By Andrew Irumba
Parliamentary Committee on Statutory and State Enterprises (COSASE) has finalized its damning report inquiring on Bank of Uganda’s role in the closure of seven commercial banks, after over three months of vigorous quizzing and interviewing of various stake holders in the banking sector.
The chairperson COSASE, also member of Parliament Bugweri County Hon.Abdu Katuntu said members had finished their job and was ready to table the final report before parliament today (Wed) for further discussion, though they were least expected on Thursday as per speaker’s instructions while extending their term of office.
A parliamentary probe committee was triggered by a special Auditor General’s report, which was compiled on the orders of the Speaker, Ms Rebecca Kadaga after it found out a number of malpractices in the central Bank.
This followed public outcry that the Bank of Uganda (BoU) could have irregularly sold off Teefe Bank (1993), International Credit Bank Ltd (1998), Greenland Bank (1999), The Co-operative Bank (1999), National Bank of Commerce (2012), Global Trust Bank (2014) and Crane Bank Ltd (CBL) that was sold to dfcu in 2016.
Crane Bank was sold to dfcu bank in 2016 on credit of Shs.200billion.
The 94-page Auditor General’s (AG) report indicated that BoU did not follow any guidelines/regulations or policies in the sale of Crane Bank to DFCU Bank in 2016 and in the closure of the other banks. The AG, Mr John Muwanga, also said the Central Bank did not carry out an evaluation of the assets and liabilities of Crane Bank before they were transferred to DFCU Bank.
The MPs have since summoned various stake holders to shade light on AG’s findings, including; Governor Prof.Emannuel Mutebile, His Deputy Dr.Louis Kasekende, former BoU director-in-charge of banks supervision Justine Bagyenda, dfcu’s former Managing Director Juma Kisaame, all directors of the seven closed banks save for Dr.Kigundu of green land Bank(RIP), among others.
The AG’s report also raised questions on how BoU signed a Purchase of Assets and Assumption of Liabilities agreement with dfcu on January 25, 2016, for the purchase of Crane Bank.
“I was not provided with the negotiation minutes leading to the P&A agreement. In the absence of the minutes, I could not determine how BoU selected the best-evaluated bidder and how the terms in P&A were determined. I also noted that the P&A did not have complete details of assets and liabilities transferred to dfcu with their corresponding values; I was, therefore, unable to establish the status of assets and liabilities transferred to dfcu,” Muwanga’s report noted.
Aggrieved Crane Bank shareholders have since sued BoU, arguing the January 25, 2017 sale agreement was signed by BoU Governor Emmanuel Tumusiime Mutebile and Juma Kisaame, former managing director of dfcu Bank without considering the interests of major shareholders of the defunct bank.
The AG also questioned the source of Shs478.8b the Central Bank injected into Crane Bank in 2016 to keep it liquid.
MPs quized Mr Mutebile on how BoU paid billions of shillings as consultancy fees to several law firms in the sale of the banks.
For instance, in the period when BoU was managing Crane Bank Ltd, it said it used Shs4b in the hiring of two external law firms – MMAKs (Shs3.9b); Cohen and Collins Solicitors and Notaries (Shs17.4m). However, the AG indicated the budget for MMAKS Advocates and AF Mpanga Advocates – the external lawyers hired by BoU in Crane Bank case before court kicked them out over conflict of interest, was never disclosed.
Now, today we wait to see the findings and recommendations by COSASE committee after three months of vigorous work.
