Judge Kavuma cited in loan scheme scam
By Grace Matsiko
Feb 25, 2005
KAMPALA - Police are investigating a firm suspected to be running a bogus loan scheme, under which thousands of Ugandans claim to have lost billions of shillings.
The Foundation for Empowerment in Harmony Limited (FEHL) is the firm at the centre of the investigation.
Newly appointed Court of Appeal Justice Steven Kavuma is said to be a director and signatory to the accounts of the Foundation.
The other directors and signatories include; the Chairperson, Ms Jennipher Bitarabeho, a top official with the Uganda Investment Authority (UIA), Ms Ori Kahana, a Jewish businesswoman based in Kampala and Ms Liz Walker.
The three were members of the money gift circles, banned by the government about two years ago after its members claimed they had been fleeced.
Justice Kavuma, a former State Minister for Defence, told The Monitor yesterday that he left the foundation before he was a ppointed a judge. He declined to comment further, saying judicial rules bar him from making press comments.
Police last Friday, summoned Bitarabeho to CID headquarters and quizzed her for several hours over claims that part of the FEHL members' savings were diverted.
The foundation has its offices on Plot 19, Buganda Road, Kampala.
Police Commissioner, Serious Crime, Mr Edison Mbiringi on Wednesday confirmed they are investigating FEHL.
"I know about it but there is someone investigating it," Mbiringi said.
He referred this reporter to Detective Fred Mayende who is handling the investigation. But Mayende has been elusive for the last two days. An official at the FEHL offices, Mr Paul Tibenderana and other members insist Kavuma is still a director. Kavuma was the foundation's legal counsel, sources said.
"How can he say he (Kavuma) is no longer a director when he has not resigned. He can't just walk away. He has to be summoned and explain what went wrong," Tibenderana, a member of the 10-man internal committee appointed to examine FEHL books of accounts, said. Other members include; Mr Peter Egadu, an accountant and Ms. Florence Tibamwenda, a city trader.
Kavuma's name was also read among the directors at the foundation's meeting, which turned rowdy at Buganda Road on Saturday. Angry members pulled and shoved Ms Walker, the only director who attended. Police detectives at the venue saved her.
But Kahana, who doubles as FEHL landlady distanced herself from the foundation, saying she resigned from the group in May 2004 - a claim members dismissed. They said Kahana and other directors had a case to answer. Bitarabeho said she could not say members lost money because investigations are going on.
"There is some work going on. People's questions will be answered but we are grateful that some of our members have asked questions and have understood the situation," Bitarabeho said. She said another meeting would b e held to discuss the foundation matters. She confirmed she went to CID but declined to state the reason.
The Monitor has found out that registration for membership took two forms. The first category paid Shs2 million per person as annual membership fee while the other category parted with Shs600,000 per head.
The fee was in addition to a non-refundable fee of Shs150,000 for the first category and Shs75,000 for the second group. The foundation operates like the former money gift circles except this one is registered.
Each person joining the foundation pays between Shs600,000 to Shs2 million and is encouraged to introduce at least four other people to form a unit of five.
When the circle is completed, one member takes all the contributions and ploughs back between Shs600,000 to Shs1 million, which is used as security deposit with the foundation.
On reaching five, the group splits and forms a new unit with the members who did not benefit in the firs t set coming in the middle of the chain to serve as the next benefactors in the endless cycle.
The chain continues building and splitting. But angry members said the "the security fee" which is deposited with the foundation was not accounted for by the directors.
According to an internal source, most of the members in the category one were high-ranking government officials or their spouses, expatriates or prominent personalities.
On account number 01101008035 at the Bank of Baroda, members in the first and second category had paid Shs1,357, 324, 400 as participation fee with some members paying 600,000 while others paid Shs2 million.
But the members said only Shs254,182 was on the account by the Saturday meeting. On the second account number 01101008055 with Baroda over Shs31 million was banked but it now has a balance of Shs146,342.
Another account 01101008059 under a company called Kitty had Shs66.4 million as deposits from the members but only Shs13 ,450 was remaining as balance.
But the mmbers during the meeting said that the Egadu inquiry did not show to which account the directors deposited Shs74,555,000 as registration fee from the 1,157 membership. "The members present at the meeting agreed to increase on the number of voluntary committee members, who would further investigate, take legal action against the directors and recover their money," according to the minutes of the meeting.
The Egadu committee also discovered that a former foundation office administrator, Mrs. Anna Katusiime, now moneylender, had withdrawn Shs233,600,018 from their Baroda accounts.
"Banks don't pay third parties. There were members who did not want to wait for four days for cheques to mature. There were other members without accounts. The rules were that we don't pay cash to members but I was given a letter by the directors authorising me to collect money and then pay the members. I did that as an office administrator not as a beneficiary," Kamusiime said.
Some foundation members allege that people who were not registered with it accessed money in form of soft loans, a claim the directors deny.
� 2005 The Monitor Publications.
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