Kampala. The Inspector General of Government (IGG), Justice Irene Mulyagonja, has directed Solicitor General Francis Atoke not to approve a joint venture deal between the UPDF’s National Enterprise Corporation (NEC) Pharmaceuticals and German drug firm Chemperion GmbH over the latter’s lack of technical experience.
Justice Mulyagonja, in a February 28 letter to Mr Atoke, said the decision is based on an investigation of the matter following an allegation that NEC was about to enter into a joint venture with the German firm for production of pharmaceutical drugs in Uganda.
NEC Pharmaceuticals, in Bugolobi Industrial Area and currently grounded, is one the eight subsidiaries of NEC, the manufacturing arm of UPDF.
In the complaint to the ombudsman, it was alleged that Chemperion GmbH neither owns a drug factory in Cairo nor in Germany where it said to be headquartered and that the Germany office has no experience in manufacturing pharmaceuticals.
“Investigations established that Chemperion GmbH does not have the technical competence and experience in the manufacture of pharmaceuticals. Chemperion GmbH’s financial capability also could not be established based on the documents availed during the investigations,” Justice Mulyagonja said.
Daily Monitor understands that NEC officials had earlier sought clearance from the Solicitor General’s office to proceed to sign the Joint Ventures Agreement, which was granted early last year but with some ammendments. Upon receiving the complaint, the IGG paused signing of the deal pending investigations.
Attempts to reach the NEC’s managing director, Lt Gen James Mugira, for a comment were futile as he neither returned our calls nor responded to our messages.
In the report of investigation dated February 14, the ombudsman said Chemperion GmbH is registered in Frankfurt, Germany, and is engaged in the field of import and export of chemicals, pharmaceuticals products and foodstuffs.
“However, the NEC team, which carried out due diligence, did not obtain the necessary legal company documents that were pertinent to verify the legal existence of the company, implying that the purpose or objective of their due diligence visit was not fully achieved,” the IGG investigation report reads.
Investigations, according to the report, established that the company’s books of account could not be relied on to establish on its financial capability because the auditing standards used do not apply in Germany where the company is headquartered.