Appearing yesterday, December 3rd 2018 before Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE), today, Mrs Justine Bagyenda, the sacked former Executive Director, Banking Supervision, told MPs that BoU did not carry out a valuation of the assets and liabilities of the banks to be sold, but rather, relied on what she called “desktop valuation’ by JN Kirkland & Associates to determine the value of the assets sold.
Over and above failing to present the key documents like minutes leading to the sale and progressive reports, Bank of Uganda officials further shocked the nation when they said that they cannot trace the offices and or address of JN Kirkland Associates, a law firm that they hired for consultancy services during the process of selling seven defunct banks.
Investigations by this website however show that Bank of Uganda officials, most of whom are under oath are probably lying through their teeth, to the committee because the law firm is one of the most prominent lawfirms in the country. Its founders, Kakembo Katende and Jackie Naluyima Katende are also prominent lawyers in town.
If BoU officials were really looking for JN Kirkland, they would cross check with Uganda Law Society which has a list of all members or Ministry of Justice which annually publishes a list of all licensed law firms. But they also could have checked their website http://www.jnkirkland.com for their contacts and address- in any case, JN Kirkland’s offices are in Muyenga, by the roadside, just before Hotel International.
Additionally, Robert Kirunda who between November 2005 to November 2011 was a Senior Legal Associate at JN Kirkland & Associates is Mrs Justine Bagyenda’s lawyer and surely has contacts of his former bosses.
Kirunda, who is a founding partner at Kirunda & Wasige Advocates, last week represented Bagyenda in parliament and told the legislators that Bagyenda was away in America and wouldn’t be able to make it to the probe committee hearings for some ten days.
But who is really JN Kirkland and what is their role in this scandal?
Founded in 2005, by Kakembo Katende and Jackie Naluyima Katende, JN Kirkland, according to their website, are specialists in mergers & acquisitions, banking and finance, securities and capital markets as well as transaction advisory work.
Kakembo Katende is a graduate of Makerere University and Harvard Law School where he obtained a Master’s degree and has practiced in the US before coming to Uganda. Simialarly, Jackie Naluyima Katende is also a Makerere University graduate and also holds a Master’s degree from Columbia Law School in New York.
The details of how and when BoU arrived at choosing JN Kirkland as an external consultant on an exit strategy from the 3 defunct banks are scanty, but available information show that it is JN Kirkland who identified a US company, Octavian Advisors, a US hedge fund, said to be specializing in distressed investments; itself founded in 2005, who agreed to buy the bad loan book, through M/S Nile River Acquisition Company (NRAC), which is said to have been incorporated in Mauritius on the 26th September 2007.
Accordingly, NRAC on 24th November 2007 bought the assets of International Credit Bank (ICB), Greenland bank, Cooperative Bank Assets (loans) amounting to Shs135 billion at $5.25m (Shs8.9bn), causing a loss of Shs126 billion?
According to the Auditor General’s report, the loan portfolio included Shs34b of loans that had valid, legal and equitable mortgage supported by proper legal documentation. The AG also said that the UGX8.9bn sale price, represented 26% of the total secured loan portfolio and 7% of the total loan portfolio.
The Auditor general further noted that BoU did not furnish auditors with bid documents that guided the procurement of NRAC, and therefore, it was impossible to establish the process followed to identify this company and if value for money had been obtained.
Up until today, vital documents relating to the bidding process, how they arrived at NRAC as the final buyer and how the actual price was arrived at are all missing. It was only until yesterday that Bagyenda volunteered some information that JN Kirkland only did what MPs later termed as “desktop estimation.”
In what appears to be a carefully constructed scheme, immediately after acquiring the assets at a give-away price, on 31st of December 2007, NRAC executed a power of attorney to M/S Sil Investments – a company only registered in Uganda just a month before, on 16th November 2007, to collect debts on its behalf!
This looks very irregular, who would give a 1-month old company a humongous task to recover Shs135bn?
Investigations by this site show that SiL Investments belongs to 3 people- a Nanyonga Evelyn, Kafuko Agatha and Muliro Peter. The trio are not registered court bailiffs, nor is Sil Investments licensed as a bailiff company.
More suspiciously, the registered address for Sil Investments, this website has also established was Greenland Towers, the then registered offices for JN Kirkland & Associates. One of the lawyers who represented Sil Investments on several of the recovery cases, intimated to this reporter that all legal instructions from Sil originated from JN Kirkland & Associates’ founding partner, a one Kakembo.
When this website tried to contact Mr Kakembo on phone, he did not pick our calls. We reached him via his known WhatsApp number, but he declined to respond, despite having read our query.
Interestingly, Octavian Advisors closed in 2012, over what it said was a difficult operating environment. Richard Hurowitz, Octavian’s founder is also a Columbia Law School alumni and it appears this is where he met the JN Kirkland & Associates founders.
It is therefore not surprising that Bagyenda has decided to hire, Kirunda, a lawyer who previously worked for JN Kirkland; he certainly knows quite a lot about the case in question- bordering on conflict of interest.
Did BoU actually sell the banks to JN Kirkland?
But the major questions that MPs now need to turn their heads to, is, did JN Kirkland actually buy the bad assets for themselves through Sil Investments, but used Octavian Advisors and NRAC Company as mere smokescreens?
If so, was JN Kirkland working on its own or was it representing some powers that be in Bank of Uganda and if yes, who are these people? Did the officials at BoU, then deliberately under-price the bad assets of the failed banks so as to privately benefit once the recovery had been done?
Is this the reason why the files about the particular sale are missing?
Was this wheeler-dealing limited to only the three banks mentioned above, or did it affect all the banks sold by BoU?
To attempt to reach the bottom of these questions, it is important to understand who NRAC Company is and who are the people behind it?
Since NRAC was registered offshore, investigators and MPs may want to deeply look into who actually owns Sil Investments? The Financial Intelligence Authority, needs to track the recovered moneys paid to Sil Investments; where did they end up? Was the money actually remitted to Mauritius or did the money stay in Uganda and if it did, who had access to it?
Robert Kirunda, as a former Senior Legal Associate at JN Kirkland surely has some of these answers to these questions; the MPs only need to ask hard, next time he shows up in parliament.
But more importantly, he ought not to be representing Bagyenda, as he himself may at some point be required to be a witness to the probe.