Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) has Wednesday evening chased away Dfcu Bank officials from parliament for presenting documents which were unconvincing as they were not signed.
Abdu Katuntu, the committee Chairman said MPs would not consider the unsigned documents saying as they are unauthentic with no one to bear responsibility for them.
He challenged the Dfcu Bank legal team to correct the mistakes and report back to parliament on Thursday at 10:00hours. The committee is in the final staging of finishing the probe that started in late October following the Auditor General John Muwanga’s report that faulted the Bank of Uganda (BoU) on closing banks without following due processes.
Dfcu officials led by chairman board of directors Jimmy Mugerwa were appearing before COSASE as witnesses in the closure and purchase of Crane Bank in the ongoing Bank of Uganda probe.
During the meeting, Dfcu’s Mugerwa made a defense presentation in regards to the terms of purchase of Crane bank agreement, however the presentation was backed by fake documents which were neither dated nor signed by the bank authority. This prompted MPs of the committee to kick them out and allow them reorganize themselves.
“Its prudent for this committee to throw out dfcu team because they are so confused and disorganized, they are fidgeting with their own documents. It is in the best interest that dfcu withdraws and reorganizes themselves.
Some of the documents that caused the MPs to chase away Dfcu Bank officials led by Chairman Juma Mugerwa and new MD Mathias Katamba included one on “Fair valued loans and advances of customers of Crane Bank Limited (CBL). The other included schedules of CBL loans and advances.
Mr Muwanga in his report on defunct banks faults Dfcu Bank for engaging in transactions that did not follow proper guidelines as it bought of CBL assets at Shs200 billion, paid in installments. Dfcu Bank also bought the assets of Global Trust Bank without following guidelines as laid in the Financial Institutions Act, 2004.
The sourcing of Dfcu Bank as a buyer of both banks happened over telephone, according to Ben Sekabira, a senior banking officer at BoU. Former director of bank supervision Justine Bagyenda was at the forefront of selling the two banks to their rival Dfcu Bank.
At the time DFCU Bank bought Global Trust Bank in 2014, William Kalema was both on the board of BoU and the board of DFCU Bank.
BoU also sold the two banks to Dfcu Bank well knowing that its staff under the BoU Staff Retirement Benefits Scheme own a percentage of shares in Dfcu Bank which creates conflict of interest.
Former owners of CBL were in parliament Wednesday morning where they said their bank was sold illegally and asked for an independent audit. BoU sold CBL based on the inventory report and due diligence report done by DFCU Bank. The buyers set the price.
The former shareholders led by their Chairman Joseph Biribwonwa and his Vice Sudhir Ruparelia, told MPs Bagyenda, was more interested in selling CBL than saving it as lender of last resort.
Biribwonwa said BoU closed CBL at the time when they were in serious discussions with strategic investors who were willing to put capital in the bank. BoU closed CBL on account of being undercapitalised, a situation officials said put depositors’ money at risk.
Biribwonwa said CBL’s total assets helped Dfcu Bank to grow its assets from Shs1.8 trillion to three trillion Shillings, which was an increase of 67 percent. He wondered why BoU could transfer CBL assets to Dfcu Bank at Shs200 billion interest free yet it denied CBL financial support to remain in business.
CBL opened its doors in Uganda in 1995, growing from one branch to 46 braches spread countrywide as well as spreading into Rwanda.
CBL shareholders also want BoU to refund US$8 billion they gave to BoU as capital contribution among other sums of money.
They were also bitter that BoU paid Shs914 million to MMAKS Advocates for advice on sale of CBL assets and assumption of liabilities as well as paying them commission of Shs3 billion being 5 percent of monies recovered them as CBL shareholders. BoU wants the shareholders to cover the cost incurred by BoU. But they said it is unfair and won’t respond pay the money they see as exorbitant.
They also told the committee that Dfcu Bank made a profit of Shs39.7 billion on the first day it acquired CBL yet BoU claimed it was insolvent.
The former shareholders particularly Sudhir Ruparelia also disputed Shs570 billion passed to Dfcu Bank written off loans even as it was not included in the purchase and assumption of assets agreement.