City Chinese, Sharp Lawyer and MP Ekanya named in USD1m Sukulu Phosphates Project Scandal

President Museveni launching the project on August 19th 2014

KAMPALA, Uganda: Pressure is building for government to review the legality of the compensation agreements that were signed and the rates contained in them between the locals affected by the Sukulu phosphate Chinese USD560 million project in Tororo.

These new calls follow a scathing report released on Tuesday by London Based firm, Global Witness. The report reveals how, despite the compensation to scores of locals in Tororo, poverty continues to bite them hard, leaving scores hungry and with no cash to even pay fees for their children.

Calls are also rife that following reports that since no official rates (compensation) were issued for Tororo District in 2014, government needs to explain and also ensure that any shortfall in the compensation given to affected persons should be made up by the company and arrangements made to ensure that they are no worse off than they were before they were moved from their homes.

The hallmark of bribery has also been cited with revelations emerging of how former Tororo County Member of Parliament and FDC stalwart Hon. Geoffrey Ekanya allegedly received USD$1 million from the Chinese Investors Guangzhou to woo the locals and instead ‘swallowed’ it. The process for negotiating compensation should also be investigated including the alleged payments made to Hon Ekanya and ORLDAO. This should include the role played by ABMAK.

Ekanya ‘paid’ to win local community

According to documents seen by Global Witness, Guangzhou subsidiary Hui Neng paid over USD1m to Ekanya and a community group known as ORLDAO to help negotiate land rights on their behalf. The money reportedly never made it to the community.

Hui Neng, the Ugandan subsidiary of Guangzhou, received an exploration license for the Sukulu phosphate mining site on August 1st 2013, but amidst controversy. According to the investigations by Global Witness, the license area had previously belonged to Nilefos, a company with close links to the prominent Madhvani family, which had been granted the license in August 2005 but had struggled to resolve land disputes with local communities in vain.

Nilefos’ license expired in June 2013 but it appears that Guangzhou had been maneuvering behind the scenes for some time and had secured political support at the highest levels. According to an internal government memo written by Edwards Katto, the current Department of Geology Surveys and Mining (DGSM) commissioner, and seen by Global Witness, the deal with Guangzhou “originated from the common consensus reached” in a meeting between President Museveni and China’s President, Xi Jinping, at a BRICS meeting in Durban in March 2013.

This was almost three months before Nilefos’ license expired. Other evidence suggests that the origins of the deal go back even further. According to Guangzhou Dongsong’s vice-president Mao Jie, the project was ‘set to be accelerated by China’s strategy of “One Belt and One Road.”

‘One Belt and One Road,’ known also as OBOR, is President Xi’s ambitious projects with over USD256 billion lined up for several projects. It seems that gaining support from senior government and political figures was central to Guangzhou’s strategy but so was winning over the community at the site.

Guangzhou knew that Nilefos had been struggling to secure land access and that resolving this issue was key to successfully gaining mineral rights. Guangzhou therefore set about ensuring that it secured the community’s support for its bid and Nilefos didn’t.

Guangzhou signed two agreements with local community group Osukuru Rubongi Land Development Advocacy Organisation (ORLDAO), for whom local MP, Ekanya acted according to letters from ABMAK, in the months before Nilefos’ license expired. In these documents ORLDAO agreed to negotiate exclusive land rights for Guangzhou with local communities and handle compensation in return for payment by the company.

Letters from ABMAK, Guangzhou’s lawyers, to the Ministry of Energy and Mineral development, allege that Fang Min, Executive Director of the Guangzhou subsidiary, paid over US$1 million to ORLDAO and Hon Ekanya between April and May 2013, before the Nilefos license expired.

According to ABMAK/Guangzhou, the payments were for legal costs, the “needy” of the county and administration/consultancy costs. Ekanya in his Defence said that he had never received any payments from Guangzhou. The community group in turn signed agreements with community members to secure their loyalty to Guangzhou making it difficult for Nilefos to secure a mining lease.

According to the letters from ABMAK, ORLDAO and Ekanya failed to keep up their side of the bargain, much to the annoyance of Guangzhou who complained to the Edwards Kato, the DGSM Commissioner. Though in its report, Global Witness noted that it does not accuse Ekanya of corruption, it pointed out however, that the whole process raises serious concerns about the conduct of Guangzhou, which appears to have hoped to resolve the problem of land rights by making payments to the local MP and community representatives.

The payment of hundreds of thousands of dollars by a private company to a democratically elected representative raises the question of whether this was an attempt to induce them to support their bid over that of another private company. Equally, it could be considered as a set of legitimate payments made to represent them in negotiations and secure the support of the local community.

ABMAK made it clear to Global Witness that the alleged payments were made before Guangzhou became ABMAKs client and that they played no role in the payments themselves.

The Investigator has established that residents affected by the phosphate project were ferried to Rock Classic Hotel in Tororo where they were induced with food, drinks and USD$140 (Shs500, 000) to sign Surface Rights Agreements. According to those interviewed, they didn’t understand the contents what they were being made to sign, majority appended their thumb prints. Watch this space…

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  • were sam

    Ooh!! Hon Ekanya I hope you were misquoted, but if true then as Justice Ogola said about those who ate GAVI funds, you can surely scavenge on the poor people of Osukuru that far? You must come clean or bury your head in sand forever.

  • Katondwaki Sejjusa Darius

    When leaders becoming vampires of their populase.