The parliamentary Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) has summoned former shareholders of commercial banks which were controversially closed by the Bank of Uganda (BoU) to testify about the circumstances that led to the closure of their banks in the process that started from 1993 to January 2017.
This follows the completion of MPs probe of BoU officials who left a lot to be desired as far as the closure of the banks is concerned. This is because they failed to present all the documents including quarterly liquidation reports and valuation reports, minutes of meetings and others.
As such former shareholders of National Bank of Commerce (NBC) and Teefe Bank together with Nile River Acquisition Company (NRAC) will appear next week.
NRAC an offshore firm bought the loan assets and liabilities of International Credit Bank Ltd (1998), Greenland Bank (1999) and the Co-operative Bank (1999). The loans amounted to Shs135 billion which comprised of secured loans of Shs34.5biullion which had valid, legal or equitable mortgage on the real property, according to the Auditor General John Muwanga’s special audit report of Bank of Uganda on defunct banks.
The report pins BoU for closing the affected banks without following the guidelines and procedures laid in the Financial Institutions Act, 2004 and the BoU Act.
The former shareholders of NBC, who are expected to be cross-examined by the committee, will include Prime Minister Dr Ruhakana Rugunda, Governor Tumusiime Mutebile, former Prime Minister Amama Mbabazi, and businessman Amos Nzeyi.
MPs who have to complete their work by February 22 before handing over to the new committee, will then meet former shareholders of International Credit Bank (ICB), Cooperative Bank, Crane Bank Ltd and dfcu -the bank which took over the assets and liabilities of both Global Trust Bank (GTB) and Crane Bank. The committee will also hold meetings with the BoU Board of Directors and technocrats from the Finance ministry.
BoU officials are expected to respond to what Ms Justine Bagyenda, the former director of Supervision for Commercial bank, testified about the closure of banks last December.
Lawyers from Masembe, Makubuya, Adriko, Karugaba & Ssekatawa (MMAKS Advocates) will also be quizzed to explain how much BoU paid them as legal fees for several cases involving the closed banks.
MMAKS will also be required to clear the air over whether BoU hired them as transaction advisers in the disputed Crane Bank takeover at a fee of US$251,045 (about Shs943.3 million).
In doing business with MMAKS, MPs said during the BoU probe that that Ms Bagyenda usurped the powers of the legal department by taking over the drafting of the terms of engagement between BoU and MMAKS.
With BoU failing to produce documents spelling out the terms of engagement, MPs questioned why the bank opted to use external lawyers instead of its own legal team.
In a period of 23years, the Central Bank has overseen the closure of seven defunct Banks including; Teffe Trust Bank (1993) that was closed due to insolvency, International Credit Bank Ltd (1998) due to poor liquidity and insolvency, Greenland Bank (1999) insolvency and violation of Financial Institutions Statute.
The other Banks were; Cooperative Bank (1999) continued poor performance and non-compliance with regulatory capital adequacy requirements, National Bank of Commerce (2012) undercapitalization, Global Trust Bank (2014) undercapitalization and corporate governance weaknesses, and Crane Bank Ltd (2016) closed because it was undercapitalised.