Bank of Uganda's Emmanuel Tumusiime-Mutebile

By Richard Wanambwa

The Bank of Uganda (BoU) Governor Emmanuel Tumusiime-Mutebile has come out to defend the Shs478.8 billion it extravagantly sank in activities he said were aimed at protecting Crane Bank Limited from collapsing before it could be transferred to its rival-Dfcu Bank.

Governor Mutebile’s defence was in response to Daily Monitor’s Monday headline- “How BoU blew Shs478 billion in the Crane Bank Takeover”, which he said was “seriously misleading” the public.
Mutebile in his defence says BoU provided a loan to Crane Bank and this money came from the BoU’s own resources. However the official did not give the public the terms and conditions under which BoU gave Crane Bank the said loan and who signed the loan on behalf of Crane Bank. Who in particular signed this money on the side of shareholders of CBL?

Stories Continues after ad

Further the good Governor needs to be reminded that no one has said that BoU is not mandated to create financial assets and liabilities to support weak banks. The issue is that Shs478 billion spent by officials at BoU under the cover of liquidity support to CBL was extravagant especially when one examines legal and technical services hired by BoU. The public is not happy that lawyers and audit firms were paid huge monies when they should have taken less of the taxpayers’ money. The Governor has not also explained the over Shs720 million the Auditor General said was spent as “facilitation for special exercise (CBL). BoU needs to shade more light on this particular expenditure.

The media and especially the Daily Monitor is right to say BoU blew the money especially when officials cannot clearly provide items on which the money was spent. The Governor says Shs 466 billion was spent on liquidity support yet adequate documents to support this expenditure were not provided to the AG John Muwanga to make clear conclusions. If BoU and more especially the Governor Mutebile himself cannot trace for documents to support claims that this money was spent as special exercise on officials and in the same spirit, who can refute claims by Auditor General that BoU failed or top official knowingly refused to release these documents, then Mutebile can’t claim he is in charge at BoU?

“Crane Bank had been losing liquidity for months prior to its takeover by the BoU. This was because a large share of its loan portfolio was not being serviced by the borrowers and because customers were losing confidence in the bank and withdrawing their deposits,” Mutebile says and no one is disputing that information. The issue is whether that money was used for that purpose as BoU managed Crane Bank for the year or so before ‘selling’ or transferring it to Dfcu in a transaction that forced parliament to cause an audit of BoU in regard to the sale of seven defunct banks.

Apart from the Shs466 billon of liquidity support to Crane Bank, Mutebile says BoU also spent Shs12 billion in resolving Crane Bank. “These were expenses that were necessary to ensure that the assets and liabilities of Crane Bank could be transferred to another bank, thereby allowing Crane Bank’s customers to continue having access to normal banking services,” Mutebile says. The Shs12 billion which included payment to lawyers, private auditing firms and surveyors still is too much to carelessly spend in a poor economy like Uganda. BoU should have done better to save the taxpayers ‘money.

Therefore, Daily Monitor’s assertion that the BoU “blew” Shs478 billion is correct. However, if Mutebile doesn’t know, let him be told that the transaction of CBL was mismanaged to the extent that the related case is the Courts of Law.

Furthermore, Mutebile says BoU is recovering the Shs200 billions of this money through the sale of assets and purchase of assumption transaction which transferred assets and liabilities of Crane Bank to Dfcu Bank. That Dfcu Bank determined the price and yet it was the buyer leaves many questions unanswered. Remember that shareholders of the other six banks BoU closed or sold are also crying.

Website | + posts