ON THE SPOT: BoU top three that are implicated in the sale of commercial banks.

Bank of Uganda top managers including its Governor Prof Emmanuel Tumusiime-Mutebile are in panic over what explanations they will give to parliament, following the latest Auditor General’s confidential report which says they might have intentionally neglected certain aspects in the closure and sale of at least seven commercial banks, including Crane Bank that is still the talk of the country.

In the new report to parliament, the Auditor General (AG) John Muwanga pins Mutebile and his top directors at BoU for acting in the absence of guidelines, regulations or policies as they closed bank like Teefe Bank in 1993, International Credit Bank Ltd. in 1998, The Cooperative Bank in 1999, Greenland Bank in 1999, The National Bank of Commerce in 2012, Global Trust Bank in 2014 and sale of Crane Bank in 2017 to dfcu Bank.

Muwanga has in the report faulted BoU for not following any guidelines to determine the procedures in the sale or transfer of assets and liabilities of the defunct banks to the identified buyers.
The AG also says there were flaws, including lack of negotiation minutes as BoU sold Crane Bank Limited assets and liabilities to Dfcu in a Shs200 billion transaction. Crane Bank was owned by businessman Sudhir Ruparelia and others.

“In the absence of the minutes, I could not determine how BoU selected the best evaluated bidders and how the terms in P&A were determined,” Muwanga says in the report, adding that BoU did not carry out the valuation of the assets and liabilities of Crane Bank Limited but only relied on inventory report and the due diligence undertaken by Dfcu to reach the P&A agreement.

“I also noted that the P&A did not have complete details of assets and liabilities transferred to Dfcu with their corresponding values; I was therefore unable to establish the status of assets and liabilities transferred to Dfcu.” He says, adding that the some details of the assets and liabilities given to him lacked details of the loans and advances transferred to Dfcu and evidence of valuation of assets before sale “hence it was insufficient to respond to this observation.”

The AG also wants BoU directors to account for Shs478.8 billion they claim to have used as a liquidity support and other activities after they controversially took over Crane Bank on October 20, 2016. Shs12.2 billion of that money, BoU managers claim was used for compiling inventory report, forensic review and investigations, IT and hiring of external lawyers.

BoU is also accused of selling assets of ICB, Greenland Bank, Cooperative Bank, GT Bank and NBC worth Shs164 billion at a discount whooping rate of 80 percent, yielding only Shs32 billion.
The above was also worsened by BoU’s resolve to sell ICB, Greenland Bank and Cooperative Bank, with a total loan of Shs135 billion which included secured loan of Shs34.5 billion (with valid legal documentation) but were sold to Nile River Acquisition Company at another more than huge discount of 93 percent.

The AG in the report has exposed BoU in the GT Bank deal where Sh23 billion obtained remain unaccounted for, 25 land titles missing, and customer loans inherited from closed banks were sold at an under-valued rate.