ROADS TO RICHES: THE SYNDICATE BEHIND ARUA’S 14.03Bn USMID-AF SCANDAL

Part of the Shs 14.03 Bn Go down Road constructed by China Railway Seventh Group Company Ltd under USMID-AF

By Dramadri Federick

Arua City

Arua City has been placed at the center of a growing financial scandal after explosive allegations emerged of a coordinated scheme involving technocrats, contractors, and consultants accused of attempting to siphon hundreds of millions of shillings from the Uganda Support to Municipal Infrastructure Development Additional Financing (USMID-AF) project.

The allegations surfaced during a heated council debate over a supplementary budget worth 2.023 billion shillings, part of which had been earmarked as outstanding contractual obligations to China Railway Seventh Group Co. Ltd (CRSG), the contractor behind the rehabilitation of Go-Down Road and related infrastructure works in the city.

At the center of the controversy is a disputed payment claim of more than 513 Million shillings that some city officials allegedly sought to push through despite mounting evidence that the contractor was either overpaid or owed only a negligible amount.

The supplementary budget, sent by the Ministry of Finance under the World Bank-funded USMID-AF program, had initially proposed 513.5 million shillings as outstanding obligations to CRSG and 1.5 billion shillings for procurement of 192 solar street lights along key roads in Arua City.

But what appeared on paper as a routine budget approval quickly turned into a bombshell corruption exposé.

Moses Adriko the Secretary Finance, Planning and Administration justifying the Motion to approve the USMID funds recently.

According to documents tabled before council, Arua City implemented the USMID-AF project from the 2019/2020 financial year until December 2023, with an extension to June 2024. The original contract awarded to China Railway Seventh Group Co. Ltd was worth 13.5 billion shillings for 12 months, but was later extended by three months, increasing the contract value to 14.03 billion shillings. However, the contractor, consultant, and Accounting Officer reportedly presented a higher contract figure of 15.43 billion shillings, which differed from the signed agreement. Additionally, a final payment claim of 1.596 billion shillings submitted by the consultant was said to lack support from the original contract documents, raising concerns over possible inflated claims and financial irregularities.

This discrepancy reportedly triggered suspicion among some council members and technical officers, who began reviewing payment records and audit reports.

Council records showed that CRSG had already received payments totaling 13.446 billion shillings through advance payments, interim certificates, retention fees, and payments for street lights. By official calculations, the contractor’s outstanding balance should have been approximately 583 Million shillings only.

The Paper Trail.

The 2025 Auditor General Value for Money report discovered that 63.7 million shillings had allegedly been paid for installation of 12 solar street lights on Afra-Road that were never installed. The amount was flagged for recovery but accounting officers didn’t take any action. Another 78.3 million shilling was recommended for recovery by the Office of the Auditor General following findings of overpayments on Go-Down Road.

The scandal widened further when auditors reportedly uncovered illegal 20 percent deductions imposed by the contractor on subcontractors handling water and electricity works. The deductions, amounting to over 110 million shillings, were classified as unlawful recoverable funds.

More evidence unveiled on March 15, 2023 when Archways Holdings Limited that was subcontracted by China Railway Seventh Group Company Limited (CRSG) to relocate utilities wrote a complaint letter to the project manager CRSG about a 20% illegal deduction of their pay totaling to Seventy four million forty six thousand seven hundred seventy seven (74,046,777) Shillings and threatened legal action against the contractor.

Shs1.342 billion embezzled in Ghost Camp site

 

Logs, graded aggregate still sighted at Arua Prisons Primary School Playground.

Documents indicated that the contractor had previously been paid 2.8 billion Shillings under School Road Construction project to establish a camp site and quarry.

Council, consultants, and the contractor had reportedly agreed that the same facility would be reused for the Go-Down Road project at no extra cost. The site was previously used as a play field for Arua Prison Primary School but cannot be used for any purpose due to the damages caused.

Despite this agreement, the contractor allegedly claimed and received an additional 1.242 billion Shillings for establishing a “new” camp site for Go-Down Road. Another 100 million Shillings was allegedly paid for reinstating the same camp site work that investigators say was never completed.

Officials who opposed the payments claim their objections were ignored by the Accounting Officer despite written warnings from the Contract Manager.

Link to the Graph of Contractors demands for the 513million shillings

https://public.flourish.studio/story/3676325/

Questionable Payments Made to the Contractor.

Arua city Officials during the Handover of the former Mayor Wadri Sam Nyakua digesting affairs of the city.

A review of financial transactions, payments made by Arua City Council to China Railway Seventh Group Co. Ltd under the USMID-AF project shows that the contractor received a cumulative total of Thirteen billion four hundred forty-six million twenty thousand  six hundred eighty (13,446,020,680) Shillings through advance payments, interim payment certificates, retention release, and payments for solar street lights.

The first payment of 2.701 billion Shillings was made on 22nd January 2022 as advance payment, accounting for approximately 20 percent of the total payments made. This advance was intended to facilitate mobilization of equipment, personnel, and commencement of works on the Go-Down Road rehabilitation project.

Subsequent payments were processed through six Interim Payment Certificates (IPCs), which together amounted to 9.358 billion Shillings. The largest single IPC payment was Interim Payment Certificate No. 5 worth 2.502 billion Shillings paid on 19th June 2023, while the smallest was IPC No. 2 worth 535.8 million Shillings paid on 10th June 2022.

On 11th July 2023, the contractor received 1.513 billion Shillings under Interim Payment Certificate No. 6 and an additional 322.6 million Shillings as retention payment on a single day, no explanation was given by the town clerk regarding the payments.

The contractor also received 1.083 billion Shillings specifically for installation of 321 solar street lights. However, subsequent inspections and audit findings revealed that some street lights, including 12 units on Afra Road worth 63.7 million Shillings, were allegedly never installed despite payment being made.

Financial analysis further indicates that the total amount paid represented about 95.8 percent of the revised contract sum of 14.029 billion Shillings. This left an expected contractual balance of approximately 583.5 million Shillings before deductions and recoveries identified by auditors and technical officers.

However, later reviews by the Office of the Auditor General and city technical staff raised concerns over unsupported claims, overpayments, duplicate camp site charges, illegal deductions imposed on subcontractors, and payments for unexecuted works.

After accounting for all recoveries and deductions amounting to approximately 1.595 billion Shillings, technical analysis reportedly concluded that the contractor’s actual payable balance reduced drastically to only 1.5 million Shillings instead of the claimed 513.5 million Shillings.

The payment trends therefore raise significant concerns regarding contract management, certification of works, accountability controls, and possible financial irregularities in the implementation of the USMID-AF project in Arua City.

The revelations sparked fears of an organized scheme to divert public funds through manipulated contractual claims.

According to the motion presented before council, by the secretary for Finance Planning and Administration Moses Adriko, some technocrats allegedly attempted to use forged documents and questionable reconciliations to justify payments that lacked contractual backing.

“I saw some reports cooked in the names of the consultant from the town clerk’s office shared with the executives whose contract expired in June 2024. When we questioned David Kyasanku (Town Clerk) did not want any other officer to clarify and yet the consultants obligations were fulfilled. If we are to arrest this time round, the town clerk must not be left,” Adriko stated.

Consultant, Town clerk on spot for alleged connivance.

 Arua city Town clerk David Kyasanku declines to implement council resolutions on the USMID-AF.

The contract for SEGAMU 14 Consults Ltd, the supervising consultant, reportedly expired in June 2024. However, documents continued surfacing afterward under the consultant’s name. Whistleblowers alleged that some of these documents were prepared by city officials and individuals linked to the contractor rather than the legitimate consultant team that supervised the project in Arua.

“Those documents do not have authentic evidence and some of you have been receiving them through social media platforms including WhatsApp, please disregard them,” Adriko added

In one of the most explosive allegations, councillors were told by the Secretary Finance Planning and Administration that the Accounting Officer (City Town Clerk) David Kyasanku was allegedly mobilizing support for approval of the disputed supplementary budget by promising facilitation payments to councillors.

Adriko who laid grave evidences of the Auditor general’s Value for Money report of the road project, reports from the contracts Manager, the signed contract agreements and a detailed analysis report urged councillors to approve 1,524,031 shillings other than the 513,511,823 shillings.

The motion further alleged that representatives brought before council by the Accounting Officer to defend the contractor had not even worked on the Arua project, with some reportedly coming from Gulu and Kitgum projects instead.

He also warned that the action of the town clerk was a deliberate attempt to manipulate public systems and divert taxpayer funds through fabricated obligations.

“Somewhere someone has selfish interest. I am aware some of you councillors were promised shs.10million, shs.5million if you had approved the over 500million shillings. I am leaving the council but we must learn to stand on the truth. If someone is to be arrested, they must start with the accounting officer because he refused to implement council resolutions even when the Mayor wrote to him directing payment of the funds, this town clerk paid death ears,” Adriko emphasized.

Technical officers Defend Contractor.

David Kyasanku, the Arua city town clerk vows not to sign any documents related to the USMID-AF specifically pertaining the Go down Road construction. Kyasanku who based his defense on the October 10, 2025 letter of the Permanent Secretary Ministry of Finance Ramandan Ggoobi directing the release and utilization of the 2.023billion shillings for offsetting contractual obligations and the consultant’s report that indicated that contract was demanding 1.589billion said he will not approve any funds for street lighting or even less than what the consultant had indicated.

“I can’t approve what doesn’t have a backup and what the consultant gives me is what I will pay but if the council insists, I will not sign for the release but I need to write to my bosses for an independent audit for the third time”. Kyasanku noted

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In his letter dated 10th December 2025 under Ref ENG/204/10 by Contracts Manager Anthony Dradria, who also doubles as the city’s Senior Civil Engineer, insisted that the net payable to the contractor is 513,511,823 Shillings and urged the city’s Executive to pay without delay.

The Assistant Deputy Town Clerk Arua City Emmanuel Angudubo who represented the office of the town clerk during the May 11, 2026 council sitting, started with a disclaimer statement saying he is not an accounting officer and warned that approving unsupported payments could expose city officials to criminal liability once investigations are completed.

“I’m not the accounting officer. Actually the first person to be asked about this project is the project manager not any other person because he implemented the project from the time go to the end. My guidance is the council should approve the 513.5million shillings as per the contract manager to avoid litigations”. Angudubo said.

The controversy has now left Arua City deeply divided, with some officials demanding a full forensic audit into all USMID-AF expenditures.

The Councilors’ Stand

Arua City Speaker Yako Teddy Gloria ruled against the consultants will.

Meanwhile, council was urged to redirect the bulk of the supplementary funds toward procurement of solar street lights rather than disputed contractor claims.

The councillors upon deliberating on the matter were convinced by the report presented by the Secretary for Finance, Planning and Administration and redirected and approved 2.023billion Shillings of Which 2.021billion shillings has been directed  for procurement of new 192 new solar street lights based on the documentary evidences tabled before the Council for Arua Hill Round About to Ewuata (Pakwach Road), Ediofe Cathedral Road (Pajulu Road) and State Lodge to Mvara S.S Gate to MUBS Arua Campus Road (Mt. Wati Road) under USMID-AF and 1,524million shillings be paid to China Railways Seventh Group Co. Ltd as outstanding obligation.

Mbigiti Godfrey Jona the Deputy Resident city commissioner in charge of Ayivu division threatened to arrest whoever has a hand in the scandal saying money meant for service delivery must serve the purpose.

“We cannot pay someone out of pressure. We must pay for work done otherwise whoever is engineering such useless reports must present evidence with prove or else we shall arrest them,” he warned.

Yako Teddy Gloria the Arua city speaker after each and every member of the councils submissions asked those in support to respond and councillors unanimously responded okaying that the city council will pay the contractor 1,524,031 shillings instead of the 513,511,823 shillings as demanded by both the city town clerk, and the contractor.

“Those who say the contractor China Railway Seventh Group Company Limited be paid 1,524,031 shillings but not 513,511,823 shillings and a total sum of 2.021billion shillings be used for procuring solar streetlights, those in favor say Aye, and those not in favor say Nay….. (Councillors …Aye…) Ayes have it” the speaker then ruled immediately directing the funds be used as per the council resolution.

The scandal now threatens to become one of the biggest corruption investigations tied to municipal infrastructure financing in Northern Uganda, with several senior officials potentially facing scrutiny over abuse of office, fraudulent accounting, and causing financial loss to government.

As pressure mounted, the matter attracted the attention of the Inspector General of Government (IGG), who in their letter dated 13th April 2026 signed by Nicholas Kajura wrote to the town clerk Arua city demanding for documents regarding the rehabilitation of Go Down Road under USMID program to assist in investigations into the project.

Arua’s Growing Corruption Crisis and the National Picture.

Signage of Arua city.

Since 2019, a total of 11 technical officers from Arua city have so far been arrested and either directed to refund funds or interdicted in connection with mismanagement of infrastructure, road funds, and service delivery by the State House Anti-Corruption Unit and the Inspectorate of Government (IGG).

According to reports by the Inspectorate of Government (IG) in 2024 and 2025, Uganda loses an estimated UGX 10 trillion (approximately $2.7 billion) annually to corruption.

Public procurement is a primary driver of these losses, accounting for some of the largest corruption-related financial drains. This staggering figure accounts for about 44% of the country’s domestic revenue, severely impacting public service delivery, infrastructure development, and economic growth

As investigators close in, the central question remains: How much public money would have been lost had the discrepancies not been uncovered?