MPs erred on Dura consent judgment – by Sam Mayanja (The Observer 18.03.2012)


It has been noted with concern that Parliament has, of late, deviated from the known constitutional norms of this country and decided to act in a manner that encourages the breach of the rule of law.

The Public Accounts committee (PAC) recently presented a report to Parliament on the judgment in Civil Suit No 8 of 2008, Dura Cement Ltd vs Attorney General.

The main finding was that there had been financial loss caused to government and on the basis of that “finding”, Parliament debated the PAC report and adopted it and made a number of recommendations which were inappropriate.

The offensive recommendations are as follows:

    • Mr Elly Karuhanga be held liable for professional misconduct and influence peddling “as a lawyer who had sued government for compensation.”
    • Kampala Associated advocates (KAA) be held responsible for influence peddling and professional misconduct for making false representation in the consent judgment specifically to evade payment of taxes.
    • KAA should be held liable for causing loss of taxes amounting to Shs 3.2bn as a result of disguising the compensation in the consent judgment as special damages in order to evade taxes.
    • KAA should be blacklisted from all government contracts for defrauding the country.
    • KAA should provide documentary evidence to Parliament on how the judgment sum was received and disbursed.

Parliament/PAC’s role is to look at the findings on public accounts as made by the Auditor General, consider them and take appropriate action. However, PAC and Parliament have been making findings of “financial loss” caused to government, when the Auditor General has not found so.

The making of a finding as to whether or not there was financial loss is a constitutional audit function of the Auditor General, and not PAC or Parliament. In the Dura case, its mining lease was unilaterally cancelled by government and the Auditor General did not find any person as having “defrauded” government and/or caused “financial loss.”

The Auditor General’s only concern in his report to Parliament was that he had seen no evidence of payment of taxes by Dura. However, PAC, on its own, found that the then Solicitor General, Justice Billy Kainamura, the then Attorney General, Prof Khiddu Makubuya, and KAA, acting as Dura’s lawyers, had caused financial loss and defrauded government.

Related to the above is the recommendation that KAA and Justice Kainamura be held responsible for causing loss of taxes by “disguising” the Dura compensation as special damages. The taxes were paid but Dura Cement filed an objection, in accordance with the law, challenging the legal basis for the taxation, and even filed a case in the High court.

URA later withdrew the assessment after it agreed with the legal position, ‘that loss of mining rights is, under the law, not taxable.’

It is a well-known principle that no government agency or department can question the validity of the actions of the Attorney General or the Solicitor General in giving legal advice to government or in representing government in courts of law. It is only a court of law, and not Parliament, that can question or overturn the actions or decisions of the Attorney General.

It has for long been held that court judgments cannot be interfered with or questioned by the executive or by Parliament, as that would tantamount to interfering with the independence of the judiciary. Therefore, Parliament should respect court judgments and it has no jurisdiction or authority to interfere in the judicial process.

As noted above, Parliament also requires that KAA, as Dura’s lawyers, should provide documentary evidence of how the judgment sum was received and disbursed. It should be noted that Section 125 of the Evidence Act prohibits advocates from disclosing communication or documents availed to them in the course of their acting as advocates.

It is noted with concern that Parliament has even decided that KAA should be blacklisted! Whereas, this is for the reason that the lawyers had represented their client whose proprietary rights had been infringed and managed to have the client compensated, it should be noted that it is not Parliament’s duty to blacklist lawyers.

In many instances, committees of Parliament deliberately misrepresent facts in order to paint wrong pictures on various topical issues.

The case in point here is the condemnation of KAA on the basis that the KPMG report recommended nil compensation to Dura, and that the report had been used to mislead government that a sum of $14.5m had been identified as a reasonable return to Dura’s shareholders for the 19-year mining lease period.

Even before one goes into the clear provisions of the KPMG report, it is unimaginable for Parliament to say that a litigant whose property has been expropriated should get “nil compensation.” Besides, looking at its report, KPMG assessed the issue of the net profit Dura would have made in about five  pages of its report. The total net profit figure for the 19-year period is $14,566,890.

Parliament has also been involved in a number of other breaches and actions which undermine the rule of law like the calls for public civil uprisings, rowdy acts such as heckling members, and attempting to hijack the speaker’s mace.

We need assurances that Parliament and its committees will respect the Constitution and desist from unconstitutional and unlawful actions that are injurious to the right of lawyers to practice their profession.

The author is a Senior Partner at Kampala Associated Advocates

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