On this day, 28th November, 2017 following several complaints about the irregular closure of several commercial banks by Bank of Uganda, the Public Accounts Committee on Commissions, State Authorities and State Enterprises (PAC – COSASE) vide letter requested the Auditor General (OAG)to undertake a special audit on the closure of 7 commercial banks by the Central Bank.
The seven banks are: Teefe Trust Bank, International Credit Bank, Cooperative Bank, Greenland Bank, Global Trust Bank, National Bank of Commerce and Crane Bank Limited.
Bank of Uganda tried and failed to block the audit and following the intervention of the Speaker of Parliament, Rt. Hon Rebecca Kadaga, the Audit by the OAG started. PAC-COSASE would later re-convene in October 2018, to consider the report’s findings.
The OAG discovered a lot of rot at the central bank characterised by lack of systems and procedures in closing and selling off banks, insider dealing and failure to comply with the Financial Institutions Act (2004) among many other legal and corporate governance breaches.
For example, it was discovered that assets (loans) belonging to International Credit Bank (ICB), Greenland bank, Cooperative Bank Assets (loans) amounting to Shs135 bn were sold to a one, M/S Nile River Acquisition Company at $5.25m (Shs8.9bn), causing a loss of Shs126 bn. The loan portfolio included Shs34 bn of loans that had valid, legal and equitable mortgage supported by proper legal documentation.
According to the OAG, the UGX8.9bn sale price, represented 26% of the total secured loan portfolio and 7% of the total loan portfolio!
In another shocking discovery, the Auditor General discovered that Bank of Uganda had not carried out any valuation of Crane Bank, as required by Section 95 (2) (a) and (b); and 95 (3)(a) and (b) but instead relied on dfcu’s valuation, raising questions as to how a seller can rely on a value set by the buyer.
As a result, the OAG found that BoU sold Crane Bank to dfcu bank at a bargain purchase price of Shs200bn payable over a period of 30 months. He also found that BoU either negligently and or intentionally failed to charge dfcu interest on this deferred payment, causing the tax payer a loss of UGX39.5 billion.
Uganda: Shs1.2 trillion approved to facilitate merged agenciesThe Auditor General (AG) Mr John F.S Muwanga, also reported that out of UGX478.8bn that BoU claims was used to recapitalise Crane Bank, he couldn’t confirm that money amounting to UGX270bn actually went to bonafide beneficiaries.
These are just a few of the glaring acts of corruption, misuse of office and gross negligence uncovered by the OAG and PAC-COSASE.
The MPs in their February 2019 report, recommended that owners of the closed banks be compensated to the “commercially fair extent” possible for the ”financial loss occasioned.” They also asked that “all BoU officials who failed to properly execute their duties in accordance with the law should to be held responsible.”
But it is now going up to a year and despite several media reminders by the public, members of parliament, including the Speaker herself, no single action has been taken on these errant BoU officials.
The probe into former BoU Executive Director, Bank Supervision, Justine Bagyenda’s alleged illicit wealth by the Inspector General of Government, has never seen the light of day.
As the entire world prepares to celebrate the Global Anti-Corruption Day on December 2019, a befitting gift to Ugandans and the rest of the world by President Museveni, would be taking action on the recommendations of PAC-COSASE.
A shakeup of Bank of Uganda, would be a big message to all the corrupt that no matter who you are, there will be consequences for corruption.
