US report pins BoU over corruption, demands for radical reforms

A hard-hitting report by the United States State Department has raised red flags over corruption and abuse of office at Bank of Uganda and recommended that massive reforms be implemented to save the central bank from potential collapse.

The Country Report 2019, section 4: titled Corruption and lack of transparency in government, also questions why the government did not take the initiative to punish ex-BoU Deputy Governor Louis Kasekende and the former Executive Director for Commercial bank Supervision Justine Bagyenda after the duo was named during corruption investigations by Parliament.

The Report referenced investigations by Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises(COSASE) that concluded that there was “irregular conduct” by officials at Bank of Uganda during the processes that led to the closure of seven commercial banks.

“By year’s end there were no criminal proceedings or resignations resulting from the COSASE report,” asks the report regarding government failure to punish BoU officials who  were named over the irregular closure of commercial banks.

The US report questions why shareholders of Crane Bank Limited like city businessman Sudhir Ruparelia have not been compensated yet the COSASE report clearly faulted BoU over the bank’s closure and demanded that the shareholders be compensated.

MPs on the COSASE Committee were outraged after finding out that the Central Bank allegedly injected Shs478.8 billion   into the central bank before it was sold to Dfcu bank without valuating its assets and liabilities.

To forestall further chaos at the central bank, the US State Department Report wants the government to amend the BoU Act to bring on board radical reforms to bolster the fight against internal corruption at BoU and also trim the powers of the Governor and Deputy Governor to avoid conflict of interest.

The United States Report particularly demanded that Section 7(1) (a) and (b) of the Bank Of Uganda Act be amended to remove the possibility of conflict of interest by having the Governor and Deputy Governor as Chairperson and Deputy Chairperson of the BoU Board respectively.

Section 7 of the BoU Act says that the governing body of the bank shall be a board of directors consisting of (a) the governor, who shall be the chairperson and (b) the deputy governor who shall be the deputy chairperson.

The State Department Report also wants amendments that will make BoU officials personally liable for acts of corruption.