Investigations

Matugga vaccines plant standoff: Magoola defends self, says South African contractor failed to deliver

President Museveni who was in company of former Speaker of Parliament Rebecca Kadaga and Kenya’s Deputy President William Ruto during the launch of the construction of the Dei Natural Products International Ltd plant in Matugga last year (PHOTO /Courtesy)

KAMPALA — Fresh details have emerged in Matugga vaccines plant standoff with new evidence pinning a South African contractor, Mutoni Construction (U) Ltd of failing to deliver a pharmaceutical plant at Matugga on Bombo Road— and instead resorted to using powerful politicians and security agents to intimidate the client to pay for work not done.

Dei Natural Products International Ltd (Dei), which is part of the Dei Group, says whereas they contracted Mutoni Construction (U) Ltd and paid it almost UGX. 6 billion, the contractor exhibited lots of incompetence, failed to finish the production plant and has instead turned around and dragged them to police, claiming they were not paid.

On October 14, 2021, Mutoni Construction (U) Ltd wrote to Police’s Criminal Investigations Directorate (CID), claiming that Dei and its director, Mr Matthias Magoola, procured them to construct the multibillion pharmaceutical company but hasn’t paid them a sum of UGX. 4 billion.

But Mr. Magoola in a statement of defence on the record indicates that Mutoni Construction (U) Ltd was paid the money to complete the project but still failed.

Upto UGX. 6 billion has since been paid to the contractor, evidence on the record shows.

Dei adds that Mutoni should stop using underhand methods and fulfil the contractual obligations.

“Mutoni should stop engaging “imperialist tendencies” crying over being South African investor, because it was not given a contract because it was a South African investor, but because it undertook to construct and handover the building to Dei within agreed timelines and standards,” Dei’s defence reads in part.

“By failing to execute the contractor in a just and transparent manner, Mutoni cannot expect to receive free money simply because it is a company of the so-called South African investors. One wonders, if in South Africa contractors get free money or whether in case of disputes they drag in political heads to resolve the disputes,” it adds.

The Genesis:

On 27th September 2019, Dei and Mutoni signed the contract for the construction of the phase 1 of the Pharmaceutical Production Building at Matugga at a cost of UGX 9.6 billion, including both labour and supply of construction materials.

By the terms of the contract, Mutoni was to complete the construction of the building within four (4) months.

Mutoni took possession of the site on 1st October 2019 and was required to have completed and handed over the building by 20th February 2020.
But Mutoni was later unable to beat the deadline and requested for an extension.

“However, Mutoni was unable to supply the materials and in order to avoid delays, it was mutually agreed by both Dei and Mutoni that the supply of materials be removed from Mutoni and Mutoni only remained with labour contract. Any person familiar with construction will know that the biggest component of construction is materials, and labour only constitutes about 20%. Yet Dei has so far paid Mutoni over UGX6 billion,” Dei’s defence reads in part.

According to Mr. Magoola, Dei was patient with Mutoni and continued making demands for speeding up the project but the construction company’s promises “were always empty and not complied with.”

As Dei was contemplating another company to complete the work, Mutoni gave assurance to Dei that once payment of UGX500 million was advanced, the project would be completed without necessity of other funds or certification.

“On this undertaking and since Dei was desperate to have the building completed and availed; Dei agreed to the payment and parties agreed in principle that then it was not necessary to appoint a successor project manager. The UGX500 million was paid, but Mutoni did not do any work and indeed did not complete the construction as promised,” the pharmaceutical company says.

Dei says as it complained about the failure by Mutoni to complete the building as promised, but to their shock, Mutoni came up with three “manipulated and false claim of over UGX 4 billion.”

“Mutoni’s inflated and false claim was naturally rejected by Dei and Dei suggested that an independent entity be engaged to evaluate the project for mutual settlement be engaged, but Mutoni aware of its schemes rejected the proposal and even threatened sinister schemes to tarnish the image of the project,” Dei says.

Mutoni, who got the job after Dei advertised the tender and several companies placed bids, including Mutoni Construction (U) Ltd, was later informed by an independent consultant that the claim by Mutoni that they could do the project in four months was false and used as a ploy to win the tender.

“Mutoni Construction (U) Ltd misrepresented this time line in order to win the contract! They have instead spent over two years and still failed to deliver the project on top of being paid almost UGX6b,” Dei states.

Dei says that the independent consultant also indicate that they had overpaid Mutoni.

Efforts to resolve the mater before arbitration have too been frustrated by Mutoni Construction (U) Ltd who have since rejected court arbitration and instead resorted to sinister schemes, including involving police and the President, to resolve the matter.

“That contract did not involve the President of Uganda or the Vice President of Kenya, who Mutoni is unfairly bringing into the conflict in order to malign Dei.

“Mutoni as contractor should know, that it is normal the world over for a dispute to arise in contracts and that is why dispute resolution mechanisms are embedded in contracts, and contractors ought to follow these mechanism and not run to political heads or institutions who have nothing to do with the contracts in the first place,” Dei said in an official statement.

Police have since asked Mutoni to petition a civil court for remedy.

In June 2021, President Museveni commissioned the Biological Drugs and mRNA (Messenger Rigonucliec Acid) vaccine facility in Matugga, Wakiso District, which will make vaccines readily available in the country.

The President was in company of Dr William Ruto, the deputy president of Kenya; Dr Yonas Tegega Woldemariam, the World Health Organisation (WHO) country representative, and an adviser at Food and Drug Administration (FDA), Prof Sarfaraz Niaz, among others.

The Minister of Health Dr. Jane Ruth Aceng, was also present during the commissioning.
Dr Monica Musenero, the Minister of Science, Technology and Innovation, who is also a senior presidential adviser, said the facility is a private initiative which will manufacture modern vaccines.

According to the government of Uganda, the project will make Uganda self-sufficient in all her health care needs by making essential drugs that are currently being imported into the country.

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