Connect with us

Commercial Justice

Firms linked to Louis Kasekende’s wife got Shs1.4bn BoU deal to audit Crane Bank



Conflict of Interest: Kasekende refused to say if he had declared the possible conflict of interest

As Parliament’s COSASE committee starts probing Bank of Uganda over the way it handled the statutory seizure and or subsequent disposal of the assets and liabilities of seven defunct banks, it has emerged that two firms linked to Dr. Louis Kasekende’s wife were awarded a Shs1.4bn deal to carry out a forensic audit of Crane Bank, raising possible conflict of interest on behalf of Kasekende.

Dr. Kasekende the BoU Deputy Governor and disgraced former Executive Director, Bank Supervision, Mrs. Justine Bagyenda closely managed the sale of Crane Bank, with advice from MMAKS Advocates, the BoU external legal advisors.

PriceWaterhouseCoopers, a company where Edith Nsubuga Kasekende, the wife to Dr. Kasekende worked for 12 years and is now one of her prime clients at her new company, Inspire Talent Uganda, was awarded a Shs1.4 billion deal to compile an inventory of Crane Banks assets worth Shs345 million.

Inspire Talent is owned by Edith Kasekende as well as Stewart Kasekende and Vivienne Kasekende, who each own 250 shares. The trio are Louis Kasekende’s wife, son and daughter respectively.

Shortly after, they were also awarded another Shs936.5 m deal to do a forensic review of Crane Bank. On the same deal, they were advised by Bowmans (AF Mpanga Advocates) – another of Edith Kasekende’s clients. Bowmans would later be handpicked by BoU to represent Crane Bank (in Receivership) in a case against Sudhir Ruparelia but were later dropped after court found them conflicted having represented Sudhir in related cases.

The Leadership Code 2002, describes conflict of interest a situation in which “a leader deals with a matter in which he or she has personal interest and where he or she is in a position to influence the matter, directly or indirectly, in the course of his or her official duties.”

The Code also describes personal interest to also include “the personal interest of a spouse, child, dependent, agent, or business associate of which the leader has knowledge or would have had knowledge if he or she had exercised due diligence having regard to all the circumstances.”

We contacted Dr. Kasekende, both on email and Whatsapp messaging service to ask him whether at the time BoU awarded PwC and Bowmans the mega-deals, he was aware they were doing business with his wife and whether he thought this constituted conflict of interest, but he did not respond to our queries.

He also did not respond to our queries regarding the fact that his name was came up in a separate FBI investigation as having been involved in a plot to sell off Crane Bank to a Chinese conglomerate days before BoU took over Crane Bank.

This site also tried to reach out to PwC’s Country Senior Partner Francis Kamulegeya on if he was aware of this possible conflict of interest and if it was declared, but he too declined to respond- in what has now become a typical default response for all the companies mentioned in the controversial sale of Crane Bank.

These findings raise further concerns regarding the lack of a structured process to dispose of troubled banks, as raised in the Auditor General’s report. This, lack of a clear procedure, compounded by BoU’s inability and or refusal to hand over vital documents regarding the contested sale, the AG said, raises integrity and value for money questions.

Multi-interests: Mpanga’s Bowmans Uganda is retained by dfcu Bank but has variously worked with BoU on the Crane Bank issue, raising questions is this gave dfcu undue advantage in the Crane Bank acquisition and to whose benefit was this at BoU

For example, in particular reference to how the individual law firms and audit companies, to whom BoU paid a total of Shs12.2 billion in “intervention costs”, the AG said, it was difficult to establish if value for money was ever achieved.

“In respect to intervention costs, my scope did not extend to assessing how the service providers were appointed by and evaluating the value for money for the services provided. Therefore I could not justify the costs incurred,” he wrote.

Another major point of possible conflict of interest has been uncovered surrounding Bowmans and Sebalu & Lule Advocates- who are both dfcu Bank’s lawyers, who later bought Crane Bank, but have been variously engaged by BoU on several issues regarding the same sale where dfcu is a prime beneficiary. For example, Bowman’s involvement in the audit of Crane Bank, before it went on sale, could have given dfcu an undue advantage over the other bidders.

It is said these law firms could be working closely with their Godfathers at BoU to cash big on the Crane Bank sale, through exorbitant invoices after all, all costs are recoverable from Crane Bank shareholders.

For example, MMAKS, who are retained Bank of Uganda lawyers, are said to have invoiced BoU a total of USD1.4m (Shs5.4bn) as commission on recovered moneys from Crane Bank debtors, something which riled Governor Mutebile who described the fees as unreasonably, ”exorbitant” forcing him to on March 27th 2017, to write to BoU’s legal counsel, a one Margaret Kasule over the matter.

”M/s MMAKS Advocates are the Bank’s principal external lawyers engaged on a retainer basis, for which the Bank has enjoyed a long term relationship for quite some time. I, therefore, expect that their charges should be reasonable based on negotiated hourly rates, actual costs incurred and reimbursable fees rather than basing their fees as a percentage of the claim,” wrote Mutebile.

As the parliament probes into these issues, we expect that the code of silence maintained by all the named companies in this sale will perhaps be broken, giving the public some clear insights into what actually went wrong and who benefited from what.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *