Bank of Uganda officials grilled over Shs140b Haba Group debt

KAMPALA. Parliament’s accountability committee has demanded answers from Bank of Uganda over a Shs140.487 billion financial exposure linked to Haba Group Ltd that has remained unresolved for nearly nine years.

The Parliamentary Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) on Monday postponed its engagement with the central bank after officials failed to provide detailed answers on how the money would be recovered and why no direct action had been taken against the company.

The exposure, which dates back to 2017, is contained in Note 36 of Bank of Uganda’s financial statements and was also flagged in the Auditor General’s report for the 2024/25 financial year.

The committee questioned why Bank of Uganda had spent years corresponding with the Ministry of Finance and consulting lawyers without filing a recovery case or obtaining security from Haba Group.

Dorothy Masifa Ochola, the Bank of Uganda head of legal, told MPs that the letters of comfort were issued following instructions from the Ministry of Finance to enable Haba Group to obtain financing from commercial banks.

She said the central bank has since engaged the ministry and its external lawyers, Max Advocates, on possible options for resolving the matter, including court action.

“Court resolution is one of the options we have been looking at,” Ms Ochola said.

Her response drew criticism from MPs, who questioned why a financial exposure of more than Shs140 billion had remained outstanding for years without concrete recovery measures.

The committee also established that Bank of Uganda did not obtain security from Haba Group before issuing the guarantee.

Ms Ochola further failed to provide the current names of the company’s directors and shareholders, saying she would need to conduct a fresh search to establish the information.

She told MPs that members of the Basajja Balaba family were associated with the company but could not immediately provide the names of all its directors.

The omission raised concern among MPs, who questioned how the central bank could lack current information about the ownership and status of a company linked to such a substantial public financial exposure.

COSASE chairperson Muwada Nkunyingi said Bank of Uganda could not continue to rely on the Ministry of Finance to explain the matter when the central bank had issued the letters of comfort.

“You cannot continue to hide behind the Ministry of Finance,” the MPs argued, demanding that the central bank explain the actions it had taken to protect public funds.

The committee also questioned what it described as inconsistencies in the explanations about who ultimately benefited from the money.

Ms Ochola initially told MPs that the loan had been advanced to government and that government was responsible for repayment because the guarantee had been issued on its instructions.

MPs, however, pointed to documents before the committee showing that the letters of comfort were issued in connection with Haba Group’s borrowing from commercial banks.

Bank of Uganda Governor Michael Atingi-Ego said he was aware of the matter but asked the committee for more time to compile a detailed response.

He said previous COSASE committees had examined the issue and that the central bank had continued writing to the Ministry of Finance seeking settlement of the outstanding amount.

According to Mr Atingi-Ego, the Ministry of Finance instructed Bank of Uganda to provide letters of comfort to commercial banks to enable them to lend to Haba Group.

However, the current committee rejected the suggestion that it should rely on previous parliamentary inquiries.

The MPs said the 12th Parliament must establish what happened to the money and determine what action has been taken during the current audit period.

They also criticised Bank of Uganda for appearing before the committee without the relevant documents despite being informed in advance about the issues to be examined.

Mr Atingi-Ego asked for additional time to retrieve information from previous reports and engagements before providing a comprehensive response.

COSASE consequently postponed the engagement and directed Bank of Uganda officials to return with detailed documentation.

The committee wants the central bank to provide information on the circumstances under which the guarantee was issued, the due diligence undertaken before approval, any security obtained, recovery efforts and correspondence with the Ministry of Finance.

It also wants details of the commercial banks involved in the transaction and the respective responsibilities of Bank of Uganda, the Ministry of Finance and Haba Group.

The committee further resolved to summon representatives of Haba Group, including businessman Hassan Bassajjabalaba, to explain the company’s position and establish its current ownership and status.

The Shs140.487 billion exposure is linked to the controversial compensation of Mr Bassajjabalaba and companies associated with him following government’s cancellation of leases he had obtained to manage several Kampala markets and Constitutional Square.

Government paid about Shs142 billion in compensation, with the funds drawn through Bank of Uganda and backed by guarantees to commercial banks.

The compensation was later challenged in the Constitutional Court, which ordered Mr Bassajjabalaba and his associates to refund the money.

The Supreme Court subsequently overturned that decision, ruling that the Constitutional Court had exceeded its mandate by determining a dispute involving contested facts and commercial transactions rather than a pure question of constitutional interpretation.

For COSASE, however, the latest inquiry is focused on the unresolved financial exposure and whether the institutions involved took adequate steps to protect public funds.

The committee is expected to resume the inquiry after Bank of Uganda submits the requested documentation.