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

http://www.eastafricapress.net/index.php?option=com_content&view=article&id=314:fallout&catid=88:ethics

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:

http://www.eastafricapress.net/index.php?option=com_content&view=article&id=315:we-parted-amicably&catid=96:management

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

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Comments

10 Comments so far. Leave a comment below.
  1. Wandega Masaba,

    Andrew Mwenda, though your explanations make some sense, it is hard to believe they are credible. You have put a stain on your credibility, it may not be easy to clean it. Also, your close friends, Jamwa and Kasango are now in trouble over their funny dealings. May be sooner you will also be exposed

  2. Mwenda is free and just to explain his side of the story i believe if we as reader really wish to know the truth then we sould kind and patient enough to listen ti both sides before we could jump to condemn or judge whos wrong or right lets give it our ears my be mwenda is right but even if wrong we should be advissive than condemning .

  3. Wandega Masaba,

    Mr. Kabugo, you see for me to make a conclusion, I have what I think are facts. I have followed this matter since May. I had the chance to read both Mwenda and Bichachi’s views, as well as the views of his co-friends, one called Were and the other Wamucholi. I believe that from both views, Mwenda appears less credible. He may not have had bad intentions, but the manner in which he changed goal posts all the time, while relying on advice of Jamwa and Kasango, shows he was not exercising good judgement. Why do you refuse to document issues of shares. Trust can never be permanent, even God and Jesus know this. The other guys were right to insist on documenting shares, becuase people can change their view but when there are doucuments signed, it becomes easier to solve. By refusing to documents these shares issues, Mwenda invited suspicion.

  4. OKUMU DENIS,

    HI Andrew get serious Charles is a very careful guy he can’t lie just to destroy you

  5. Godfrey,

    Hi Andrew,
    Both of you have been in this bussiness for a while now try and keep a track what you are know for than falling apart. Bussiness is all about honesty and respect

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  7. Business is business-you cant rely on unwritten signed words from someones mouth especially in Uganda where people in all walks of life have been known not to keep their word. You can forget or change your mind,but if the agreement is on paper,you will respect it or have a case to answer.

  8. Mwenda is too smart for many people including the likes of Bichaachi.Warning;next time make everything in writing just as civilized business people do.Thank you

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