Investigations into Bank of Uganda’s (BoU) alleged irregularities in the closure of seven commercial banks have started with Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) already finding it difficult to access all documents required to help them quiz BoU officials over irregular operations in the mysterious and controversial sale of the banks as established by a recent special audit report of BoU on defunct banks.
Auditor General John Muwanga’s special audit report established alleged corruption and suspicious activities at BoU, including unaccounted for money, missing land titles, disputed payments to external lawyers and customer loans that were inherited from closed banks and then sold at undervalued rates without justification, thereby misappropriating taxpayer’s money to the tune of Shs478 billion.
The committee has summoned various individuals including governor of BoU Emmanuel Tumusiime-Mutebile, his deputy Louis Kasekende and others including former BoU director in-charge of banks supervision Justine Bagyenda. Tumusiime-Mutebile and Kasekende appeared before the committee on Monday for the second time and were again sent back to bring all documents before MPs can begin questioning them.
For the two weeks that the committee has interfaced with BoU officials, they have had to send them back to collect all the documents used in the transactions of the banks, particularly those of Teefe Trust Bank, which BoU has failed to present on account that there law did not require them to have an inventory of the sold assets and liabilities, something that legislators on Cosase have brushed away.
It should be remembered that when Cosase on November 28, 2017 requested Mr. Muwanga to undertake a special audit on the closure of commercial banks, Kasekende worked so hard to frustrate the investigations to the extent that he approached the Solicitor General, Francis Atoke, who advised him not to cooperate with Mr. Muwanga and his team of auditors. It would take the intervention of the Speaker of Parliament, Rebecca Kadaga, for the auditors to begin investigating BoU senior staff. Kadaga argued that there is no any government institution that cannot be investigated.
However, Mr. Muwanga and his team, as cited in his report, found it difficult to get all the documents concerning the sale of the commercial banks. Dr.Kasekende and Ms Bagyenda, the two officials who spearheaded the sale of commercial banks, inside sources say, have intentionally hidden the documents to frustrate the MPs just as they frustrated the Auditor General.
The committee specifically requested the Auditor General to provide assurance on; the status of the banks at closure, cost of liquidation, status of assets and liabilities of the banks from closure to date, non-performing assets, non-recoverable assets and liquidators.
On Teefe Bank he said: “I was not availed with the inventory report, loan schedules, customer deposit schedules and statements of affairs of Teefe Trust Bank to enable me to fulfil the specific audit objectives. Due to this limitation, I could not assess the status of the assets and liabilities of Teefe Trust Bank from closure to date.”
Mr. Muwanga in his report would go on to say: “I noted that BoU did not carry out a requisite valuation of assets and liabilities of the three defunct banks (Global Trust Bank, National Bank of Commerce and Crane Bank Limited) resolved using the purchase and assumption arrangement at the time of signing the P&A. In absence of the valuation and or documented evaluation of alternatives and assumptions used, I could not establish how the terms for the transfer of assets and liabilities in the P&A were determined.”
Mr Muwanga’s dilemma as read above was caused by Kasekende who didn’t like anything to do with the investigation of BoU. In an April 19 letter to the Attorney General, he said the Auditor General had no authority to audit the Central Bank over its role in the closure of seven commercial banks, arguing that it would contradict the subjudice rule since the cases related to the collapse of CBL were before the High Court.
Dr Kasekende also believes the MPs have no powers to question him and BoU senior staff as regards the controversial sale of banks. He wants to derail the process so that the legislators lose interest or ignore certain issues related to the liquidation and sale of some of the banks. Buying time works well for him.
Sources further say Kasekende is dragging COSASE so that the lifespan of the current committee ends without a report and that would make it had for a new committee to commence investigation on BoU.
Insiders also say Kasekende is not happy that BoU’s new Executive Director of Supervision, Dr. Tumubweine Twinemanzi, who promised MPs last Monday that they would bring all required documents. It is on record that being new, Twinemanzi has little knowledge on the transactions that took place and had some owners of the banks ran to court for redress.
Unlike Tumusiime-Mutebile, Kasekende Bagyenda and Ben Sekabira are the key targets of the investigation as the two officials were the most involved in the sale of banks. Remember that Tumusiime Mutebile blamed the mess in the local banking industry on Bagyenda to the extent that he sacked her. Recent leaked documents show Kasekende and Bagyenda transacting billions of shillings on their money accounts as well as owning properties in Kampala and Wakiso worth billions of shillings.
Last year, Amos Nzeyi, one of the shareholders and former chairperson of NBC, dragged BoU to Commercial Court for allegedly wrongfully closing his bank (NBC) in 2012. The assets of the bank were later sold to Crane Bank that also collapsed last year after becoming ‘significantly undercapitalized’. Nzeyi alleges that NBC’s financial health had stabilised by the time BoU closed it and now wants court to hold BoU for alleged failure of supervising the banking sector.
Meera Investments has also dragged Dfcu Bank to the Land Division of the High Court, seeking to reclaim its 46 branches which it says were acquired illegally following the dissolution of Crane Bank. The closure of Crane Bank saw Dfcu bank become the third biggest bank after acquiring 46 branches from the financial institution.
Meera, in its law suit, claims that at the time BoU took over the management of then Crane Bank in October 2016 before its eventual sell to DFCU, it was the leaseholder of the suit properties and paying US$6,000 every beginning of the year.
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