Mr. Paul Zhang (2nd left) and his entourage, meet President Yoweri Kagura Museveni 3rd left) in September 2019.
KAMPALA – President Museveni early last month allowed a proposal by the Chinese Tian Tang Group to re-develop Luzira Prison into a five-star hotel and conference centre.
Tian Tang Group Ltd is headed by Zhang Zhigang populary known as Paul Zhang as its chairman.
The company runs a manufacturing park in Malala Mukono.
Amongst the Group’s subsidiaries are Nanjing Hotel, Nanjing Tours & Travel Limited, Tian Tang Steel, ComFoam Mattresses, China North Machine Company, Sino-Uganda Mbale Industrial Park and Pearl Trac Limited, the sole authorised dealer of Sany Group in Uganda.
Sources familiar with developments have questioned the firm’s capacity to do the job citing recent disturbing reports in which Tian Tang Steel one of its subsidiaries was involved in the vandalising and stealing of Uganda Railways Corporation (URC) rail lines for conversion into steel products.
According to the suit details, URC accused Tian Tang Group Limited of destroying up to 14 tons of railway materials (equivalent to 750 metres) recovered from the billionaire’s factory complex at Mbalala, in Mukono District.
Following a tip-off and a court-sanctioned search of Tian Tang’s premises at Mbalala Mukono conducted by the Uganda Police, 14 tons of railway materials/equipment were recovered at Tian Tang’s premises.
On March 29th 2021, Mukono Grade Two Magistrate Steven Waidhuuba issued an order to search the premises of Tian Tang for rail sleepers and steel rails. The search was witnessed by Uganda Railways Corporation and security officials led by Captain Henry Mawejje and Superintendent of Police, Agnes Agabirwe.
URC then proceeded to sue Tian Tang Steel for the actions that it said were “illegal, callous, criminal, detrimental to a public good railway works infrastructure, and in most material particular, the defendant facilitated vandalism of the plaintiff’s railway installations/equipment/materials by providing a black market for the same”.
Through their lawyers, Engoru, and Mutebi Advocates, URC asked the court to order Tian Tang to compensate URC UGX11 .4 billion for the replacement of the rail materials and lost value as well as compensation and UGX150 million as cost of reinstatement and UGX400 million as cost of freight, insurance, procurement and other related costs.
However in an ugly turn of events, according to the Auditor General’s audit report for FY2021/22, Tian Tang Stell entered into an out-of-court settlement with URC.
“It was established that 750 meters of the railway line had been vandalised and the culprits who were arrested led security to one factory in Mukono District where the railway materials, having identification marks of URC, were found. Although the cost of the stolen railway materials, excluding compensation and reinstatement costs, was estimated at UGX 1.10Bn, URC entered into an out-of-court settlement for only UGX 0.21Bn as per the agreement made on 16th November 2021 resulting in a loss of UGX.0.89Bn,” the Auditor General reported.
Question why URC accepted a lesser settlement, the URC Accounting Officer explained to the Auditor General that among other reasons, Tian Tang Steel had pleaded to “be on the verge of bankruptcy due to Covid-19”.
In 2014, the Commercial Court, ordered ComFoam Uganda Limited, a subsidiary company of Tian Tang Group to pay UGX2 billion to Megha Industries Limited, the manufacturers of Royal Foam mattresses over trademark infringement. The court found ComFoam guilty of manufacturing and selling mattresses dressed in Royal Foam-branded mattress covers. The court also ordered ComFoam to pay another UGX1 billion for disobeying a 2011 court order stopping the illegal act while the case went on.
Subsequently, both parties reached a compromise on an agreed figure and entered into a consent settlement which they filed with the Court of Appeal and the High Court and the matter was resolved.
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