By Spy Uganda
The State House Anti-Corruption Unit has stopped Arua City from paying Shs1.5 billion to China Railway Seventh Group Company Ltd., ordering the immediate suspension of the transaction over disputed contractual claims and possible irregularities.
In a June 24, 2026 directive, Brig. Gen. Henry Isoke, the head of the State House Anti-Corruption Unit and Senior Presidential Advisor on Anti-Corruption, instructed Arua City Town Clerk David Kyasanku to halt the payment pending investigations.
The directive effectively overturns a resolution passed by the Arua City Council on June 10, where councilors approved the payment despite concerns over missing documentation and conflicting accounts about whether the contractor was still owed the money.
Brig. Gen. Isoke said the suspension was necessary to safeguard public funds and preserve the integrity of ongoing investigations into the disputed claim.
The payment relates to road and drainage works undertaken between 2022 and 2024 under the World Bank-funded Uganda Support to Municipal Infrastructure Development Additional Financing (USMID-AF) project, when Arua was still a municipality.
City officials told councilors that the former Arua Municipal Council had left an unpaid balance of about Shs1.2 billion for works executed by China Railway Seventh Group Company Ltd., a liability inherited by the city administration after Arua attained city status.
The contractor upgraded more than six kilometres of roads and constructed drainage channels under the project.
However, the claim has remained contentious.
The project’s contract manager reportedly disputed that any outstanding payment was due, while councilors had twice deferred the matter because critical documents—including the contract addendum—had not been presented.
When the matter returned to the council on June 10, several councilors questioned why they were being asked to approve such a substantial payment without complete supporting documentation. Others expressed concern over what they described as unusual pressure to fast-track the approval.
According to discussions during the council meeting, the Ministry of Local Government had convened three meetings with city officials and reportedly issued a four-day ultimatum for the council to approve the payment.
Officials warned that failure to resolve the matter could affect Arua City’s eligibility for approximately Shs126 billion under the Uganda Cities and Municipal Infrastructure Development (UCMID) programme in the 2026/2027 financial year.
The controversy had already gained public attention before the council vote after an anonymous letter circulated widely on social media, alleging irregularities in the proposed payment and questioning whether any outstanding debt existed.
The intervention by the State House Anti-Corruption Unit has now frozen the transaction until investigations are completed and further guidance is issued.
