Black Corruption & Crime in Africa: Uganda: How Gold Cartels Operate in Uganda

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The recent arrest and remand of David Balondemu, chairman of the Kampala District Land Board (KDLB), has sent ripples through the real estate and gold dealing communities.

Last week, Balondemu was charged in court and remanded for allegedly obtaining money under false pretenses and conspiracy to commit a felony. His associates, James Jeff Mugisha and Godfrey Mabirizi, are also in custody, while another accomplice, Eric Geoffrey Mkwe, remains at large.

The court heard that between March and November 2021, the accused allegedly obtained $600,000 (approximately Shs 2.2 billion) under the false pretense of selling 53kg of gold to Korean national Hyun Uk Kim.

Multiple sources who spoke to The Observer suggest that the Balondemu case is not an isolated incident, but rather the tip of the iceberg in a shadowy under-world of gold and real estate dealings. In fact, it’s an open secret that one of the quickest routes to wealth is through real estate and gold transactions.

On the flip side, Kampala is also a well-known hub for laundering illicit money from abroad, often ‘cleaned’ through such dealings. A striking aspect of this issue is that nearly all these transactions are conducted in cash.

"A majority of the ‘investors’ who fall victim to scams are also involved in questionable activities like money laundering," said a source at the Criminal Investigations Directorate (CID).

"Many are reluctant to report such cases, and even when they do approach the police, they request that the matter be handled discreetly to avoid media attention. As a result, the perpetrators often go unpunished."

TOUGH SEARCH FOR JUSTICE

According to a source at the Criminal Investigations Directorate (CID), the case against Balondemu was filed in December 2021 at Katwe Police Station. However, the Korean victim preferred that the police not handle the case completely in hopes of recovering her money. Initially, the case was managed by Benon Ayebare, the then-regional police commander.

"Entrusting the case to the police turned out to be a costly mistake. Every officer who handled the case file extorted money from both parties, leading to a failure in progressing the case," the source revealed.

Frustrated by the stalled police process, Kim reportedly reached out to several top ministers and NRM officials. Despite her efforts, she found no resolution until a few weeks ago when she went with Ko- rean Ambassador Park Sung-Soo to meet Gen. Muhoozi Kainerugaba, the President’s first son, in Entebbe.

"The accused were spending more money than the Korean victim to quash the case. However, when she appealed to Muhoozi, he provided a direct link to President Museveni," said the source.

Upon learning of the situation, President Museveni directed the State House Anti-Corruption Unit (SHACU) to investigate the matter independently, without police involvement. The President did not immediately order Balondemu’s arrest, given that as KDLB chair, Balondemu often consults State House on key land matters. Nonetheless, when the SHACU investigation implicated him, the President gave the green light for his arrest on October 18.

DRAMA AT CID

Balondemu was reportedly detained at the Kibuli CID headquarters. However, when news of his arrest broke, police were inundated with requests for his release.

"I’ve never witnessed such a high number of high-profile individuals, from both the government and the opposition, visiting a detainee," the source said. Among those who reportedly pleaded for Balondemu’s release were former Speaker Rebecca Kadaga and Kasule Lumumba, the state minister for General Duties.

Nonetheless, officials from the State House Anti-Corruption Unit (SHACU) remained resolute, informing them that the directive for his detention came from ‘higher authorities.’ On October 20, Balondemu appeared before the City Hall court, where a dramatic event unfolded.

Sources revealed that SHACU officials, suspecting that the magistrate might grant Balondemu bail, entered the magistrate’s chambers with clear orders from ‘higher authorities’ to remand him for at least three weeks, regardless of the credibility of his sureties.

In the end, although Balondemu’s five sureties had all their paperwork in order, the magistrate cited the need for additional time to review the documents and remanded him until November 6.

"This is a setup. How can he be remanded for such an extended period based on such a trivial reason, one that doesn’t even take five minutes to verify?" lamented one of Balondemu’s lawyers, who preferred to remain anonymous, outside the court.

WHO IS BALONDEMU?

Balondemu is recognized as a savvy lawyer who has discreetly climbed the ranks to become the chairman of the Kampala District Land Board (KDLB). He is no stranger to controversy; in 2015, his diploma in Legal Practice was revoked by the Law Development Centre (LDC) on charges of academic dishonesty.

However, the court ruled in his favor, citing the LDC’s failure to provide him with a fair hearing before rescinding the award. He is also a prominent and affluent figure in both Busoga and Kampala politics, where he financially supports several politicians.

HOW GOLD CARTELS OPERATE

A new class of extraordinarily wealthy Ugandans has emerged in recent years, largely due to involvement in gold scams. To execute a scam, these cartels often enlist a lawyer to draft the necessary paperwork, as well as a high-ranking army or police officer, and a supposed gold seller.

"Sometimes they go a step further by involving an ‘illiterate’ gold dealer from the DR Congo, accompanied by an ‘interpreter’," said a police source familiar with these dealings.

Prospective victims are primarily lured through recommendations from other dealers who have profited in the industry. These recommending individuals pose as successful dealers and may even initially sell genuine gold to the target.

"After closing the first deal, the target frequently opts to travel to Uganda to conduct business directly with the primary source," said the source. Surprisingly, some of these ‘investors’ manage to bring in thousands or even millions of dollars into the country through various entry points without much hassle.

"Upon the target’s arrival in Uganda, a senior army or police officer, who is part of the scam, arranges for a complimentary police escort to accompany the target wherever they wish to go. Those unknown individuals you see in tinted cars, being led by police patrols with sirens and breaking traffic laws–many are gold dealers. For the ‘General,’ renting a patrol vehicle for Shs 1 million a day is trivial when planning to defraud more than a billion shillings," the source added.

EXECUTION

According to sources, the scam may take several months to execute. During this period, the cartel assists the target in processing essential documents, including company registration, obtaining a gold operating license from the Uganda Revenue Authority (URA), and securing clearance from the Ministry of Energy and Mineral Development.

After the scam is executed, victims are often coerced into not involving the police.

"What usually happens is that while the victim is led to believe that everything about the deal was illegal, they themselves are often complicit, typically involved in money laundering. Local cartels are aware of this, making it difficult for victims to report such cases," said the source.

When seeking comments on the handling of significant sums of money within the country, a senior official from the Financial Intelligence Authority (FIA) pointed out that banks and immigration officials often display complacency or collaborate with criminal elements.

The source stated, ‘In many instances, banks continue to facilitate these transactions even after we have flagged certain accounts. As a result, we occasionally find ourselves powerless to pursue such matters due to their sheer volume."

"Balondemu is not the first individual to be arrested in connection with such a failed deal. In 2021, lawyer Simon Peter Musangala, along with two others, Martin Bwayo and Enock Katwesigye, also known as Colonel Frank, faced charges of money laundering, facilitating money laundering, and cheating. They were accused of obtaining $5.5 million (approximately Shs 20 billion) from an American national, Anastasia Belesis, under the pretense of selling gold.

In this particular case, after the American had transferred the money to the suspects, he instructed them to leave the location. However, during their departure, they were intercepted by seven gunmen dressed in UPDF uniforms who held them at gunpoint and confiscated the money. This case is still pending in court.

In 2019, another lawyer, Paul Wanyoto Mugoya, was remanded for charges related to obtaining money through false pretenses and conspiracy to commit a felony. Yahya Osman Muhammad claimed that he had been defrauded of approximately Shs 600 million while attempting to purchase 265 kilograms of gold.

In 2018, Wanyoto faced charges alongside seven senior police officers, led by the then-influential Siraje Bakaleke, for extorting Shs 1.4 billion from Koreans Park Seunghoon and Jang Shingu Un. According to the allegations, after obtaining the money, Bakaleke arrested the Koreans for unlawful presence in the country and subsequently escorted them to the airport, facilitating their deportation."

Read the original article on Observer.

Source: https://allafrica.com/stories/202310250525.html

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