MPs kick out BoU officials from parliament for poor presentation of responses to shareholders of closed banks

Members of Parliament investigating the closure of seven banks on Monday faulted and sent away Bank of Uganda (BoU) officials for the poor presentation of responses to queries of shareholders who said last week that their banks were closed unfairly even as most of them had injected in some of the required capital, as undercapitalisation was a major reason for their closure.

MPs who sit on parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE), where shocked as BoU’s executive director of bank supervision Dr. Tumubweine Twinomanzi presented the responses causally without addressing issues as presented by shareholders of banks.

The BoU officials who included both the management and board members had come prepared to respond to issues raised by seven closed banks such as Teefe Trust Bank, Greenland Bank, International Credit Bank, Cooperative Bank, National Bank of Commerce, Global Trust Bank Uganda and Crane Bank Limited. The banks were closed between 1993 and October 20, 2016. The BoU officials will now come tomorrow to defend themselves before MPs.

For instance, shareholders of Global Trust Bank in their presentation to COSASE said they injected in some of the capital required by BoU still closed their operations.

“Our total direct cash equity investment as at July 25th, 2014 was US Dollars 35.2 million or Shs132 billion at today’s exchange rate. The committee is kindly requested to note that we injected over US$10.5 million (about Shs39.5 billion) between January 2013 and 31st May 2014. It is also important to note that the last equity capital investments were made on May 8, 2014,” Bayo Folayan the former Managing Director explaining the financials of Global Trust Bank Uganda (GTBU) at the time it was closed to COSASE on December 14, 2018.

Responding to the above concern by GTBU Dr. Tumubweine Twinomanzi, could only say that the bank was closed because it was continuously making losses to the tune Shs60 billion at closure, the response MPs said was not convincing enough as it did not address the above queries.

MP Moses Kasibante asked BoU officials why they failed to save the bank and several others. He equated BoU to a doctor who does not treat a patient but instead looks for the ways of killing him off. “Why didn’t you help these banks instead of closing them,” he asked.

It is from here that MP Medard Segona, asked that BoU be given 10 minutes to sort out themselves but MP Nathan Byandala interjected, saying the officials should be send away so that they come with all required documents on Tuesday but particularly also respond to specific issues raised by shareholders of banks. COSASE Chairman who sustained the MPs’ request told BoU officials to come well prepared tomorrow.

Monday’s meeting was supposed to be an exit meeting for BoU officials, having been postponed last Friday. The committee is supposed to write and hand in a report to the Speaker of Parliament by February 22, 2019 as the new COSASE Committee led by MP Mubarak Munyagwa and is supposed to handle some of the issues as well.