WHAT NEXT: Dr. Kasekende seem to be lost in COSASE.

A new report Auditor General’s dubbed Special Audit Report on the Shs478 Billion Injected into Crane Bank Limited by Bank of Uganda is out and pins the central bank officials for failure to account for Shs478 billion it injected in Crane Bank Limited (CBL).

The Auditor General John Muwanga carried out the audit as the ordered by parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) on December 20, 2018.

The Bank of Uganda (BoU) officials on Wednesday during their exit meeting with COSASE failed to account for Shs478 billion they say they spent as liquidity support and other intervention costs on CBL receivership between October 20, 2016 and January 25, 2017.

Muwanga in the report says out of Shs478 billion injected into CBL, a sum of Shs157.9 billion had been recovered from Dfcu Bank and CBL Non-Performing assets leaving an outstanding balance of Shs320.8 billion at the time of writing the report. CBL at the time it was sold to Dfcu Bank at Shs200 billion only needed about Shs157 billion to remain afloat.

However, Muwanga notes in the report that much as BoU has a financial crisis management plan which provides for decision-making in the event of a systemic shock to the banking sector, the plan does not provide the process of injection of liquidity support to financial institutions during the statutory management period like it happened with CBL. MPs told BoU Governor Prof. Emmanuel Tumusiime-Mutebile and his staff who were appearing before them to ensure that the loophole is closed.
According Muwanga in his August 27, 2018 report on seven defunct banks, BoU presented about Shs466.6 billion as money injected in CBL as liquidity support but in his scrutiny of documents, he established that about Shs459.50 billion was spent for this purpose, leading to a variance of Shs7.1billion.

BoU Deputy Governor Dr. Louise Kasekende said the money was spent as; telegraphic transfers (TTs) and LC payments, Real Time Gross Settlement (RTGS), clearing and cash requirement requests.

An extra Shs12.2 billion was also spent on service providers including MMAKS Advocates who pocketed about Shs4.2 billion. The latest report on Shs478 billion spent on CBL did not however audit the Shs12 billion paid by BoU to service providers, reasoning that it was extensively dealt with by the MPs.

In the latest Auditor General’s report, the Ssh478 billion was sourced by BoU as; Shs171.81 billion from its Currency Circulation account while US $85.24 million was sourced from its Foreign Reserves in Citi bank account in New York, United States.

The report however notes that much as BoU remitted funds amounting to US$53.1 billion to CBL in respect of telegraphic transfer requests by CBL, Muwanga was not able to confirm the final recipients of the respective transfers from the CBL Nostro account as the account did not indicate the beneficiary account names, account numbers and beneficiary bank.

Muwanga in the latest report further says BoU transferred an extra Shs77.5 billion to accounts of 46 CBL branches although he was not able to confirm that the funds were withdrawn by bonafide accountholders at the respective branches as the daily teller transaction reports provided did not indicate the customer account names and customer names.

He says BoU explained that: “CBL upgraded the banking software from the Bank Master Core Banking system to T24 system bringing out a mismatch in information. “ BoU said lining the two systems by Dfcu Bank has been a tedious process that might requires more time.

Today MPs also tasked BoU officials to explain why part of the money MMAKS took had to be paid in dollars and not Ugandan shillings. That concern was raised by MP Michael Tusiime. MPs suspect there is foul play here.

Weeks ago, Bagyenda read to the MPs a memo/document of November 30, 2016 requesting for payment of the lawyers without showing the work that was done. BoU governor would on December 12, endorse and approve the request for payment of over US$51000 dollars as part of their total fee. The money was paid. But MPs said that went against the Public Finance Management Act, which instructs government agencies to pay local suppliers in Ugandan shillings.

The law firm was hired after On October 28, 2016, BoU engaged PWC to carry out a forensic review of Crane Bank Limited (CBL) focusing on a 48 month period before statutory management which was completed on January 13, 2017. MMAKS would go ahead to call for bids on behalf of BoU as it acted as transaction advisors as well as commission agents.

Meanwhile, BoU officials on Wednesday presented written responses to queries raised by former owners of closed banks. Last week the officials were kicked out of parliament as they could not satisfactorily respond to the queries such as unfair closure of banks, refund of money as well as compensation.

The current COSASE is winding up its work and expected to present a report to parliament for debate on the way forward as far BoU operations are concerned. The in-coming led by MP Mubarak Munyagwa will continue with the remaining issues of the inquiry.