On September 9th, all the major news outlets in Uganda ran with a screaming headline: “Microfinance Support Centre [MSC] officials charged with embezzlement.” It was alleged that Shs 11 billion released to MSC “just disappeared” into the pockets of four officials – John Peter Mujuni, the executive director; John Mwebembezi, the head of finance and administration; Joan Asiimwe Baryaruha, a teacher and Julia Birungi, a lawyer and the assistant credit officer.
As the police and the Director of Public Prosecutions (DPP) moved swiftly to arrest, charge and remand the accused, the media took the news on its face value. It is ten days since and no journalist or media house has yet published an account of what actually happened.
In 2010, some teachers registered a union called the Uganda Teachers’ Cooperative Savings and Credit Union (UTCSCU). In 2011 President Yoweri Museveni launched it in Jinja and pledged of Shs 25 billion to it. In 2014, the money was budgeted and given to the ministry of education. The ministry issued a tender for a financial institution to manage it as a revolving fund. MSC won the bid.
The ministry of education released Shs 9.2 billion to MSC, who gave it to 150 teachers’ SACCOs across the country at an annual interest of 9% plus 2% administrative costs. As I write, this revolving fund has grown to Shs 10.8 billion with total value created for teachers of Shs 16 billion.
In 2015, teachers began to agitate that they want to manage the money by themselves. This was during election campaigns. Some teachers formed a rival union with a near-similar name – the Uganda Teachers’ Savings and Credit Cooperative Union (UTSCCU). The registrar of cooperatives should have noticed this similarity in the name and turned it down but did not. Why? We don’t know.
Anxious to win the support of teachers, a large and influential body, and also perhaps misinformed, Museveni ordered that the money should be given to teachers to manage by themselves. This was politically profitable but technically disastrous. The teachers’ unions and the SACCOs did not have the capacity to manage this money. Now every group of teachers rushed to form a union in order to get a piece of the pie. The rivalry emerged among teachers on which of the unions should manage the money.
Finally, in 2015, the ministry of education gave the balance of Shs 15.8 billion on the president’s pledge to the hastily formed UTSCCU. This is where the fraud began. Officials of UTSCCU would go to some SACCOs, give them Shs 50m but they sign for Shs 80m. They were not doing any assessments. For political reasons, this was popular because there was no demand on the SACCOs to prove their capacity to manage the money. And it was an election year.
UTSCCU was using the offices of Uganda National Teachers’ Union (UNATU), which is a labour union. But a trade union is not a cooperative. There is correspondence where UNATU was writing to the ministry of finance demanding money to go to UTSCCU, which in principle is not correct. UNATU is a pressure group, which ideally cannot be overseeing the activities of a cooperative.
In 2017, UTCSCU threatened to sue UTSCCU for deliberately registering a name almost the same as its own (impersonation). UTSCCU rushed and changed its name into Walimu Sacco Union. By this time, UTSCCU has finished dishing out the Shs 15.8 billion. Walimu now began agitating that even the money at MSC also should be given to them to manage. But MSC already had a Memorandum of Understanding (MOU) with the ministry of education and with UTCSCU. So it could not change to this new entity.
Somehow, in 2019, Walimu succeeded to get the president to issue an instruction that all teachers’ SACCO money goes to the unions. MSC in five instalments between November 2019 and August 2020 sent Shs 10.8 billion to UTCSCU with whom it had an MOU. The money was paid in instalments because it had been lent out to SACCOs. It had to be recovered over a period and given to UTCSCU.
Having failed to put their fingers on the Shs 10.8 billion, Walimu, using its political connections and knack for intrigue, now went to Uganda’s gullible press, incompetent police and sleeping DPP and claimed the money is lost. All these three institutions, in Uganda’s characteristic culture of working on rumours and gossip swung into action to arrest, detain, charge and publicise a “huge corruption scandal.”
Yet at the time police arrested and detained the top officials of MSC, when the DPP sanctioned the charges of embezzlement and attempted fraud of Shs 10.8 billion, when the media screamed with the story that Shs 11 billion had gone missing, there was Shs 7 billion on the account of UTCSCU, the Shs 3.8 billion had been given to the teachers’ SACCOs and all transactions are there.
So Mujuni and Mwebembezi were arrested, kept at Jinja road for two nights, then taken to safe house in Kireka for two nights, then taken to court and charged with embezzlement and conspiracy to defraud government and sent to Kitalya prison for three days, then released on bail. It is now that police are running around looking for the most basic evidence to support their case.
The bail terms too were stringent: each accused person had to deposit cash bail of Shs 30m and a land title worth Shs 500m and above. Apparently there was a claim that there was some power behind all this! But which power would promote this impunity?
Media and gossip alleged that MSC gave money to SACCOs, which were run as family or personal fiefdoms – that in some of them you would find the treasurer is the wife of the chairman of the SACCO, the son the administrative head etc. I would be surprised if there existed many teachers’ SACCOs that were not run this way in Uganda. If one demanded institutionalisation of the type we find in rich countries, even the state of Uganda would not qualify – just look at the president and his minister of education to begin with.
Someone told me that police were trying to measure MSC on the standards of commercial banks. But MSC goes for the small and excluded whom banks cannot lend. The risk of losing money in SACCOs is here is high. That is why banks do not lend them. The regulations are deliberately lax in order to include the poor and vulnerable.
The real organisation to investigate is UTSCCU, now Walimu. They created a name deliberately designed to get money from the ministry of education. When challenged they changed, thereby admitting to getting money by false pretence. If police and the DPP are serious, let them ask UTSCCU, now Walimu Union, the following questions: what has happened to the Shs 15.8 billion? How far has it grown? What value has it created for teachers as a revolving fund? What we know, however, is that the accountants in the ministry of education who handled this money resigned after giving it out because they did not need to work anymore.