DFCU Bank headquarters in Kampala

DFCU top guru are among those lined up by parliamentary Com­mit­tee on Com­mis­sions, Statu­tory Au­thor­i­ties and State Enterprises (Cosase) in an inquiry that is expected to begin soon, the Auditor General, John Muwanga, having presented his report on defunct banks sold/liquidated by the Bank of Uganda (BoU), Eagle Online understands.

DFCU bought Crane Bank Limited (CBL) in January 2017 and Global Trust Bank Uganda (GTBU) in July 2014 but the two deals, according to the Auditor General John Muwanga’s special report of BoU on seven defunct banks, are questionable as major documents were not available to him during his inquest of the central bank’s top brass.

The two banks were sold by BoU to DFCU on account of insolvency and under-capitalization respectively, each going for Shs200 billion and about Shs71 billion worth GTBU’s liabilities, respectively.

BoU’s sale of the two banks to DFCU, according to Muwanga was done without following established guidelines, which BoU top managers might have ignored intentionally for selfish interests. BoU sold other banks like Greenland Bank, Cooperative Bank, International Credit Bank and others in this regard of guidelines.

Section 95(1) (b) of the FIA 2004, states that the Central Bank shall within 12 months from taking over as a Receiver arrange for the purchase of assets and assumption of all or some of the liabilities by other financial institutions. This was not followed in the case of GTBU as BoU closed the bank and solicited for the buyers (DFCU) on the same date of July 25, 2014.

“I observed that there were no guidelines /regulations or policies in place to guide the identification of the purchasers of GTBU. There were also no guidelines to determine the procedures to be adopted by the Central Bank in the sale of assets and transfer of assets or liabilities of the defunct banks to DFCU,” Muwanga says.

Muwanga further says he was not provided with records of the procurement process to ascertain the bid requirements, offers made, list of bidders, evaluation criteria, evaluation report and negotiation minutes leading to the Purchase and &Assumption (P&A) agreement. “In the absence of guidelines and procurement records, I could not ascertain whether BoU selected and evaluated the bids in line with the evaluation criteria,” he says.

In July Eagle Online reported that Muwanga and his staff were finding it hard to access critical information as they investigated BoU top officials who presided over the liquidation and sale of defunct banks.

Among BoU officials questioned by Muwanga’s team of auditors were the Deputy Governor Dr Louise Kasekende and retired former director of supervision Justine Bagyenda who has her own case of alleged illicit accumulation of wealth, with billions of shillings on her bank accounts.

In mid-May this year, the Speaker of Parliament Rebecca Kadaga directed the AG to investigate BOU after reports emerged that the bank officials had earlier on refused to cooperate with the AG officials, claiming the case of the sale of Crane Bank was already in court and that it would breach the sub-judice rule. The Solicitor General Francis Atoke had advised BOU top managers not to cooperate with the AG’s investigators.

The expanded audit into BoU was prompted by petitions from Crane Bank shareholders and central bank employees regarding Shs200 billion taxpayers’ money that was allegedly invested into the defunct commercial bank before it was liquidated in October 2016 and sold to DFCU Bank in January 2017.

The shareholders had earlier on petitioned Parliament’s Committee on Commissions Statutory Authorities and State Enterprises (Cosase) chaired by MP Abdul Katuntu and requested for an investigation into the sale of Crane Bank to DFCU Bank and the closure of other several banks in the past.

Quoting from the interim report submitted to Cosase on April 10, MP Katuntu said that BoU officials had denied the Auditor General access to any information regarding closure of Crane Bank and the National Bank of Commerce (NBC).