The former owners of International Credit Bank (ICB), have blamed the Bank of Uganda (BoU) for shutting down their bank in September 1998 and now want its licence reinstated by the responsible authorities.
The shareholders led by former Managing Director Thomas Kato were on Tuesday appearing before parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) which has been probing BoU over the controversial closure of seven commercial banks.
Kato who was giving, ICB’s side of the story, said BoU acted without giving managers time to reconcile books of accounts. When by MPs about the closure process, Kato said they were just asked to move out of the bank by BoU officials who were in the company of policemen.
Kato said the closure of ICB resulted into losses in terms of money and lives. Without mentioning names, Kato said ICB lost three managers and its Chairman as a result of its closure. He said former owners of the bank would soon ask for financial compensation, saying they were still working on the figure to be presented for compensation.
According to the Auditor General John Muwanga’s special audit report of BoU on defunct banks, BoU closed ICB on September 18, 1998 on account of poor liquidity and insolvency which it said had put depositors’ money at risk. It appointed audit firm KPMG as the liquidation agent from September 1999-2001.
After takeover the liquidation of ICB IN 2002, BoU combined loan assets of the bank with those of Greenland Bank and Cooperative and sold them as one unit, something that ICB owners told MPs was illegal and fraudulent as it violated the Financial Institutions Act, 2004.
In the case of ICB, Greenland Bank and Cooperative Bank the total loan portfolio sold of Shs135bn included Secured loans of Shs34.5 billion which had valid, legal or equitable mortgage on the real property and were supported with legal documentation but were sold to Nile River Acquisition Company at a 93 percent discount as the company paid only Shs8.89 billion. ICB had secured loans of Shs1.1 billion.
Kato said former ICB owners the categorization of their loans such as ‘unknown loans’, ‘poorly secured’ and ‘not secured’ was suspect as such cannot apply in banking. They said BoU should give more details, saying it was wrong for BoU to lump all the loans.
COSASE Chairman Abdu Katuntu said with such confusing terms, an element of fraud could not be ruled in the commercial the bank. There is no way you can have unknown loan. Money is expended on accounts which have names of account holders,” he said.
The bank’s former owners could not also agree with BoU on liquidation costs, value of assets. BoU is officials are expected to respond to the queries raised on Friday when they will interface with the MPs. That will be the last day that BOU appears before the MPs as far as the probe is concerned.