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In a tough lesson for businesses and business people considering corporate crime in Uganda, the constitutional court has imposed massive fines on four banks for their part in the country’s Habagate scandal. Further fines and punishment await others involved, but the court said the assessment of these should be left to the high court which is also to establish how to apportion the blame and punishment due.

The constitutional court’s judgment, delivered this week, disclosed extraordinary features of the scandal: without proper authorisation, the Kampala City Authority let go of some of its most precious public features including Constitutional Square, a park regarded as an essential ‘green space’ in the city and available for public use since the establishment of the city of Kampala.


Starting from 2000 and stretching over several years, Ugandan businessman and politician, Hassan Bassajjabalaba, purported to ‘lease’ several markets and Constitution Square from the city council, using several of his companies, including Haba Group, as mechanisms to do so.

After market stall holders began agitating against these ‘developers’, the purported contracts were cancelled and Bassajjabalaba was then enabled to claim compensation for the huge losses he said he had made as a result.

The amount he was to be awarded by way of compensation increased astronomically, and the banks became involved because they ensured payouts to him.


In his lead judgment, Justice Kenneth Kakuru referred to a sham compensation scheme. Counsel for the petitioner, a civil society organisation called the Legal Brains Trust, described what happened as a ‘well-planned, well-executed, well-coordinated, illegal, grand corruption scheme’ for the benefit of certain individuals.

Justice Kakuru agreed with this description. Among other things, he accepted that the signature of the acting Solicitor-General on key documents had been forged, and that a crucial court judgment had also been forged. He also found there was a deliberate decision by the Kampala City Council ‘at the highest level’, ‘cascading down to the tender committee and management to grant … two non-existent companies’ the lucrative contracts at the heart of the scheme.

Void and unlawful

Crucial to the case is the fact that the Attorney General must approve the award of contracts and leases in matters like this. However, the Attorney General at the time did not carry out this vetting function. That alone made the contracts constitutionally void and unlawful, the court found.

The contracts were thus awarded, as the court put it, ‘without the approval of the AG, without having been registered, without any history of having carried out any business, without assets, without bank statements, without income tax returns.’

Here is how Justice Kakuru summarised the scheme, ‘All along (Bassajjabalaba) was in cahoots with officers of Kampala City Council and its tender board. They set out a scheme. They obtained contracts. They frustrated them. They now sought compensation. When the chips were down, Bassajjabalaba approached the President for assistance.’

Grossly inflated

The President agreed in principle that compensation could be paid, but he asked the Attorney General to verify the claim. Instead of doing so and establishing whether the claim had any legal basis, the Attorney General worked out the amount of compensation that should be paid, even though this was not his duty or what he had been asked to do. He also set up a committee to establish the compensation, and that committee grossly inflated what had been claimed.

Justice Kakuru added that the ‘push’ to have the Bank of Uganda involved in the compensation scheme was ‘clearly initiated’ by the then minister of finance, Syda Bumba. Once that bank was involved, it was relatively easy to get four commercial banks on board to complete the fraudulent scheme. The court found the conspirators were Bassajjabalaba and his companies, together with certain Kampala City Council officials and others involved in the city’s tender board. ‘The other conspirators (were) the Attorney General Khiddu Makubuya and the Minister of Finance, Syda Bumba.'


At the time these were the masterminds behind the fraud. They were obviously the beneficiaries of the fraud and corrupt dealings, only thwarted by the secretary to the treasury who ‘smelled a rat’ and referred the matter to the Auditor General. When the Auditor General put the brakes on the fraud, the Minister of Justice asked the Bank of Uganda to get involved by issuing guarantees to the private commercial banks and they then took the fraud to another level.

On behalf of the majority, Justice Kakuru said the public deserved redress. The money lost could have been used for medicine, for health centres, to educate children and to pay teachers and soldiers. ‘It would have built roads, schools and hospitals.’


Explaining the severe fines imposed he said there had been an ‘explosive leap’ world-wide in the size of penalties imposed on global companies found to have been involved in improper conduct.

‘The era of tolerance for corporate crime has ended. The colossal sums would never have been lost without the involvement of (these four) banks. They are the ones individually and collectively that provided (Bassajjabalaba) with the key to the national treasury. They provided him with the password to the safe.’

Apart from the fraud and scandal involved in this matter, the case also raised an ongoing, significant legal issue: the judges disagreed over whether the court had jurisdiction to hear the matter at all. The dispute mostly concerned whether the issues raised were in fact constitutional matters. If not, they were appropriate for hearing by another court.

Proper case

All members of the court were clearly of the view that the petition had not been well drafted, and this almost caused all five judges to refuse to hear it. However, three of them said they were persuaded that there were sufficient grounds to consider the matter, despite the drafting issues.

It is a matter that the court has already addressed several times in other cases and will no doubt return to in future litigation as well: at what point will a matter that references the constitution and infringements of the constitution became a proper case for the constitutional court to consider?