Minister Kasaija and top BoU officials at the COSASE probe.

By Our Reporter

As to date, the Bank of Uganda (BoU) has closed a total of seven banks that include; Teefe Bank in 1993, International Credit Bank Ltd in 1998, Greenland Bank in 1999, The Co-operative Bank in 1999, National Bank of Commerce in 2012, Global Trust Bank in 2014 and the sale of Crane Bank Ltd to DFCU in 2016.

That led in to a parliamentary probe into the closure of the seven defunct banks that arose from a letter by parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) authored in November 2017, requesting the Auditor General, John Muwanga to undertake a special audit on the closure of these commercial banks by the Central Bank after the controversial closure of crane bank. Below we bring some key quotes of the BoU probe.

“The decisions and actions of selling the assets of banks placed under resolution, were based on the objectives of protecting the depositors’ funds, increasing confidence in the banking system and fostering financial sector stability, which is the core reason for our existence as an Institution,” BoU Governor Prof. Emmanuel Tumusiime-Mutebile on November 12, 2018 while addressing MPs on COSASE on the closure of seven commercial banks.

“We are going query by query. Any document which we will require to answer a query, we will get it. I have two matrixes from the Bank and I need clarification from the Governor. There is one which you brought last time and one which you submitted with these files—somehow they differ, they are not the same,” COSASE Chairman Abdu Katuntu on November 12, 2018 referring to unsatisfactory documents presented by BoU on the close of Teefe Trust Bank in 1993.

“I also got a challenge during the review of the matrix vis a vis the Auditor General’s report. The matrix attempts to address issues yet the AG’s report has issues that were not provided for here. The AG’s report goes further than what the matrix provides. There were queries that were dropped in preparation of this matrix,” MP Michael Tusiime on November 12, 2018 referring to unsatisfactory documents presented by BoU on the close of Teefe Trust Bank in 1993.

“At the time of closure of Teefe, the law was the 1969 Banking Act and the nature of the documents required at that time did not include an inventory. So we do not have an inventory,” Deputy Governor of BoU Dr. Louis Kasekende on the closure of Teefe Trust Bank. This was after MPs on COSASE talked BoU on November 12, to produce an inventory report for the closed bank.

“Frequent reporting was not required. These are the differences that existed. BOU did not want to report to itself, it wouldn’t issue a report on itself, so the decision was made to appoint auditors. Because it is expensive, you can’t do an audit every year,” Ben Sekabira BoU’s Director Financial Markets Development Coordination speaking before COSASE in November on the closure of Greenland Bank.

“Mr Chairman, I’m sorry I don’t remember receiving any reports about this matter…Sekabira says he had no reports for me because he was far from me – below me. He was reporting to somebody else but he didn’t say who it was. So who’s this person?” Mutebile explaining the confusion in BoU in November while responding to queries on closure of Greenland bank.

“I … would like to express my appreciation to the Auditor General for his report which raised issues that will culminate in an improvement in the operations of Bank of Uganda. The Bank of Uganda acknowledges the relevance of this exercise and we are confident that it will enhance transparency and accountability, which are key values that the Bank upholds,” Prof Mutebile in his closing remarks to COSASE on December 20, 2018.

“We take note of the committee’s concern of conflict of interest with respect to service providers and directors of supervised financial institutions. As previously mentioned, Bank of Uganda will review its policy on conflict of interest and its implementation,” Mutebile in response to use law farms like MMKAS and A.F Mpanga Advocates who serve as directors on some of commercial banks in Uganda.

“I apologise for the inconvenience caused by my absence from Uganda caused the members. I am willing to assist the work in the committee in any way that I can,” the former BoU executive director of bank supervision, Ms Justine Bagyenda on December 3, 2018 while appearing before COSASE, having skipped the COSASE probe for over a week following her flying out of the country on November 22, 2018.

“There was a serious security breach of BoU’s security. Rule 20(15) of the Security Policy states: All persons shall go through a security screening without exception. 20(16) states all items brought into the bank shall go through security screening without exception but on two occasions, these rules were not adhered to,” UPDF representative in parliament Brig. Takirwa on November 29, 2018 while reading a report on security management at BoU after it emerged Bagyenda ferried documents in and out of the bank without being checked.

“We played back the cameras, we found that bags were ferried from BoU to Bagyenda’s car. We wanted to start the search at her home to find out what kind of documents were taken but didn’t because security had not seen the type of documents. We consulted and we concluded that if we go and do a search at home, we may be embarrassed because we had issues where she said she was being witch-hunted,” BoU director for security Milton Opiyo on November 27, 2018 while telling MPs on COSASE on disappearance of documents from the bank.

“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 at the time it was closed to COSASE on December 14, 2018.

“BoU continued claiming that the capital of the bank was being eroded yet this was caused by BoU itself. This was made worse when NBC was slapped with illegal civil penalties of Shs2m per day by Ms Bagyenda. It is very clear to us that senior staff at BoU were determined to fail BoU,” the Chairman of National Bank of Commerce Mathew Rukikaire while giving the shareholders side of the story recently to COSASE on the closure of their bank by BoU.

“The purpose for which this money was advanced to BoU was not met and therefore BoU has no reason to keep it,” Sudhir Ruparelia the former Vice Chairman of defunct Crane Bank a week ago while telling COSASE that shareholders gave US$23.5 million to BoU as a fraction of capital before the bank was closed by BoU.

“It’s prudent for this committee to throw out the Dfcu team because they are so confused and disorganized, they are fidgeting with their own documents. It is in the best interest that dfcu withdraws and reorganizes themselves. In the report, they are valuing Crane Bank assets but without a specific report from the government valuer, on how they came into those figures,” MP Odonga Otto on February 6, 2019 while reacting to the disorganization of DFCU Bank officials as they appeared before COSASE to respond to queries that they fraudulently acquired Global Trust Bank and Crane Bank Limited.