* Amama Mbabazi named in leaked U.S. cables
* Denies accusation he took bribes from oil firm
* Analysts say appointment is a surprise
* Rest of cabinet to be announced this week
By Elias Biryabarema
KAMPALA, May 24 (Reuters) - Ugandan President Yoweri Museveni appointed Amama Mbabazi prime minister on Tuesday, a move that surprised analysts after he was named in leaked U.S. cables as having taken bribes from Italian oil firm Eni.
Mbabazi was one of two ministers the U.S. ambassador to Uganda, Jerry P. Lanier, urged his government to impose travel bans on over corruption, according to cables posted on WikiLeaks last year.
Both ministers, and Eni, denied the accusations.
“The president described Amama Mbabazi as one of the most ideologically reliable cadres of the (ruling National Resistance Movement), disciplined and with vast legal knowledge,” a statement from Museveni’s office said.
“He also said Mbabazi is loyal and never deviates from the ideologies of the NRM.”
The appointment defied expectations and the wishes of some Western donors who met Museveni last week and say they asked him not to reappoint ministers dogged by corruption charges.
According to the WikiLeaks cables, Lanier told Washington the bribery allegations were made in 2009 by British firm Tullow Oil, which at the time was in competition with Eni for oil assets in the country.
“If Tullow’s allegations are true -- and we believe they are -- then this is a critical moment for Uganda’s nascent oil sector,” Lanier said in the cable.
Tullow later admitted to the meeting with Lanier but denied making the accusations.
Mbabazi, a former security minister who once had a parliamentary election win cancelled by the courts because of vote-rigging, has also been implicated in several of Uganda’s biggest corruption scandals.
A parliamentary committee accused him and other ministers of misusing money meant for hosting the Commonwealth heads of government meeting in 2007. According to donors, $33.2 million of the total budget for the meeting disappeared.
“It’s a strange appointment and I‘m very disappointed,” Ugandan political commentator Bernard Tabaire told Reuters.
“Obviously the expectation of everyone was that no one tainted by corruption would be appointed at all but (Museveni) has made his decision and it’s now up to Ugandans to react.”
Some analysts say the impending cash bonanza from Uganda’s newly-discovered oil deposits may have given Museveni the economic confidence to shrug off complaints from donor countries. Uganda relies on foreign sources for about 30 percent of its budget.
Museveni appointed former parliament speaker Edward Sekandi as vice president. He is expected to appoint a full cabinet later this week following his re-election in February.
The veteran president has faced a series of anti-government protests in recent weeks, triggered by high fuel and food prices. The demonstrations have been crushed by security forces, drawing international condemnation. (Writing by Barry Malone; Editing by George Obulutsa and Janet Lawrence)