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Day August 26, 2010

Andrew Mwenda responds in details to the accusations by Charles Odoobo Bichachi

Dear all,

First, I find it curious that the people who claim to believe in democracy among the Ugandan elite cannot practice some of its basic principles. In the case of my disagreement with my colleague, Charles Binanchi, as indicated in the link below:

Why co-founder Bichachi quit The Independent

Many of you have rushed to a conclusion on the basis of hearing only his side of the story. I thought those who claim to be democratic would follow the first and most important principle of natural justice i.e. do not condemn anyone without hearing from them. In this case, Charles wrote what he felt about leaving IPL. He did not lie. Although I think he felt hurt, the problem was that he misunderstood me and the complexity of shareholding we were trying to implement. For example, the shares were to be registered on a percentage basis i.e. 20%. The problem was, assuming each one had 5% shares all of them based on sweat, what do you do when someone leaves after one year and another works for ten years?

According to our original plan, the one who worked for one year would have equal shares with the one who worked for ten years. That is grossly unfair because the sweat of someone for only one year cannot be valued at the same level of the sweat of another for ten years. The difficulty in registering these shares (and we are still facing it today) is how then to calculate them? Anyway, in the same magazine was my reply to Charles as indicated in the link below:

There is more I could say on this matter but I respect Charles and know that he was genuine but genuinely wrong. First, I mentioned that in January 2009, we (meaning me, Bichachi, Were, Dambyo, and Wamucoori) fired two of our senior colleagues (Daniel and ford) for loss of revenue. Each of these people had 3.5% shares in the company. I insisted that we hire an auditor and value the company along a NBV (net book value) and pay them for 3.5% of the shares each had been promised in the verbal agreement. The company’s total assets (fixed assets, money owed by advertisers and bank balances) were about Shs 510m. But remember that I had extended a loan to the company of Shs 350m which Bichachi talked about. This coupled with losses of Shs 164m in 2008 and debts to our suppliers worth shs 122m created negative equity in the company (do the maths). Yet this notwithstanding, I felt strongly that partly because of their contribution, and largely because of the strong importance I attach to my word and integrity, they should be compensated. So we paid them for equity that the company did not actually have.

Secondly, when Bichachi was leaving, we actually paid him. In his article, he says we paid him peanuts. Surely, Charles should have had a scientific basis for valuing his 3.5% shares and then proceeded to show whether it actually amounted to a certain amount he felt he deserved. I personally felt he deserved much more money. But my feeling cannot override the financial reality of the business. In fact we paid him because of my feeling that he deserved to leave with something, not because technically his shares were worth anything. The company was still in negative equity at the time he left i.e. our liabilities were greater than our assets. I really would not like to criticize Charles because I respect him a lot, and I admire his personal courage and commitment to freedom and democracy. But in all fairness Charles does not understand paper wealth. I got the sense that he felt the existence of a company automatically means that it has positive equity.

Finally, all the other colleagues have not left Independent. It is wrong to think they are poodles. Joseph and Patrick asked me to compensate them for their shares. I paid. Godrick refused saying he trusted my word. Today, the board of directors approved the employee shareholding scheme and his 3.5% is there. The company is going to turn a profit this year, has cut down its debts, the money put in by directors as loans has now been transferred in as capitalization. So we have positive equity. It pains me that Charles left before he could actually realize the value of his efforts. I can never cheat anyone, and I can never renege on my word.

I would also like to respond to Abbey Semuwemba who posted something on the Ugandans At Heart (UAH) forum saying: ‘’Yes, we started discussing the general entrepreneurial unprofessionalism among Africans in Uganda and abroad, and how it can be addressed, after reading Charles’s story, which I thought was more important than even Charles’s story itself.’’

I do not agree with Abbey that the lack of formal agreements kills business partnerships. Please note that a formal agreement is not what keeps a partnership. There is what the sociologist Durkheim called “non contractual elements of a contract.” What makes people honor a contract is not the words written on a piece of paper. If that were the case, people would always be in court seeking redress – because only courts can adjudicate on such matters. Agreements and contracts are rooted in a people’s norms, traditions and shared cultural understandings which we actually take for granted. My dad sent me to school and paid my fees all through. There was no contract. You may say that was my dad. But I look after children who are not my relatives but total strangers who have impressed me with their excellent academic performance yet they are poor. I pay their fees in secondary schools and universities every term and on time. I honor my word to them out of my moral commitment. They trust my promise when I delay to give them money for a day or two, because we trust each other.

Second example: My friend Teddy and her husband Isaac import goods from china for sale in Uganda. Their Chinese suppliers give them credit to the tune of US$ 1m and they pay back after selling. Yet the Chinese suppliers in Shanghai have never been to Uganda, do not have Teddy and Isaac’s physical address, do not have a contract with them etc. all they have is their phone number and email address. This business relationship is working well. Teddy goes to China and parts containers of goods without pre-paying, brings to Kampala, sells and pays them later. Across the Middle East and Africa, people trade without formal agreements and they honor their obligations. The belief among some African elites that an agreement has to be formally written and signed to be honored is an inheritance from western values that is not rooted in our culture. Whoever is reading this has friends he has lent money to or borrowed from and promised to pay without an agreement.

Even at Independent, we loaned our printer shs 200m to buy a new printing machine. The board has been asking me for a debenture on the machine, a registered loan agreement, an insurance policy on the machine etc. I have insisted that I trust this man because I know him. He stood by us when no one could print our magazine because of state intimidation. He cannot cheat us. Finally the board agreed that I should be held responsible if the company loses money. I accepted because I trust this old man. In fact, bichachi had also expressed a concern that our printer would cheat us. I refused saying I know the man. He is a respectable man who meets his loan obligations. I have businesses I run with friends here in Kampala – black and white and Indian – where we do not have formal agreements. The business partnerships are all doing fine.

Kindly write to Godrick Dambyo, now our general manager, and ask him about his shares in the independent. We have not yet registered them. Ask him privately or publically if he thinks mwenda intends to cheat him. My mistake was to think that Charles would trust me as I thought he would; he certainly did not. I should not have assumed that. Secondly, even beyond that expectation of trust, Jamwa, Kasango and everyone else whom I consulted knows how many times I tried to get these people’s shares registered and how many times I found legal and practical obstacles. If God exists, he knows how much I tried to ensure that whoever I promised shares gets them registered in a manner that does not make one cheat the other. For example, if we registered Patrick’s 3.5% shares in 2009 and Patrick left in 2010. Meanwhile we register Bichachi’s shares as 3.5% in 2009 and he stays on for ten years. All would have 3.5% shares. Yet these were sweat shares. Bichachi would have worked to create wealth for Patrick. It was the failure to find a formula to solve this problem that delayed the registration of these shares, not my desire to cheat anyone. The failure to register the shares had more to do with my concern for my colleagues than myself.

I rest my case.

Andrew Mwenda

Managing Editor of the Independent Newspaper


Uganda Govt statement On Constitutional Court Ruling on Sedition




Fellow Ugandans,

The above petitioners filed a Petition challenging the offences of Sedition (Section 39, 40 of the Penal Code Act) and promoting sectarianism (Section 41 of the Penal Code Act) as unconstitutional.

They also wanted Sections 42 – 44 of the Penal Code Act which relate to these offences declared redundant, in case the above sections were found to be unconstitutional.

Yesterday 25th August 2010, the Constitutional Court held that the offence of Sedition was unconstitutional whereas the offence of Sectarianism was upheld as being constitutional.

The parties were not availed with copies of the judgement. The Attorney General is presently considering filing an appeal against the judgement declaring the offence of Sedition as unconstitutional, and has requested for a copy of the Judgement to enable it further determine possible grounds of appeal.

Presently, one of the areas of dissatisfaction with the judgement is that it seems to focus on the acceptability of criticising the person of the President as a politician, and did not address the other areas of the Section 39.

(Please refer to Section 39 1 ( a) (the last part refers to the Government and the Constitution) 39 (1)(b), ( c ) and (d).)

In our opinion, the Court also failed to properly consider Section 39(2) which provides for very wide range of defences which in effect allow for very wide political comment and criticism of the Government. The Attorney General is thus dissatisfied that the Court found that the offence is too wide.

The Attorney General is also dissatisfied that the Court did not address the fact that the law of sedition is present in the law books of leading democracies, such as the USA. It is a standard established by the Constitutional Court that it should consider the practices of countries which are free and democratic in assessing constitutionality of laws. However, while the Attorney General presented different leading democracies which have laws on sedition, (e .g, USA, Australia) it was not addressed by Court.

It is also our opinion that the Court erred in holding that the Attorney General had not adduced evidence to prove that Mr. Mwenda’s statements prejudiced the national interest or security, when this was never in issue before court.

(There was never any issue framed before court as to whether Mr. Mwenda’s trial for the offence was justified, as this would have been an issue before the Magistrate. The only question referred to the Constitutional Court by the trial Magistrate was whether the challenged Sections of the Constitution were unconstitutional).

In conclusion  the issues presented before Court were those of law and not of fact and the court erred in requiring the Attorney General (who was not the DPP prosecuting the matter in the trial court) to prove the effect of Mr. Mwenda’s statements or the justification for his prosecution.


26TH AUGUST, 2010

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