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 World Bank wants Mutebile’s powers trimmed as reforms take shape at BoU

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World Bank has in a wide range proposals suggested to government to trim the many powers Governor of Uganda enjoys.

Currently, Governor Emmanuel Tumusiime Mutebile is holds three titles at BoU. He is the governor, chairman of the board and chairperson of the disciplinary committee.

The redrafting of rules follows the recent flaws exhibited in the sale and closure of the seven defunct banks in Uganda.

The Constitution of Uganda under article 161 (40), provides that the governor and deputy shall be chairperson and vice chairperson of the board, however under the new rules, the position of chairperson and vice chairperson of the Board will be separated from the position of chief executive officer (CEO) and his deputy after Mutebi and Kasekende failed their mandate of adequately the management in the process of liquidating the financial institutions.

It is also averred that BoU will base on the recommendations made by Parliamentary Committee on Commission, Statutory Authorities and State Enterprises (COSASE) after thorough investigations into the closure and sale of banks.

Recently Finance Minister, Matia Kasaijja revealed that BoU with assistance from World Bank, they are in the process of putting up bank resolution unit they will be responsible implementation of the resolution framework.  Under this, the framework will cover the operation of the liquidator, maintenance of financial ledgers and records.

Government has also put a special committee that will draft financial sector crisis management plan.

In 2018, Parliamentary Committee on Commission, Statutory Authorities and State Enterprises (COSASE) led by the then chairperson, Abdul Katuntu embarked on investigating into the closure of banks after Auditor General’s (AG) report which showed irregularities into the sale and closure of banks.

The closed banks include Teefe in (1993), international credit Bank ltd in 1998, Greenland bank (1999), The Co-operative Bank (1999), National bank of commerce 2012, Global Trust Bank (2014) and the dubious sale of Crane Bank Ltd to Dfcu bank in 2016.

In its findings, COSASE established that, some banks including Crane Bank Ltd were liquidated on telephone calls without thorough evaluation. Crane Bank Limited was in 2016 put under receivership and later sold to Dfcu ta Shs 200billion who value was to be recovered from the bad book. Crane bank had initial capital of Shs478 billion.

When BoU sold CBL to Dfcu Bank it also transferred to the same bank freehold properties of CBL/Meera Investments Limited without following the law. CBL was renting the properties that were wrongfully transferred to Dfcu Bank.

In May last year, BoU would controversially extend the duration of Dfcu bank’s possession of freehold properties of Meera Investments Limited for extra 24 months after the first 34 months elapsed, having transferred CBL to Dfcu Bank on January 25, 2017 on account of undercapitalization.

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