Friday, April 18, 2014

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Ugandan Parliament Blocks Foreign Oil Deals Amid Corruption Controversy

A corruption scandal has forced four ministers to step down and has led MPs to vote against any new oil deals until new laws have been passed.
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Kampala, Uganda:

Allegations of rampant corruption in Uganda’s oil sector have, in a moment of rare bipartisanship, ended in the suspension of new deals between Uganda and foreign oil companies and led to the resignation of four ministers.

The resolution to block deals, one of many reached in a special meeting of the Ugandan parliament this week, has consequences that will reverberate at home and abroad, and possibly change forever how oil in Uganda is managed. Its immediate impact, however, was to put influential ministers and the president on the spot over allegations that they received bribes to give oil companies advantageous positions in the country or to help with the sale of assets. The result has led Foreign Affairs Minister Sam Kutesa, Government Chief Whip John Nasasira, and Minister of State for Labour Mwesigwa Rukutana to step down, and has, notably, forced President Yoweri Museveni to come out and address the nation on the issue. Today - Friday - Internal Affairs Minister Hilary Onek confirmed he too would step down when a parliamentary committee commences its investigation.

The extraordinary events of the last few days have been, to a great degree, inspired by a collective sense of resentment at the mystery involving agreements signed between the government and a couple of oil companies, Italian firm ENI and Irish company, Tullow Oil, which strongly denies any "defamatory" allegations of bribery. The petition that led to an extraordinary session of the House, which the government tried to kill, would never have succeeded without the support of pro-government lawmakers, the majority.

As the government hardened its secretive stance, popular opinion coalesced around the idea that something fraudulent or sinister was going on. At the same time, documents circulated in Kampala claiming that Kutesa and Onek had been bribed by an oil company. Another allegation, contained in a WikiLeaks cable, suggested that Prime Minister Amama Mbabazi may also have taken a bribe.

No smoke without fire for the masses

It is these documents that were then tabled in the House, producing the kind of drama — and determination — that is electrifying a nation eager for real action against corrupt government officials. It does not matter to the average Ugandan that these documents are of questionable provenance or that their authenticity is dubious. The spirit here is that there is no smoke without fire.

To a wealthy official like Kutesa, who claims innocence but has been censured before over corruption, a common rejoinder goes like this: Why you? Why is it that, in every corrupt deal, your name always gets mentioned? The same applies to Mbabazi, who is widely despised but retains Museveni’s favour. Whatever the case might be, and even if the documents were forged, there seems to be agreement that money changed hands. Some experts say these bribery scandals are the inevitable result of competition among the various oil companies looking to invest in Uganda, one of which is the Italian firm ENI. Although it won no contract with the government, it made news for its willingness to give incentives to Ugandan officials in exchange for a deal. Defending himself against the allegation in a WikiLeaks cable that ENI bribed him, Museveni said he had personally vetoed the “small” Italian firm because a bigger company from China was on the horizon. Still, it has been said that well-connected officials in Museveni’s circle were bribed to act as fronts for foreign oil companies or to peddle their influence with the president.

The fight against corruption has often relied on Museveni’s patronage to have any semblance of seriousness. The way it works, in keeping with his preferred system of personalizing power, Museveni selectively asks the police to investigate suspicious activities. This is why, for example, when former Vice President Gilbert Bukenya was jailed for corruption, most Ugandans assumed Museveni approved of his arrest.

Museveni losing control

But if the actions of Ugandan lawmakers prove anything, it is that Museveni is losing control of the war against corruption. He saw his own lawmakers ganging up with the opposition against ministers who are very close to him, men thought to be in the succession queue. Museveni cannot feel secure when trusted cadres like Mbabazi and Kutesa are humiliated publicly. Their misery is his. No wonder he has indicated that he will be summoning his party’s lawmakers for a retreat to discuss the implications of their recent behaviour.

These developments will be a source of anxiety for Tullow Oil, the Irish company with the biggest stake in Uganda’s oil, since lawmakers have resolved to delay the sale of its Ugandan assets until necessary new laws have been introduced. What this means is that, if their resolutions are followed, Tullow’s $2.9 billion deal with the Chinese firm CNOOC and the French oil giant Total would be in jeopardy. The resolutions also complicate a legal process in which Tullow Oil and the government of Uganda are locked in a dispute over outstanding taxes. Analysts say the resolutions of the lawmakers have no legal force, making it likely that the authorities may ignore them.

A precedent has been set

And yet, in light of the great public support for the lawmakers’ actions, any move that goes against these resolutions could backfire spectacularly and create another round of drama. At the very least, the crusading lawmakers believe that they have established a template for how the government should behave in the management of Uganda’s oil resources. They want good laws and they want transparency, and it looks like they will keep the government on its toes.

There is every hint that Museveni is taking notice, even if he ultimately remains aloof. His address to the nation, given the day after the oil resolutions were passed, seemed to have been driven by panic more than anything. Corruption has been the way his government works and how it survives, but is it possible that it could also be the way it fails and dies off? Not in Museveni’s time have Ugandans — and his own party — spoken out so strongly, and with one voice, against powerful officials who steal with impunity. A precedent has been set.

 

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Comments

I am saddened but not surprised about what is going on in Uganda.
I am saddened because despite having a 'democratic government' and having periodic elections, governance is getting worse.
I am not surprised because countries like Uganda hide behind so called electoral politics to convince donors that they are moving towards democracy.
What we need is a change of government and a credible opposition to keep the new government in check.