TOP STORY: South African contractor reports Kadaga backed man, Mathias Magoola to Museveni for defaulting on UGX.4 billion payment

Mathias Magoola, a man who claimed to have invented COVID-19 ‘cure.’ Magoola, the Director of Dei Biopharma Uganda Limited together with Professor Safarz Niaz, a scientist from the University of Illinois in the United States in March claimed that they had invented treatment for coronavirus.

KAMPALA — A South African company that was contracted to construct a pharmacelical factory in Matugga Wakiso District, for Dei Natural Products Ltd has petitioned President Museveni and Police’s Criminal Investigations —demanding disciplinary sanctions against company proprietor, Mathias Magoola over non-payment for the work they did.

Led by Hakim Semuwemba, company partners—some are South Africans— in a letters to the President Museveni and Criminal Intelligence state that — Magoola who in 2020 sparked controversy with a claim that his pharmaceutical company was manufacturing an alleged cure for the coronavirus— has refused to clear their balance amounting to UGX 4 billion, in breach of the agreed contract protocols.

“I hereby request for the above mentioned person (Magoola Mathias) to be investigated and prosecuted for obtaining service by false presence worthy UGX: 4,000,000,000 (Four Billion Shilling). It’s on March 2020 that the above mentioned person contracted m/s Mtoni Construction Limited to construct a pharmaceutical factory in Matugga Wakiso district, as per invoices No.1514,15481489,1499,1505,1521 d 1537 and as per interim certificate No 05 all are hereby attached for ease of your reference, ” reads a petition to President Museveni.

The contractor says that during the contract negotiations, Magoola claimed that the government of Uganda was going to pay for the said project and “we do suspect that the said payment could have been given /paid to him but he decided to divert the same to his personal (deals) and as such we hereby request for the same to be investigated.”

This website has obtained information that Magoola who is highly connected to State House has previously threatened to deport the contractors without paying them.

Documents submitted to detectives indicate that Mutoni Construction Ltd which has already handed over the facility to Magoola used its own finances—with the client now enjoying the same without payment.

“Whenever we try to demand for the payment he threatens us with arrest and deportation,” the document states, noting that:

“Immediately we finished the construction Mr Magoola Mathias decided to deploy LDUs (Local Defence Units) at the premises and even within its surroundings to the extent that we cannot gain access even to serve him with the demand notice”.

“Therefore, we are unlawfully being harassed by the LDUs to the extent that we fear for our lives.”

Believed to be one of the businesses that Magoola (who is also into the wheat flour and minerals trade) does in partnership with Kenyan Deputy President William Ruto, the same Matugga facility is the one Gen Museveni and Rebecca Kadaga joined the Kenyan Deputy President William Ruto to inspect sometime in July 2021.

And in respect of the same pharmaceutical business, Equity Bank Uganda advanced a loan facility of $8m.

Tropical Bank had previously funded the same project under loan terms and they too claim stake in the same.

When the Equity Bank loan was obtained, the officials of Mutoni Construction Ltd anticipated better cash flow in the finances of Dei Natural Products Ltd.

When the same never happened, with rumors flying around that more members of Magoola’s family had acquired American citizenship as the man intensified real estate undertakings in California, the contractor raised a red flag.

They wrote several letters reminding Magoola of the invoices and completion certificates in relation to which payment, fast approaching billions, hadn’t been made.

The duo was endorsed by Speaker Rebecca Kadaga on the floor of parliament before she took them to meet Museveni at State House. To-date the scheme that promised to produce COVID-19 ‘cure’ is manufacturing sanitizers.

Origin of the battle

On 25 and 27 September 2019, the Mutoni Construction Ltd, a South African construction firm and the Dei Natural Products (U) Ltd entered into a production building construction agreement for construction by the Mutoni Construction Ltd, of the Dei Natural Products (U) Ltd’s pharmaceutical industries in Matugga in Wakiso district.

According to documents seen by this website, it was an express term of the agreement that upon application by Mutoni Construction Ltd, the Architect (Santiago Y Lauren (SYL) Architects Ltd) appointed by the Dei Natural Products (U) Ltd to oversee the construction works, would issue to the Mutoni Construction Ltd a certificate stating interim amounts due to the contractor from the Dei Natural Products for work done.

Dei Natural Products Ltd would thereafter be required to pay the amounts stated in the certificate within fourteen (14) days of presentation of the certificate to it by the Mutoni Construction Ltd.

Additionally, documents add that it was an express term of the Agreement that if the certificate remained unpaid for the days stated in the Agreement for payment (fourteen days), the Dei Natural Products would pay to the Mutoni Construction Ltd interest on the unpaid amount at the Commercial Bank lending rate in force during the period of default.

In November 2020, Mutoni Construction Ltd informed SYL Architects Limited of its need to invoice the Dei Natural Products the work done.

Accordingly, a valuation was conducted and a Certificate No. 5 issued to Mutoni Construction Ltd for presentation to the Dei Natural Products

The work for which this certificate was given included preliminaries site preparation, measured works, variations and works on the QC block. Upon receiving Certificate No. 5, Mutoni Construction Ltd invoiced Prof Magoola’s Dei Natural Products for payment of UGX 952,055,972 (Uganda Shillings Nine Hundred Fifty Two Million Fifty Five Thousand Nine Hundred Seventy Two only) which had been approved by the architects.

“Contrary to the terms of the agreement, the Prof Magoola ignored, neglected and (or) refused to pay to Mutoni the amounts stated in invoice.

On 21 December 2020, the Mutoni Construction Ltd Managing Director wrote to the Managing Director of Dei Natural Ltd informing him of the financial constraints induced by the Prof Magoola’s delay and (or) outright refusal to pay the sums indicated in invoice.

The contractor also informed Dei Natural Products of the financial exposure faced by Mutoni Construction Ltd and requested the client to clear the outstanding sums but Dei Natural Products responded informing the contractor not to expect any payment from them unless works on the floor were completed.

“In the spirit of fostering good business relationship, the Claimant, without payment from the Respondent, proceeded and completed the works on the floor regardless of the fact that this work had no connection with invoice No. 01541, which the Claimant had sent to the Respondent for settlement. After completion of works on the floor, the Claimant once again reminded the Respondent of the need to settle the invoice. Nevertheless, the Respondent reneged on their earlier freely made commitment,” one of the Court documents seen by this website reads.

By 31 January 2021, the contractor had completed the entire scope of construction works under the agreement.

Now, through their lawyers of Kyagaba & Otaliina Advocates, Mutoni Construction Ltd officials are demanding that Magoola pays up to UGX 4,108,593,090 which includes money for work done on his site, the resultant VAT obligations of UGX 819m plus the accruing interest.

They enumerate more than 10 invoices which Magoola refused to pay for yet they did the work.

President Yoweri Museveni and Kenya’s Deputy President Williams Ruto laid a foundation stone for the multibillion Biological Drugs and mRNA Vaccine manufacturing facility at Matugga in Wakiso District.

They are also faulting Magoola’s Dei Natural Products Company Ltd for failing to pay for the services of SYL Architects Ltd who was supposed to serve as the project manager and consultant through whom their payment invoices and completion of work certificates were supposed to be verified from time to time and the relevant payments effected.

That upon developing remuneration-related disagreements, the consultant pulled out yet this was breach that went to the root of the contract.

That the contractor several times brought this to the attention of the employer (Dei Ltd), because it was hurting work, but Magoola kept a deaf ear.

That they even proposed names of entities that would fill the vacuum but Magoola frustrated everything asserting he was too busy campaigning for the President’s reelection being a key pillar in the ruling party.

We have established that inability to get prompt payments from Magoola pushed the company (Mutoni Ltd) into big financial crises prompting some of the South African partners to flee back to South Africa while leaving the Ugandan director Hakim Semuwemba alone to face creditors from whom supplies like cement and steel had previously been obtained on credit all in order to be able to deliver infrastructure at Magoola’s Matugga-based pharmaceutical plant.

Magoola denies any wrongdoings

Magoola has since dismissed Mutoni Construction Ltd claims as unfounded saying he isn’t owed anything.

Through his lawyers of JOSKA Advocates (based at Nakawa Business Park), Magoola accuses Mutoni Construction of committing severe contractual breaches manifested in failing to deliver the job within the four months’ time as had been agreed at the beginning.

That as far as he is concerned the construction was to be completed in February 2020, which Mutoni Construction failed and in the process occasioning a lot of financial loss to his business.

That plenty of pharmaceutical equipment (won’t disclose details) had been imported and had to be expensively stored for more than 2 years as he waited on the contractor to finish the job. He also asserts that it was a blunder and an illegality for Mutoni Construction officials to turn themselves into project managers yet that was never their mandate under the contract.

That the invoices the contractor claims to have tendered were to come through the project manager or consultant who wasn’t in place after the departure of SYL Architects Ltd.

Magoola adds that following the exit of SYL Architects Ltd, he contracted a quantity surveyor whose verification report indicated that Mutoni Construction had actually been overpaid by over UGX 70m implying its them to pay him back some money that was undeservedly paid to them as opposed to them claiming over UGX4bn.

The lawyers also indicate the more than UGX. 800m Mutoni Construction is demanding for in VAT refunds is a sham claim because their client Magoola was VAT-exempt since his pharmaceutical business in Matugga falls in those business undertakings that are excused of VAT-related obligations.

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