Monday, May 3, 2004
Nile Hotel: M-7 Asked for $1.5m
By WAIRAGALA WAKABI
THE CHAIRMAN of Tahar Fourati Hotels International, the Tunisian group that briefly managed Nile Hotel in Kampala, has written to President Yoweri Museveni asking him to pay $1.5 million, claiming his contract was wrongly terminated.
Tahar Fourati says his firm was denied income when its contract was terminated by the Ministry of Finance's Privatisation Unit on April 26, 1997.
He also wants to be compensated for the "humiliation and arrest" of his officers when the group's contract was terminated.
"Though we left Uganda a long time ago, we continue to spend time and money on this matter, which should have been settled a long time ago," Mr Fourati said.
The letter comes as the group pursues a case in the commercial court in Kampala, in which it is claiming almost $3 million in the same case. Out of this, $1,070,176 is special damages for loss of earnings as a result of the termination, while an unspecified amount is for general damages. He also wants to be paid 24 per cent interest rate per annum from the date the contract was cancelled.
Mr Fourati said he would have preferred the matter to be settled according to the Investment Code rather than through a court of law, but "indifferent" government officials had forced him to seek justice from court.
The Uganda government and Mr Fourati entered a joint venture agreement over Nile Hotel in 1994. Under the deal, Fourati's African Continental Hotels took over the management of the hotel and Fourati became a shareholder. After a year and a half, Privatisation Unit officials accused Fourati managers of incompetence and terminated the deal.
Since the agreement did not provide for termination of the contract, Mr Fourati sued and was awarded $1.5 million by the court. The government paid the money at the end of 2001. Last year, however, at a time when the Privatisation Unit was selling Nile Hotel, Mr Fourati brought a fresh case for lost earnings, and placed a caveat on the hotel.
But the court lifted the caveat, arguing that the debt alleged by Mr Fourati did not allow it to lodge a caveat because Nile Hotel was not used as security for the debt. Serena Hotels earlier this year took over Nile Hotel management under a 30-year concession.
Documents made available to The EastAfrican indicate that Attorney General Francis Ayume, Solicitor General Lucian Tibaruha and Minister of State for Privatisation Peter Kasenene have all advised that the matter be settled out of court. A December 19, 2003, report by Mr Kasenene says Mr Fourati's contract was terminated while it had eight years remaining even though the agreement it had signed with the Uganda government did not provide for termination. Mr Kasenene added, "An audit by Deloitte & Touche advised the Privatisation Unit that the dispute (between PU and Mr Fourati) did not justify termination of the agreement. Now they are demanding $1.5 million for wrongful termination."
Mr Kasenene had on September 29, 2003 written to President Museveni informing him that Mr Tibaruha had advised that the matter be settled out of court. However, while the PU was preparing to initiate talks with the Tunisians, President Museveni's Legal Assistant, Hussein Kashilingi, directed them to await the outcome of State House investigations into the possibility of double payment to Mr Fourati.
Subsequently, Mr Kashilingi informed Mr Kasenene that the investigations had found the firm would not be paid twice. A meeting between Mr Kashilingi, Mr Kasenene, Mr Tibaruha, PU Director Charles Opagi, Senior Legal Officer Helen Wiltshire and team leader Godfrey Sebugwawo subsequently resolved to pursue negotiations out of court"as expeditiously as possible."
But Mr Tibaruha later wrote to Museveni saying the PU was frustrating the negotiations, which was likely lead to the government losing money. He said that while Fourati had originally claimed $900,000 for the wrongful termination of its contract, the money had accumulated to $1.5 million and the group had lodged court proceedings that could result in the state losing $3 million.
Mr Tibaruha said that while it is the Attorney General who should advise government in all divestiture transactions, the Privatisation Unit had bypassed the Attorney General and for many years engaged Masembe Kanyerezi and Company Advocates as their lawyers. This was despite the fact, that in cases where government agencies needed to use the services of private lawyers the Solicitor General had given them the go-ahead.
He said the PU's private lawyers had displayed a lack of legal knowledge in the Fourati case. They were erroneous to argue that the Fourati case was time-barred, since the fact that PU had over the years been engaged in talks with Fourati and given them the impression that they would be compensated, meant the case could not be time-barred.
However, Jim Mugunga, the public relations officer of PU, said Masembe Kanyerezi were actually the lawyers of Nile Hotel and not of the Privatisation Unit. He said he believed the company followed the proper guidelines that public firms should go through in engaging the services of lawyers.
He said, however, that the lawyers were better placed to comment on the matter since it was still in court. Moreover, PU was only handling "the residual company" following its concessioning and was therefore not involved in the day-to-day running of Nile Hotel.
An official of Masembe Kanyerezi said they had in the past written to both President Museveni and Mr Kasenene faulting the Solicitor General�s "interference" in the case and had been cleared by both officials to go ahead with the case. Documents seen by The EastAfrican show that Tibaruha had asked the president to prevail on PU to get the lawyers off the case.
Another PU official said, "The Solicitor General has given us advice before on the issue. We believed we had a strong case and even asked the president to guide us. He wrote back saying since PU and Nile Hotel lawyers believe they have a strong case they should proceed with the court process. Indeed, we were successful in court."
Both President Museveni and Mr Kasenene wrote to Mr Tibaruha last year asking him to let private lawyers handle the matter. This was after the government lost a number cases involving huge sums of money.
Parliament's Committee on Finance and the Economy, in a report to the House dated December 19, 2003, said the dispute between Mr Fourati and government "should be settled expeditiously to avoid accumulation of interest to be awarded to the company as per the Attorney General's advice."
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