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KAMPALA - Two cabinet ministers are behind an unregistered local company that was set to take over Dairy Corporation on behalf of Malee Sampran Plc, the Thai investor that President Yoweri Museveni selected to lease the state-owned corporation at a dollar.
Malee Sampran is fronting a local company, Pan African Foods Limited, to take over the Dairy Corporation lease.
However, the lease agreement, which was supposed to be signed by February, hit a snag after The Monitor published a story about the deal.
The Monitor has reliably learnt that the two ministers behind Pan African Foods are very close to State House. One holds a senior Cabinet position, while the other is a junior minister. The two ministers are in a joint venture with Malee Sampran together with a senior Kampala advocate.
Sources closely associated with the process said Pan African Foods Limited could not sign the lease agreement because it needed to register first. However, the two ministers and the advocate are reportedly afraid to register the company because of the controversy surrounding the lease. Registering the company would expose the trio.
According to a draft lease agreement, a copy of which The Monitor has seen, the local Ugandan company has no address and directors. A search at the registrar of companies showed there were only two companies with close names � East African Basic Foods Limited and African Basic Foods (U) Limited.
President Museveni says he offered Dairy Corporation to Malee for a three-year lease �market testing period� hoping that after the lease runs out, the Thais would invest in a new multi-million dollar dairy and fruit-processing factory.
Malee is mainly active in the fruit-processing sector in Thailand.
But sources familiar with the lease process have told The Monitor that Malee, which is in a weak financial state back at home, is being used as a �smoke screen� for Pan African Foods Ltd.
�Ask yourself why the government is ready to sign an agreement with a company that doesn�t exist. There are more questions than answers,� a source close to negotiations said this week.
One of the ministers behind Pan African Foods is said to have been instrumental in the behind the scenes moves to let the deal through.
The minister and his group hope to benefit from the profits of the primary schools milk programme to be funded by the World Food Programme.
The schools milk programme is entrenched in the lease agreement.
Clause C reads: �(The Government of Uganda) desires to promote and develop its school milk programme partly through the utilisation of DCL�s production capacity.� Clause D adds: �GOU in a bid to improve the performance of Dairy Corporation Limited has decided to contract an efficient and experienced company to lease and manage Dairy Corporation Limited�s assets so as to meet the demand for milk for the schools milk programme.�
Parliament, which last week halted the controversial deal, also questioned the authenticity of Pan African Foods Ltd.
The Finance Committee chaired by Maj. Bright Rwamirama tasked the Minister in Charge of Privatisation, Prof. Peter Kasenene to explain the relationship between Malee and Pan African Foods.
Kasenene, who has twice failed to provide an acceptable report to Parliament on the matter, was not available for comment yesterday.
The minister is out of the country.
Museveni�s intervention in the privatisation of Dairy Corporation has come under heavy criticism with several sections of society questioning the President�s support for Malee.
The decision to lease out Dairy Corporation to Malee has been contested vigorously by MPs, who say the handpicking of Malee lacked transparency because a competitive bid process for the privatisation of the corporation was halted midway.
The Privatisation Unit had in December last year, pre-qualified four groups of companies - mostly in consortium - to bid for Dairy Corporation. These included Dairybord and Renaissance Merchant Bank, both of Zimbabwe; Spinknit Ltd and Spinknit Dairy, both of Kenya; and a consortium of Brookside Dairy Ltd of Kenya, FI Holding Company of Libya, Clover Holdings Ltd of South Africa and Carnations Ltd of Uganda.
The companies were supposed to review Dairy Corporation�s accounts and assets in August and submit financial bids soon after.
It�s at this stage that the President called a halt to the process and soon after, Malee�s Chairman, Mr Chatchai Boonyarat appeared in the country.
Sources told The Monitor that when asked for a financial plan, Mr Boonyarat said he had been promised a job by the President.
The Monitor reported last week that the Thai company�s capability to meet its obligations to the Uganda government is highly doubtful. Malee�s financials reveal that it is in no position to make a multi-million dollar investment in a new project.
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