Embattled former Executive Director in charge of Supervision at Bank of Uganda Justine Bagyenda.

By George Mangula

The former Bank of Uganda (BoU) executive director of supervision Ms Justine Bagyenda usurped powers of the Governor Prof. Emmanuel Tumusiime-Mutebile and used a draft agreement to sell off assets of Global Trust Bank Uganda (GTBU) to its competitor DFCU Bank, it was established Friday.

Cosase Chairman Abdu Katuntu, said that by signing on the draft sale agreement, Bagyenda assumed the powers of the BoU Governor and his deputy, which he said is unconstitutional. Katuntu noted that with such happenings, every BoU staff could easily become governor if the Constitutional provisions are not followed.

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The BoU legal counsel Margaret Kaggwa Kasule said Bagyenda used a draft agreement when asked if the agreement between BoU and DFCU Bank was genuine. This was after Bagyenda insisted that the agreement was a BoU official document.

Ms. Bagyenda said she was helped by Ben Sekabira, the BoU Director, Financial Markets Development Coordination, in negotiations that led to the transfer of GTBU to DFCU Bank, whose former Managing Director, Juma Kisaame was involved and signed the agreement to acquire its competitor then.

The Auditor John Muwanga’s report on seven defunct commercial banks faults BoU for transacting business of GTBU without any minutes of the meeting that approved the sale as well as not following the laid-down principles and guidelines.

“Mr. Ben Sekabira agreed with the report, when asked by MPs on Cosase committee whether they were minutes published prior to the sale of GTBU. “I vividly remember myself and Mrs. Bagyenda. Bagyenda was the chair of the meeting and she was my boss. I don’t remember seeing minutes being taken,” Sekabira replied when asked the BoU staff that attended the meeting and whether minutes were taken. “Like practice has been, such meetings are not minuted. You discuss and know where you stopped,” he added to the amusement of the legislators.

Sekabira, the BoU Director, Financial Markets Development Coordination, who is the only BoU staff that has witnessed the seven banks liquidated, said he was not officially assigned but was only invited by Bagyenda to participate in negotiation meetings to sell off GTBU. The meetings went on for days without the knowledge of Tumusiime-Mutebile or his deputy Dr. Louis Kasekende.

And the governor Tumusiime-Mutebile has denied ever authorizing Bagyenda to sell off assets of GTBU, disclosure that exposed how BoU is disorganized in running its assigned activities. Some disclosures on the matter seemed to be new to him, as his body language portrayed.

MP Katuntu said Bagyenda signed informally and casually the sale agreement that transferred GTBU assets to DFCU, since there were no minutes taken. “That will be interrogated and we shall come to the conclusion,” he added.

Sophia Kironde Iwumbwe, who is BoU Assistant Director Commercial Banking Inspections (Onsite) denied allegations that she was involved in GTBU sale negotiation meetings as well as participation in the identification of the acquirer (DFCU Bank).  She gave her responses on oath, just like Bagyenda, Sekabira and Counsel Kasule who also said she never participated in negotiations meetings apart from drawing the terms of the agreement.

Ms Kironde said at the time of the sale of GTBU, she was an examiner-in-charge at BoU where her role at the time was to verify the accuracy of numbers of GTBU assets and make weekly monitoring reports until the time the decision was made to close bank on July 25, 2014. Verification of accuracy of the numbers.

Among shareholders of DFCU Bank are staff members of BoU under Bank of Uganda Staff Retirement Benefits Scheme which commands 0.59 percent of the shares of DFCU Bank. MPs reasoned that that creates conflict of interest.

Other shareholders include; Arise BV (58.71%), CDC Group of the United Kingdom (9.97%), National Social Security Fund (Uganda) with 7.69%, Kimberlite Frontier Africa Naster Fund (6.15%), Two undisclosed Institutional Investors (3.22 %), SSB-Conrad N. Hilton Foundation (0.98%), Vanderbilt University (0.87%), Blakeney Management (0.63%) and retail investors (11.19%) BoU staff are investors in Stanbic Bank and Bank of Baroda, according to Oscar Edwin Kiiza, BoU’s Assistant Director Pension Administration & Financial Reporting. That makes BoU a regulator and the regulated at the same time, which MPs said is a problem in form of conflict of interest.

The MPs also established Dr William Kalema sits both on the boards of BoU and DFCU Bank which creates another conflict of interest. BoU said it is against its guidelines for a regulator to be on the side of the regulated as well.