Bank of Uganda Governor Emmanuel Tumusiime Mutebile and his outgoing Deputy Louis Kasekende are under fire after it was revealed that the central bank has posted mind-boggling losses amounting to over Shs2 trillion over the past five years.
To cover up the losses, investigations by Eagle Online discovered that the outgoing Deputy Governor Kasekende took a decision of closing some central banks and using the money recouped from the closed banks’ assets to offset the loans.
Our investigations also reveal that Deputy Governor Louis Kasekende largely contributed to the debt crisis at the central bank when he unilaterally took a decision to invest billions of dollars in Uganda’s reserves in Europe, a move that badly backfired as the interest rates there were negative.
This particular controversial move by the embattled outgoing Deputy Governor Kasekende was confirmed by Bank of Uganda(BoU)’s Executive Director for Research Adam Mugume, who told Parliament’s Finance Committee last month that the central bank had indeed invested in reserves in Europe, a decision that was not well-thought, ultimately inflicting further losses on the central bank.
To offset the losses, Mugume suggested to MPs that the central bank should be re-capitalised with a Shs 250billion kitty to help it remain afloat as it risked going burst under the weight of debts, a worst case scenario that would plunge the economy into disarray.
However, with unanswered questions over how BoU used the She200 billion that was advanced to it for re-capitalization in the FY2018/19 ,Mugume faced a tough time convincing MPs who demanded to know the role that Kasekende, as BoU Deputy Governor, played in investing tax payers money in risky markets in Uganda.
Furtrermore,a broad inquiry into Bank of Uganda’s closure of seven commercial by Parliament’s Committee on Commisisons,Statutory Authorities and State Enterprises(COSASE) found that the closure of the banks was irregular, noting that procedures were not followed by the top technocrats at the bank.
Investigations by this website have also discovered that in 2017, BoU’s losses took a turn for the worse as the central bank hired dubious law firms at astronomical amounts of money to help defend the illegal 2016 closure of Crane Bank.
Mr Sudhir Ruparelia, a City businessman and a major shareholder in the closed Crane Bank, had sued the Central Bank over his bank’s closure and has since won key legal battles despite the central bank spending billions of shillings to pay syndicated law firms.
The Cosase report also noted that billions of shillings were paid by the central bank to private lawyers as legal fees, even as BoU maintains a fully-fledged legal department, raising questions over the possibility of collusion between Deputy Governor Kasekende and the dubious city law firms.
The losses that have hit the central bank are one of the reasons that the World Bank has demanded that stringent measures be implemented under a unit called the Bank Resolution Unit to ensure that no loopholes are exploited by unscrupulous officials in future.
State Minister for Finance(Planning) David Bahati told MPs this week that the central bank last made a profit in 2007,noting that the bank has been reeling from losses over the course of the past 13 years.