Monday, October 20, 2003
Iraq may attach Uganda's UK assets over $6.4m debt
By WAIRAGALA WAKABI
THE EASTAFRICAN
UGANDA'S PROPERTIES in the UK risk being attached by attorneys working for an Iraqi governmental agency over a $6.4 million debt incurred in 1975, which the Finance Ministry has refused to pay on the grounds that past claims by Saddam Hussein's government no longer have any validity, given the change of leadership.
Lex Uganda Ltd, the solicitors for the Iraq Fund for International Development, an Iraqi governmental agency, have written to Ugandan Attorney General Francis Ayume and Finance Minister, Gerald Sendawula, informing them of the new measures they are taking to recover the money.
The lawyers have also applied for a Prerogative Order of Mandamus, under which the Secretary to the Treasury, Chris Kassami, could be taken to civil jail if the money is not paid.
"We have also instructed counsel in Britain to enforce the decree by attachment and sale of Uganda government assets and in other countries, including buildings and cash in banks," the lawyers said in their August 4 letter to Mr Ayume and Mr Sendawula.
They added: "We are aware that these enforcements may cause embarrassment to the Uganda government but we have been left with no other option."
Mr Sendawula, in an August 14 letter to the Attorney General, said he would not pay the money, saying whatever instructions Lex Uganda had previously received from the Iraq Fund to pursue a claim against the Uganda government "clearly no longer have any validity, given the recent change of government in Iraq."
He added that the new Iraqi government, the Transitional Authority, intended to seek debt relief from Iraq's creditors and therefore would be expected by the international community to comply with international obligations.
Among these will be to provide Highly Indebted Poor Countries (HIPC) debt relief on the debts owed to Iraq by HIPC eligible states like Uganda.
According to records at the Ministry of Foreign Affairs, Uganda's properties in Britain include the Chancery building at 30 Ingram Avenue in North West London, the official ambassador's residence in Hampstead, 57 Edgwareburg Gardens in Middlesex, 35 Herman Drive, 24 Little Tyton Road in Finchley and 45 Gainsborough, all in London.
A lawyer with Lex Uganda said Iraq had gone through a lot of destruction in the past two wars and it needed every resource available for reconstruction.
"The government of Uganda is morally obliged to do Iraq a good turn in this time of great devastation and pay back the loan funds. It is a matter of returning a good favour," he said.
On July 2, 2002, the Iraq Fund obtained a judgment against Uganda's Attorney General for $6.432 million plus interest of 2.5 per cent per annum until full payment is made, as well as costs of Ush210.7 million ($105,879).
Justice Richard Okumu Wengi heard the case and the state was represented by a senior State Attorney, Cheborion Barishaki.
Mr Barishaki and Deus Byamugisha, the Director for Civil Litigation in the Ministry of Justice and Constitutional Affairs, were a few months ago suspended to pave the way for investigations centred around the big cases the government was losing.
In May 1975 and June 1981, during Idi Amin's regime, Uganda received from the Fund two loans totalling $14.8 million for a number of projects, including rehabilitation of sugar and coffee plants, cotton ginning, storage and transportation and edible oil extraction.
The government, however, later reneged on payments, which prompted the Fund to move to court.
The Fund's lawyers say that, at one time, Uganda had refused to pay the money, saying there were UN sanctions against the country.
But the lawyers argue that the UN sanctions related mainly to weapons supplies to the former regime and Iraqi petroleum exports and did not extend to court awards in favour of Iraqi entities.
They said the Transitional Authority established in Iraq by the UK and US governments was legitimate and had been recognised by the UN.
They added, however, that the question of whether there was a legitimate government in Iraq "is irrelevant because the judgement creditor is not the government of Iraq but the Fund which is a statutory body that is still in existence."
Iraq had sued Uganda for $10.9 million but following verification it was established that the amount was $6.432 million. On October 7, 1998, Ugandan officials led by Mr Sendawula met a delegation led by Faik Ali Abdul Rasool, the president of the Iraq Fund, where Uganda requested President Saddam Hussein's regime to consider an 80 per cent discount on the debt, as per the HIPC initiative of the World Bank and the International Monetary Fund.
But the Iraqi delegation rejected the request, saying Iraq was not a member of the Paris Club and any terms laid by that group of creditors were not binding to the country.
They added that the Iraqi loan to Uganda was extended in cash and on very soft terms and conditions, so it had to be treated differently. Also on the Ugandan delegation were the then Permanent Secretary in the Ministry of Finance, Tumusiime Mutebile (now Governor of the Central Bank), and the Acting Economic Advisor to the Minister, L. Tisasirana.
But when the case went to court, Justice Okumu-Wengi said the HIPC discount had to be secured by Uganda from Iraq, and that since the Attorney General had not shown that Uganda had secured such a discount from the Fund, court was bound to enter judgment for the entire sum of $6.43 million.
But though Mr Ayume said in a statement on February 7 that his office had filed an appeal against Justice Okumu-Wengi's ruling, the Finance Ministry says there is no indication that this was done.
Mr Kassami, the Secretary to the Treasury, has written to the Solicitor General, Lucien Tibaruha, inquiring about the current position of the appeal and asking for assistance in the case. But sources from his office say the AG's office has not responded to the inquiries.
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