Divisive VINCI coffee deal: Court to deliver ruling in December

KAMPALA-The High Court in Kampala has set December 15, 2022, to deliver a ruling in a case filed by two Kampala lawyers who dragged government to court over the controversial coffee deal with Vinci Coffee Company Ltd.

Lawyers, Henry Byansi and Micheal Aboneka in April this year sued the Attorney General and Uganda Vinci Coffee Company Ltd owned by an Italian investor seeking to set aside the said agreement calling it illegal.

But Attorney General Kiryowa Kiwanuka has asked court to dismiss the said case as baseless, stating that Finance Minister Matia Kasaija took all the required legal, administrative and consultative processes before awarding the said contract on February 10, 2022.

The agreement was signed by Ramathan Ggoobi, the Secretary to Treasury on behalf of the government, and Enrica Pinetti, an Italian investor and the Uganda Vinci Coffee Company Limited board chairperson.

Following the signing of the agreement that attracted public outcry, especially among coffee farmers, cooperatives and dealers, politicians, and several others, the lawyers petitioned the High Court to quash an agreement between the government and Uganda Vinci Coffee Company Limited on grounds that it is illegal and irrational.

The agreement grants Uganda Vinci Coffee Company Limited exclusive rights to buy Uganda’s coffee before the government can look at other players. The company is also exempted from paying taxes such as Import duty tax, stamp duty, value-added tax, National Social Security Fund, and Pay as You Earn for ten years. The company also reserves the right to determine the coffee prices in the country on top of enjoying electricity subsidies among other benefits.

In their application, the petitioners want the court to declare that the actions of Minister Kasaija to handpick Uganda Vinci Coffee Company Limited in disregard of able Ugandan firms to solely manage the coffee business, set coffee prices and related products, is an infringement on the right to own property and open competition as well as economic rights of coffee farmers in the country.

They also aver that the agreement is illegal, unfair and irrational on the grounds that government didn’t follow all legal and administrative processes and conduct adequate consultations with the Solicitor General, Ministry of Agriculture, Uganda Coffee Development Authority and other related agencies.

The applicants also fault the government for failure to seek requisite approval from the Uganda Revenue Authority before making several tax waivers in favour of the company, and for failure to comply with the provisions that govern procurement under the Private Procurement Act and other related laws.

The application is supported by Byansi’s affidavit, in which he avers that besides being a practicing advocate, he owns a small-scale farm in Bulongo Sub-county in Luuka district where he has been getting income through selling coffee beans for the last ten years.

Byansi notes that the coffee sector in the country has many stakeholders including farmers, exporters, associations, and unions such as Bugisu Cooperative Union and Ankole Coffee Produce Cooperative Union among others who were never consulted on the agreement in question.

“I know that the impugned Deed of Amendment and Restatement of the Project Implementation Agreement unreasonably restricts competitive and equitable trade practices in the coffee sector by purporting to give the 2nd respondent/Company the monopoly to manage the coffee business at the detriment of other able Uganda firms,” says Byansi.

The applicants also note that government doesn’t have any reasonable justification of giving Uganda Vinci Coffee Company Limited unfettered rights over others to set prices of coffee beans and related products because this would be a violation of the universal and economic principles that restrict unreasonable interference and unfair competition in the economic affairs of individuals and society.

“The respondent’s actions have the chilling effect of curtailing the constitutionally guaranteed economic rights of the applicants and those other similarly situated coffee farmers and traders guaranteed under Article 40 of the Constitution,” further reads the application.

The article guarantees the right of every Ugandan to carry on any lawful occupation trade or business. Byansi and Aboneka want the High Court to quash the agreement between the government and Vinci Coffee Company Limited, saying it is illegal and of no legal consequence.

Defence

However, in its defense, Vinci through its Company Secretary, Moses Matovu, says that the subject matter of the agreement is the establishment of a processing plant with a capacity to process up to 60,000 tonnes of green beans per annum.

“I aver that all the incentives in the agreement are neither intended to and in fact do not grant the 2nd respondent/Vinci a monopoly to manage the coffee business. This is because the project consists of the establishment of a coffee processing facility with a capacity to process an initial volume of 27,000 tonnes of green beans per annum and eventually a maximum capacity of 60,000 tonnes of green beans per annum,” said Matovu in his affidavit.

The evidence tabled before the court shows that Uganda exported 382,000 tonnes of coffee between May 2021 and April 2022 and that the International Coffee Organization indicates that Uganda has for the past two decades produced an average of 437,650 tonnes of coffee per year with 330,540 tonnes in the coffee year 2019-2020 alone.

This, Matovu, says makes it impossible for Vinci Company to obtain a monopoly over the management of the coffee business in Uganda when the maximum capacity of their project is 60,000 tonnes.  The 2nd respondent [Vinci Coffee Company Ltd] is not given powers to singly or otherwise manage the production or export of coffee as alleged. Nothing in the agreement forbids any person from producing or exporting coffee.”

He argues that the company is only empowered to set the price at which it buys coffee from willing sellers and not to regulate prices for other actors as alleged, arguing that the agreement also recognizes the regulatory mandate of Uganda Coffee Development Authority [UCDA] in regulating coffee prices.

“I know that there is nothing in the agreement that gives the 2nd respondent / Vinci a monopoly or power over others to set prices since any prices paid by the 2nd respondent / Vinci pursuant to the agreement are subject to the usual forces of demand and supply and benchmarked on prices approved by the UCDA or the prevailing international market prices. The agreement guarantees higher revenues for the coffee growers,” avers Matovu.

He adds that the agreement doesn’t violate any of the guiding principles under the national coffee policy of 2013 and the National Coffee Act 2021 as alleged by the petitioners.

He continues: “The agreement has six objectives including value addition that shall be pursued at all levels for the benefit of all stakeholders, where the farmer will gain higher revenue from the premium price to be paid for specialty coffee and that every stakeholder will benefit from the increase in the quality of coffee and the resultant increase in revenue.”

Matovu, who is also a lawyer by profession, says that the agreement was entered after obtaining the advice from the Attorney General and accordingly it satisfied all the requisite legal and administrative processes.

Parliament’s sectoral committee on trade, tourism, and industry in April this year unanimously called for the cancellation of the agreement on grounds that it contravened the constitution and other tax laws.

President Museveni also sees nothing wrong with the agreement, saying that it will promote value addition in Uganda’s coffee subsector and create jobs.

Ugandans now await what court will say on December 15, 2022. Winners will enjoy a happy Christmas, losers will be free to appeal to a higher court.

https://thecooperator.news/shocking-italian-enrica-pinetti-signed-shs284b-coffee-deal-as-witness/

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