Minister Kasaija and top BoU officials at the COSASE probe.

Parliament’s Committee on Commission, Statutory Authorities and State Enterprises (COSASE) on Friday quizzed top officials of Bank of Uganda (BoU) over the controversial expenditure of Shs478 billion on Crane Bank Limited during its receivership.

During the probe, BoU deputy governor Dr Louise Kasekende said when they put CBL in receivership, they acted as lender on side and borrower on the other side, something the Committee Chairman Abdu Katuntu said created controversy in terms of accountability and transparency.

The MPs argued that BoU officials should have used a private or official receiver to manage CBL instead of doing it themselves. Interestingly BoU wants CBL shareholders to refund the Shs478 billion yet they did not enter into any contract with CBL’s shareholders.

CBL shareholders led by Sudhir Ruparelia said they would not pay that money since they don’t where it came from, who received and how it was used. BoU officials have no documentation about the use of the money. CBL needed Shs157 billion to stay afloat even as BoU spent Shs478 billion on its liquidation.

BoU on the other handed has not presented any accountability of the money it says it spent as liquidity support to CBL as well as other service costs related to its liquidation.

MP Katuntu maintained that BoU played the role of a statutory manager which it was not supposed to play since the institution is a regulator. MP Medard Segoona said such arrangement can lead to the mismanagement of the money which belongs to the taxpayers.

The Minister of Finance Matia Kasaija said he has never received any report from BoU on the closure of the seven commercial banks. The minister who said was a shareholder in the Cooperative Bank, said it is a big weakness and he will write to BoU requesting for the reports.

Kasaija suggested that parliament should appropriate some money in the budget which it would approve for BoU to use in case of any bank failure. The minister said he was not happy with the closure of CBL.

Kasekende while responding to MP Segoona’s concerns about the conflict interest in the role of BoU statutory manager, recognised that weakness but said the law provides the Depositors’ Protection Fund to act as a receiver.

This week former owners of the banks closed all cried foul play by some of the Bank of Uganda staff who closed their banks even as they had raised most of the required capital. Most banks were closed due to undercapitalisation. For instance the National Bank of Commerce (NBC) was closed on allegations of failing to raise Shs300 million when the same bank had US $2.5 million on its foreign reserves.

The probe of BoU by the MPs is a result of the Auditor General John Muwanga’s report on commercial banks which faulted BoU for the closure of banks without following proper guidelines. Some of the other banks closed include; Teefe Trust Bank, Global Trust Bank Uganda, International Credit Bank, Cooperative Bank and Greenland Bank.

COSASE will have the last meeting next Monday.