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

MPs on Parliamentary Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) on Friday quizzed former executive director of bank supervision at Bank of Uganda (BoU), Ms Justine Bagyenda and Mr. Denis Kakembo, lead counsel of M/S J.N Kirkland Associates over the controversial sale of loan assets of three banks now defunct.

The three banks whose loans assets were sold were Greenland Bank, International Credit Bank and Cooperative Bank. The loan assets were bought at Shs8.89 billion (US $5.25 million) by a mysterious Nile River Acquisition Company (NRAC) following a 93 percent discount. The debt portfolio sold in amalgamation comprised of Secured, poorly secured, unsecured and unknown loans amounting to Shs135 billion.

According to the Auditor General John Muwanga, the loan portfolio sold included secured loans of about Shs34.6 billion which had valid, legal or equitable mortgage on the real property and were supported with legal documentation.

The Auditor General in his report that the MPs are using to pin BoU staff says the sale of the loans to NRAC resulted in a variance of about Shs126 billion.

According to a letter written by Bagyenda M/S J.N. Kirkland & Associates was contracted by BoU on 17th January 2007 to implement an exit strategy for closed banks’ liquidation. The assignments commenced on January 29, 2007 and were expected to be accomplished within 16 weeks, ending May 2007.

However minutes of the meetings between BoU staff headed by Bagyenda M/S J.N. Kirkland & Associates as regards the sale of loans could not be produced, with Bagyenda saying she could not remember whether they were taken or not.

JN Kirkland & Associates evaluated the remaining assets of the closed banks and identified a suitable firm, M/s Octavian Advisors, LP which earlier had expressed interest to purchase these assets at US$.10 million from BoU. Following further negotiations with BoU, N4/s Octavian Advisors, LP registered NRAC in Mauritius to buy the assets at Shs8.89 billion, even though M/S J.N Kirkland did not present valuation report for assets/loans of the three banks. NRAC later entered into contract with Sil Investments Company to collect the debts on its behalf.

Further MPs established that Octavian Advisors, LP requested to take over the assets of the three banks before the bidding process could begin.

The MPs failed to get documentary evidence on the valuation and collection of the loans by Sil.