BoU executives taking Oath before MPs.

Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) on Tuesday blasted the Bank of Uganda (BoU) top officials for engaging in business with the mysterious Nile River Acquisition Company as the company bought off secured debts of International Credit Bank (ICB), Greenland Bank and Cooperative Bank at Shs8.89 billion representing a 26 percent discount of the total secured loans.

“The loan portfolio sold included secured loans of Shs34.5 billion which had valid, legal or equitable mortgage on the real property and were supported with legal documentation. I noted that the contract price of Shs.8.898 billionn represented 26% of the total secured loan portfolio and 7 percent of the total loan portfolio implying that the loans were sold at a discount,” The Auditor General John Muwanga says in his special audit report of BoU on defunct banks.

“I was unable to determine the cafeteria used by BOU in deriving the sale value (Shs8.89 billion),” Mr. Muwanga said in his report that the MPs are using to pin BoU top gurus. When Cosase Chairman Abdu Katuntu asked the BoU officials the minutes and basis of the 26 percent discount, the BoU officials didn’t have any.

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However, they explained that: “Estimating the recoverable amount of a closed bank’s loan portfolio cannot be done with precision. Because of uncertainty in the recoverable value and the costs related to recovery, is always true that any buyer will be unwilling to pay the full book value of a portfolio of bad debts. It is inevitable that these portfolios will always be sold at a discount.”


The purchase of the loans stretches from 2006 when BoU designed a strategy to exit the liquidation of the three closed banks which involved; assessment/ evaluation, packaging and bulk selling of the remaining assets of the closed banks so that the proceeds can be distributed among creditors.

BoU would Subsequently, BoU carried out a competitive procurement process including public advertisement, evaluation of bidders and selection of a suitable firm to implement the strategy.

The Central Bank would later hire M/S J.N. Kirkland & Associates on January 17, 2007 to implement the exit strategy for closed banks’ liquidations and the assignments commenced on January 29, 2007.

JN Kirkland & Associates would later contract M/s American Octavian Advisors, LP which expressed interest to purchase the assets at JUST over US$10 million. The latter company would further register Nile River Acquision Company (NARC) in Mauritius in order to transact with BOU, buying the secured loans at Just over US$5 million (Shs8.89 billion).

MP Katuntu was disturbed that BoU officials, as it has become their habit, did not come with all the required documents of the transaction and tasked them to come with more left behind, if any exists. Katuntu was also bitter that the bogus transaction left government without taxing NARC, as it registered in Mauritius which is a tax haven.

It later emerged that BoU gave powers of attorney to JN Kirkland as it solicited for the buyers of the assets of the three banks, yet it went ahead to put taxpayers’ money in the process, including investing in the due diligence on M/s American Octavian Advisors, LP.

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