Speaker of Parliament Rebecca Kadaga

A dubious plot by the Kawempe South MP Mubarak Muyangwa and the Makindye East MP Ibrahim Kasozi to open a fresh inquiry into Bank of Uganda’s controversial closure of commercial banks has hit a dead end with the Speaker set to block any new inquiry

Eagle Online understands that the two legislators have been quietly lobbying their colleagues and other influential MPs to support their contentious proposal to re-open the probe in the central bank’s operations but they have been unsuccessful.

A senior MP opposed to the move argued that the new leadership of the Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) views BoU as a cash cow which can be milked for positive coverage ahead of the 2021 elections while also presenting an opportunity for them to line their pockets.

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“We all know their intentions. The previous committee did a comprehensive investigation into BoU and there is no need for another investigation. That would be wanton wastage of tax payers money and if such a proposal is brought to the flow, we will not accept it,” said an MP who preferred not be named.

A senior Bank of Uganda official also indicated that the central bank is opposed to any fresh inquiry-putting both Munyagwa and Kasozi on notice that they risk being taken to court should they attempt to open fresh investigations.

Efforts to resume investigations were further dealt a blow when a one Michael Busingye petitioned the Speaker warning that a fresh inquiry is not necessary as it would further put to waste state resources.

“As Parliament is principally under your jurisdiction and as these exercises cost tax payers money and must be performed lawfully, this is to request you to prevail, on the said committee not to expend state resources on a re-examination which is outside their mandate,” reads petition which was received by the Speaker’s Chambers last week.

According to the Auditor General John Muwanga, out of Shs478 billion, Shs320 remains unaccounted for by BoU. This issue came up as MPs probed BoU on the irregular closure seven banks between the years 1993 and October 2016.

In his special audit report of Shs478 billion, Muwanga said Shs157.9 billion was recovered from Dfcu and CBL non-performing assets, leaving an outstanding balance of 320.8 billion.

During the COSASE probe, it was established that CBL needed Shs157 billion to remain operating normally much as BoU officials injected in Shs478 billion before selling the bank to its rival DFCU Bank at Shs200 billion, paid in installments.

Commenting on the above transaction, the MPs said BoU ‘lent’ Dfcu part of CBL’s loan book worth Shs570 billion. In the original agreement Dfcu Bank was supposed to take over all the loan book but BoU could later on transfer only Shs200 billion of CBL loan book to its rival interest-free yet the interest would be recovered by BoU from CBL shareholders who were not party to the agreement.

The above is part of the controversy that the detectives want to investigate given that BoU did not carry out valuation of the assets and liabilities of CBL but relied on the interim inventory report of December 12, 2016 and due diligence undertaken by DFCU Bank to transfer CBL’s loan book assets of Shs200 billion.
COSASE INVESTIGATION 05.06.19
Important to remember is that the total book value of the three banks totaling to about Shs135 billion was sold at 93 percent discount to Shs8.9 billion. The total value included secured loans worth Shs34.5 billion. BoU failed to give a convincing answers as to why this figure was added together with unsecured loans and others as they sold them to mysterious company Nile River Acquisition Company (NRAC).

The MPs also established that M/s JN Kirkland and Associates who were hired to implement exit strategy for the three banks by BoU ended up as a local agent for NRAC, with rights to run an account in Citi Bank in which all recoveries of the Shs8.9 billion portfolio are deposited.

NRAC was not registered in Uganda as a local or foreign company which is a violation of sections 369 and 370 (1) of the Companies Act. M/s Octavian which registered NRAC in Mauritius was also never registered in Uganda.

Yet the then Director Commercial Banking in BoU Ben Sekabira who was the agent of the liquidator/receiver pf the three defunct banks was also up to August 12, 2009 the agent of NRAC which created conflict of interest. The investigators are interested in Sekabira activities as well of those of former executive director of bank supervision Justine Bagyenda who allowed M/s Octavian to be the only bidders for the assets of the three defunct banks, some of whose former shareholders have since died.
However, Eagle Online has established that the ploy to commence fresh investigations were being spearheaded by Kasozi who is alleged to be under the influence of city lawyer, David Mpanga and Deputy Governor, Louis Kasekende.