FINALLY: Museveni Govt reveals what will be done to bankrupt Russian company awarded juicy digital monitors contract

President Yoweri Kaguta Tibuhaburwa Museveni’s government has spoken out on what will happen next to Russian firm Joint Stock Company Global Security Systems after it emerged that it was facing bankruptcy litigations back home.

Last week, the Russian firm inked a deal with Uganda’s security, works and transport ministries.

THE DEAL

According to permanent secretaries Waiswa Baligeya of the works and transport ministry and Yunus Kakande of the Office of the President, an inter-ministerial committee approved the deal.

The permanent secretaries also claim they had discussed the award of this contract for months.

Last Friday, PS Baligeya and Kakande signed the 10-year on behalf of Uganda.

Ivan Sukraban, the Chief Executive Officer of Joint Stock Global Security Systems, signed for the Russian firm.

CEO Sukraban and his company committed to recover their investment in two years before handing over the project to government.

Security Minister Maj Gen Jim Muhwezi emphasized that vehicle owners will pay for the purchase and installation of digital monitors.

The trackers will be mandatory and government hopes they will help in the hunting down of criminals.

Minister Muhwezi dared anyone who was dissatisfied with the project on grounds of invasion of privacy to go to court.

And perennial litigant Hassan Male Mabirizi has already done that.

THE BANKRUPTCY, DEBT DEFAULTING CLAIMS

Joint Stock Global Security Systems faces a myriad of bankruptcy and debt cases back in Russian courts of law.

In March 2019, Rus-Prom-Technology sued Joint Stock Company Global Security Systems after it defaulted on its 16.6 million rubles (roughly $220,000). Court ruled that Joint Stock Company Global Security Systems had indeed failed to pay Rus-Prom-Technology.

Over a year later, in September 2020, Rus Prom-Technologies LLC dragged Joint Stock Company Global Security Systems to the Arbitration Court of the City of Moscow over bankruptcy.

Rus Prom-Technologies LLC, asked court to declare Joint Stock Company Global Security Systems bankrupt, an application whose hearing was sanctioned the following month, but the determination of the matter has stalled.

Joint Stock Company Global Security Systems asking that the determination of the matter be deferred as it bought time to pay off the debt.

Months later, in March 2021, court tasked Joint Stock Company Global Security Systems to table evidence of debt clearance when court next convenes to hear the case in September 2021.

MORE CASES (2019-2021)

Stok-Trading LLC sued Joint Stock Company Global Security Systems over 1.2m rubles debt

JSC Royal Silk Factory sued Joint Stock Company Global Security Systems over 19.9m rubles debt

Turday GS sro Slovak Republic sued Joint Stock Company Global Security Systems over 6.1m rubles debt.

JSC ZVI sued Joint Stock Company Global Security Systems over three debts: 23m rubles, 10m rubles and 4.6m rubles.

Limited Liability Partnership Orken Alem sued Joint Stock Company Global Security Systems over an 8.5m rubles debt.

Gu Main Department of the Pension Fund of the Russian Federation sued Joint Stock Company Global Security Systems over two debts: 10,000 rubles and 455,00 rubles

QUESTIONS

Revelations of Joint Stock Company Global Security Systems’ bankruptcy have raised a number of questions: who recommended the firm to Museveni? is this the best security company government could find? Who were the other bidders? Were procurement laws followed? Was Joint Stock Company Global Security Systems looking for a third world country that doesn’t take procurement laws seriously for its financial resuscitation?

Other questions are: what was the role of the Financial Intelligence Authority (FIA) in the awarding of the contract? Who did the inter-ministerial committee that picked the firm consult?

MUSEVENI GOVERNMENT RESPONSE

According to available media reports, officials at both the Office of the President and the ministries of works and transport, and security, didn’t know about the Russian company’s financial standing.

President Museveni’s Government Attorney General Kiryowa Kiwanuka has been quoted as saying he gave his approval to the contract.

“The contract was brought to my office, we approved it and we believe there is no risk, Uganda is not exposed to anything at all,” AG Kiryowa Kiwanuka told local news agency Uganda Radio Network.

“Contract was approved by my office taking into consideration all the laws of this country and we are certain that we don’t have any order of bankruptcy issued against the company.”

For now, the Attorney General’s remains President Museveni’s and his Government’s position on the matter.

However, it is not clear if Museveni (under whose office the security ministry runs) will cancel the contract if there is sufficient evidence that Joint Stock Company Global Security Systems is indeed bankrupt.

If the president goes ahead and allows the Russian company to execute the contract, he will have flouted procurement laws that bar bankrupt companies to get contracts since they lack the financial capacity to implement them.