EDITORIAL: Munyagwa’s attempts to prematurely exonerate BoU, fall short of the “high standards of accountability and transparency” professed by FDC, his political party

Two of the major functions of the Parliament of Uganda are: passing laws for the good governance of Uganda and scrutinising government policy and administration through, among others methods, ensuring transparency and accountability in the application of public funds.

It is largely for this purpose that the Committee on Commissions, Statutory Authorities and State Enterprises, (COSASE) was set up. COSASE itself is one of the three Public Accounts’ Committees (PAC), the other PAC Committees covering the Central Government and Local Government. 

It is therefore surprising and disappointing when the Chairman of COSASE and Kawempe Division South Member of Parliament, Hon. Munyagwa Mubaraka Serunga (FDC) is the same person trying to frustrate attempts by Parliament to hold Bank of Uganda officials implicated in the irregular closure and sale of 7 defunct banks to account.

It has been reported that Munyagwa is trying to assist Bank of Uganda officials to account for UGX478.8 billion, the central bank said it injected into Crane Bank between 20th October 2016 and 25th January 2017, but could not account for, when asked by Parliament to do so.

A 20^th December 2018 audit by the Auditor General ordered by COSASE, then chaired by Munyagwa’s predecessor, Bugweri County, found that out of the UGX478.8 billion, USD53.1m sent by Telegraphic Transfer from BoU’s Citi Bank Account and UGX77.5bn in cash from CBL currency centres to Crane Bank’s 46 branches- altogether an equivalent of UGX270 billion could not be traced to its final destination. Parliament asked BoU to provide this accountability before closure of the probe, but BoU officials failed to do so.

“I cannot confirm that the funds were withdrawn by bonafide account holders at the respective branches because the daily teller transaction reports provided (by BoU) did not indicate the customer account numbers and customer names,” observed the Auditor General, in his confidential report, titled: “Special Audit Report on the UGX478bn injected into Crane Bank by Bank of Uganda” and dated February 2019.

Crane Bank shareholders, appearing before parliament told MPs that they did not believe their bank was that much undercapitalized and therefore did not need the entire UGX478.bn, raising the possibility that the missing UGX270 billion could have ended up in private pockets.

Joseph N. Biribonwa, the Crane Bank Chairman Board of Directors told MPs whereas a forensic audit report by PriceWaterhouseCoopers, showed that their bank had “a capital gap of UGX 130 billion” “when BOU took over management it spent UGX478 billion.”

“If CBL was undercapitalized to the extent claimed by BoU, then the assets of CBL would not have increased the assets of DFCU from UGX1.8 trillion to UGX3 trillion. This was an increase of 67% in the assets of DFCU,”said Biribonwa.

This anomaly was made worse by Crane Bank Statutory Manager’s failure to ascertain the liquidity position of Crane Bank during statutory management period since the audited Crane Bank annual report and financial statements for the period starting 1st January 2016 to 25th January 2017 were not submitted to BoU by KPMG, the external auditors, for nearly two years. It is these documents that Munyagwa is trying to assist BoU to present to parliament several months after the closure of the COSASE probe.

Analysts believe that to abet this anomaly, Munyagwa on Tuesday, 28^th May 2019, hastily named a select sub-committee to probe what he says is “unfinished issues” in the BoU probe. The five-member committee is headed by his vice chairperson, Mr Ibrahim Kasozi of Makindye East Constituency.

The above subcommittee then went on to meet with BOU officials led by the deputy Governor, Dr. Louis Kasekende, and tasked them to respond to outstanding Auditor General’s queries, a move that some of the MPs have interpreted to mean, re-opening the probe that was concluded by then COSASE chairman and Bugweri County MP Abdu Katuntu.

Katuntu in his February 21 report found BoU’s closure of 7 defunct banks to be severally in breach of the Financial Institutions Act 2004, under which the same banks were closed. The Katuntu committee among other recommendations asked that the named errant BoU officials be held criminally liable and also proposed several reforms in the governance of the central bank.

The committee also recommended that the shareholders of the closed banks be compensated for the losses because BoU officials did not follow the due process.

Thankfully, Rt. Hon. Rebecca Kadaga, the Speaker to Parliament has since said the attempts by Munyagwa to restart the probe is duplicitous, especially when government has not formally responded and or taken action on the recommendations of the first probe.     

 Zero-tolerance to corruption and elimination of political patronage and associated political corruption is one of the core nine (9) principles on which the Forum for Democratic Change (FDC) – Munyagwa’s party stands. The party says it prides itself in “instituting high standards of accountability and transparency for political leaders and public officials.”

Certainly Munyagwa’s actions do not reflect these high standards and FDC should bring him to order.