The State House Anti-Corruption Unit has directed Arua City Town Clerk David Kyasanku to immediately halt the payment of more than 1.5 billion shillings to China Railway Seventh Group Company Ltd pending investigations into a disputed contractual claim. In a letter, Brig. Gen. Henry Isoke, the head of the State House Anti-Corruption Unit, instructed the city authorities to suspend the payment, saying the Contract Manager for the Uganda Support to Municipal Infrastructure Development Additional Financing (USMID-AF) project disputes claims that the contractor is owed the money for works executed in Arua City.
“In order to safeguard public funds and preserve the integrity of the ongoing investigations, we request you immediately halt the intended payment of Shs1.5 billion,” the letter states. The directive follows an extraordinary Arua City Council sitting held on June 10, 2026, during which councillors approved payment of more than 1.5 billion shillings to China Railway Seventh Group Company Ltd for what officials described as outstanding contractual obligations dating back about two years.
According to documents presented to the council, the payment relates to road, street, and drainage works undertaken under the World Bank-funded USMID-AF project when Arua was still a municipality. City officials argued that the liability was inherited by Arua City following its elevation from municipality to city status.
Between 2022 and 2024, China Railway Seventh Group Company Ltd was contracted to upgrade more than six kilometres of roads and construct drainage channels in Arua Municipality. Officials told the council that the contractor had not been fully paid approximately 1.2 billion shillings by the former Arua Municipal Council, leaving an outstanding obligation that the city was required to settle. However, the payment has remained contentious.
During the extraordinary council meeting, several councillors questioned why supporting documents, including the contract addendum, had not been presented during previous council sittings when the matter was first raised. They also objected to what they described as pressure to approve the payment within a short period.
The matter had reportedly appeared before the council on at least two previous occasions but was deferred after key documents could not be traced. Councillors were informed that the Ministry of Local Government had convened three meetings with Arua City officials and directed the council to approve the payment within four days, warning that failure to do so could jeopardise the city’s access to 126 billion shillings earmarked under the Uganda Cities and Municipal Infrastructure Development (UCMID) programme for the 2026/2027 financial year.
During the heated debate, attended by an Assistant Commissioner from the Ministry of Local Government, several councillors expressed concern over what they described as undue pressure to approve the payment without adequate scrutiny of the supporting documentation.
Before the extraordinary council sitting, an anonymous four-page letter titled “USMID-AF Corruption Scandal in Arua City Deepens” circulated on social media, alleging irregularities in the proposed payment. The letter, authored by a person identifying themselves only as “the Cleaner,” The anonymous author person alleged that the recommendation to pay the money in dispute to China Railway Seventh Group Company Ltd was based on a non-existent outstanding obligation.
The author further questioned whether the city’s new leadership would address the alleged irregularities or become implicated in the matter. URN could not independently verify the claims contained in the letter. The State House Anti-Corruption Unit’s directive has effectively suspended the payment until investigations are concluded. By press time, Arua City authorities, the Ministry of Local Government, and China Railway Seventh Group Company Ltd had not publicly commented on the directive or the ongoing investigations-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
