Pearl of Africa Hotel: How Museveni Saved Aya Investments from Shs 792 Billion Loss
Aya Investments could have lost UGX 792 billion unfairly to South Africa’s Industrial Development Corporation (IDC) and its sister company, ECIC, due to a UGX 151 billion loan if HE had not halted the process.
President Yoweri Museveni has halted the auction of Aya Investments’ Pearl of Africa Hotel, revealing significant allegations of corruption, contractual breaches, and constitutional abuses in the handling of a USD 41 million loan from South Africa’s Industrial Development Corporation (IDC) and its sister company, ECIC. This loan represents less than 18% of the total project value.
Musveni with Aya Investments boss, Muhammad Hamid
Key Issues and Delays
1. **Impractical Loan Terms**: Aya Investments signed loan agreements in 2007 that required impossible insurance conditions, causing delays of three years.
2. **Revised Contracts**: In 2010, IDC revised the contracts, excluding the insurance provision, but this added another three-year delay.
3. **Financial Audits**: IDC demanded multiple financial audits, further delaying the project by two years.
Pearl of Africa Hotel
Financial Impact
– The delays and mismanagement, totaling 15 years, caused a total financial loss of USD 432 million for Aya.
– Aya had to inject USD 151 million of its own equity into the project, far exceeding the initial projection.
Judicial Concerns
– IDC engaged in prolonged litigation in Uganda, then proceeded with ex-parte arbitration in South Africa, leading to an illegal award.
– Uganda’s Chief Justice issued an injunction in 2019 to halt litigation, maintaining the status quo in Aya’s suit against IDC. The court injunction is still to date.
Presidential Intervention
President Museveni’s intervention aims to protect significant national assets from judicial corruption and ensure the integrity of Uganda’s legal and business environment.
The Aya-IDC saga underscores the need for transparency and judicial reform in Uganda to maintain its reputation as a top investment destination and uphold the rule of law.
