and all their responses led me to the same and that procedure only applies to some of their staff that are educated. When it comes to casual workers, they don’t even know what a tax identification number is and CICO pays no single coin for their NSSF and PAYE. Madam IGG, you can imagine how much money the government is losing through this and CICO will plough it back to its home country as profits despite the inflated cost of the project and this not only happens on this project but all their projects.

Madam IGG, in light of the above, we are aware of the great work your office is doing for this great country towards curbing corruption and fraudulent acts. For that reason, following the above highlights, I am much aware that CICO has not yet retrieved most of the funds from UNRA as regards the Hoima-Butiaba-Wanseko Road Project, and thus you stand a chance to save government and taxpayers’ money which is going to be lost to CICO due to the inflated cost of the project.

Furthermore, it’s my humble request that your office carry out a detailed investigation on the substandard works carried out by CICO, the acts of corruption and embezzlement of the Employees’ NSSF and PAYE allowances.”

UNRA SPEAKS OUT

UNRA’s media relations manager, Allan Ssempebwa says all the allegations are “baseless, rubbish, hearsay” and deserve no attention.

“All this is rubbish, why do you want to get a comment from rubbish allegations? Why should a briefcase law firm based in Kampala raise such allegations [potholes] yet people in Hoima have not? Who should be the first?” he said,

He added: “There is nothing to hide. Anybody can go and establish the facts on ground rather than relying on a briefcase Kampala based law firm. The road being talked about by the way is one of the best roads we have in the country so far.”

According to Ssempebwa, due diligence was done before contracting CICO and UNRA is happy with the work.

He also explained why the cost of the road per Km shoot up as thus: “The Hoima-Butiaba-Wanseko road upgrade cost higher because it involved construction of two bridges and four kilometres of its rocky section in the rift valley escarpment had to be cut up to 40 metres high while flood-prone Wanseko-Butiaba part had to be filled with layers to level the road, prevent cracks and road failures…the embankment and pavement layers, running through Lake Albert flood plains, had to be specially treated. In addition 10 kilometres of road within Hoima town and a branch off to Wantembo military barracks were upgraded to bitumen, and charged on the project, in fulfilment of a previous pledge by President Museveni. The project also explored new engineering technologies such as use of geocells and geogrid to prevent failure of embankment in the flood plain section due to poor soils as well as use of rubble concrete to found the bridge structure.”

ADB PUT ON NOTICE

Lawyers from Anguria & Co. Advocates representing East African Litigation Center Ltd have also written to African development bank’s Integrity and Anticorruption office to submit investigation reports pertaining CICO’s conduct in some of the questionable projects. “The purpose of this letter is to beseech your good office to avail us a copy of the investigation report authored on CICO for the sole purpose of furnishing court with adequate documentary evidence as we prepare court papers,” reads as letter dated May, 26 2022  and addressed to ADB’s head of  bank’s integrity and Anticorruption office.

CICO BOSSES SUMMONED, NO SHOW

On June 7th Kamya wrote to Mao Jiawei, CICO’s country director notifying him of the impending probe and tasked him to furnish her office with relevant documents associated with the whole project. Among them include certified copies of passports and Work permits of the country director and project manager; NSSF submissions and compliance report under the project issue; PAYE compliance report accompanied with salary sheets of all staff under the project; detailed Project designs and Bill of quantities as approved by the Employer and consultant; and monthly progress reports as approved by the Employer and consultant for the project from the start up to the handover. CICO bosses were also tasked produce site inspection reports as approved by the Employer and consultant for the project from the start up to the handover; Approved interim payment certificates; resettlement action plan evaluation report for all the quarries including proof of payments for the project affected persons, income tax compliance report; and a detailed list of workers under the project and qualifications of technical staff. CICO had a deadline of 13th June at 14:00 hours to submit everything. This did not happen. Instead on that day the IGG office received a letter from Muhumuza, Kateeba & Co. Advocates purporting to represent CICO denying all the allegations. They also requested for more five weeks to study the allegations raised and respond.  John Kallemera was assigned to handle the matter.

Proving to be stubborn, Kamya summoned CICO boss to appear before the IGG’s directorate of Special Investigations on June 28th to aid in the probe under inquiry No.HQT/CO/522/2022.

“You are ordered to attend before the Inspectorate of Government at Jubilee insurance Centre, Plot 14 Parliament Avenue, Directorate of Special Investigations, on the 28th day of June 2022 at 9:00 am, and so from day to day until your attendance is dispensed with, to give evidence in the inquiry into the alleged conspiracy to cause financial loss to the government of Uganda in the Hoima-Butiaba-Wanseko- Road Construction Project,” reads witness summons to CICO boss, Mao Jiawei.

We have learnt that Mao did not turn up and the excuse given was that he was out of the country.

The nonsense investigators whom Kamya have assigned to bring all the culprits to book are Simon Ariko, Asenath Ajambo, Gloria Abalo, Cosmas Otebat Orotit, Angella Tusiime , Noreeen Akello (D/SP) and James Magezi (D/IP). Armed with a search warrant, they recently stormed Seeta, Mukono based CICO offices with a view of obtaining evidence and everyone is now in panic.

IGG WRITES TO UNRA

On June 7th, Kamya wrote to UNRA ED Allen Kagina notifying the roads agency of the impending probe. To aid investigations, UNRA was tasked to avail to IGG all necessary information (oral, written etc) in their possession. These included the contract between UNRA and CICO; A comprehensive brief on the project’s procurement process, the contract and professional qualification details for the consultants, due diligence report on CICO before it was awarded the contract, approved bill of quantities, project’s progress reports from the start up to the handover, detailed project plans and as well approved interim payment certificates as approved by the consultant/employer and brief on the status on pending payments.

Rightly concluding that the allegations being raised were so serious, Kamya went on to direct UNRA deriving powers from Article 230(2) of the constitution to halt CICO’s participation in upcoming projects under UNRA pending the completion of the investigations.

CICO RUNS TO COURT

As CICO bosses played hide and seek games with Kamya, their lawyers were busy behind the scenes working on plan B. And this was evidenced in a high court interim order dated July 1st where CICO secured an injunction stopping the IGG from investigating them. The order also quashed IGG’s orders to block CICO’s participation in upcoming projects under UNRA pending the completion of the investigations.  

 

WIDER PICTURE

Sources intimated to us that there is more than meets the eye. Sources say the real battle is to do with the ongoing bidding procurement process for Koboko-Yumbe-Moyo Road (103.km), that’s being conducted by UNRA. The move is reportedly to block CICO and UNRA has to be dragged into.

There are allegations that money worth USD 300,000 has already exchanged hands on top of some parties pocketing 10% of the contract sum.

It goes without mention that CICO has already won other two projects—

Kira-Kasangati-Matugga (16km) and 7.3km Masaka Township Roads worth UGX 203 billion and 35.9 billion respectively.

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