Jimmy Mugerwa

There is panic at Dfcu Bank as parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) begins quizzing Bank of Uganda (BoU) top officials on the liquidation and sale of seven commercial banks against the wishes of owners.

Cosase began its inquiry into BoU last Thursday demanding that officials present all documents related liquidation and sale of Teefe Bank, International Credit Bank Limited, Greenland Bank, The Cooperative Bank, National Bank of Commerce, Global Trust Bank and Crane Bank Limited (CBL).

BoU Governor Emmanuel Tumusiime-Mutebile pledged to avail all the required documents this week for the Members of Parliament to study so they can ask right questions.

BoU transferred Global Trust Bank and CBL to Dfcu Bank and the Auditor General (AG) John Muwanga in his special audit report of BoU on defunct banks, published on August 27, 2018, says that the transactions had irregularities of which BoU has to explain, meaning Dfcu Bank cannot be exempted as a purchaser.

Mr. Muwanga in his report that Cosase intends to use to pin the parties notes:

“I observed that there were no documented guidelines/regulation or policies in place for the identification of the purchasers of the 3 defunct banks (GTB, NBC and CBL) closed using the purchase and assumption arrangement. There were also no guidelines to determine the procedures to be adopted by the Central Bank in the sale/transfer of assets and liabilities of the defunct banks to the identified purchaser. In the absence of guidelines, I could not establish the basis used to select the purchaser and determining the values of assets and liabilities transferred by BoU to the purchaser”.

Adding “I noted that BoU did not carry out a requisite valuation of assets and liabilities of the three defunct banks (GTB. NBC and CBL) resolved using the purchase and assumption arrangement at the time of signing the P&A. In absence of the valuation and or documented evaluation of alternatives and assumptions used, I could not establish how the terms for the transfer of assets and liabilities in the P&A were determined.” “Negotiation minutes detailing the evaluation of alternatives and assumptions for the sale of GTB assets were not provided and as such I could not determine the basis for transferring assets at a discount”, says Muwanga.

The statements above are a thorn in the flesh of Dfcu Bank top executives to the extent that Juma Kisaame, the Managing Director, Jimmy Mugerwa, the Chairman Board of Directors and others, are reportedly doing everything possible to save themselves from the MPs’ impending interrogation. It was made worse by revelations that some shareholders had more less objected to the CBL deal and according to reports from Dfcu, these very shareholders are cagey about the inquiry by parliament as they fear it is likely to soil their reputation.

Our sources within Dfcu say the two men are looking for any means that they can use to frustrate the inquiry by Cosase.

They also say that Kisaame, Mugerwa and other Board members recently held a secret extra ordinary meeting during which they came up with a plan to manipulate facts that can save them should they be required to appear before Cosase.

The Bank’s shareholders including Arise B.V. and Britain’s CDC Group are expected to appear before Cosase as well even though they did not support the acquisition of Crane Bank, the reason why they were involved in disagreements recently with CDC announcing it wanted to exit by way of selling its shares within or looking for external buyers.

According to insiders, Kisaame and Mugerwa want to convince other board members and shareholders to be on the same page when they appear before Cosase, such that their statement rhymes with the one BoU officials made to Cosase last week. That among others includes harmonizing minutes of the meetings they held especially on the purchase of CBL.

Cosase members sent away the BoU officials and instructed them to return this week with the necessary documents. After the appearance of BoU officials before Cosase, next will be Dfcu Bank officials.

The insiders also intimated that Kisaame and Mugerwa are tight business friends, who have been sharing percentages and commissions off the deals they cut for a long time.

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