Auditor General blasts BoU for lack of Shs 478b accountability ‘spent’ on Crane Bank - Daily Post Uganda

Auditor General blasts BoU for lack of Shs 478b accountability ‘spent’ on Crane Bank

Auditor General John Muwanga, Governor Emmanuel Mutebile, and City Tycoon Sudir Ruparelia

PARLIAMENT: The Auditor General John Muwanga has confirmed that the Bank of Uganda (BoU) has no accountability for Shs478 billion officials claim to have transferred to Crane Bank account as liquidity support before selling it in January 2017 to its rival DFCU Bank at only Shs200 billion paid in installments and interest free.

Days ago, MPs on parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) ordered the Office of the Auditor General to carry out a special audit of the Shs478 billion to ascertain how the money was used. This was after BoU officials failed to produce documents related to how the money was used during the Crane Bank takeover between October 20, 2016 to January 25, 2017. Now in the latest report handed over to COSASE Chairman Abdu Katuntu by the Auditor General, there is no schedules on the accountability of the money.

Sudhir Ruparelia, the majority owner of defunct Crane Bank Limited, while appearing before COSASE, said the money might have been embezzled by BoU officials as there is no clarity on what it did. BoU officials are expected to respond to the report tomorrow. Crane Bank Limited only needed Shs157 billion to remain operating, but former director of bank supervision at BoU Justine Bagyenda worked hard to ensure that this didn’t happen as she rushed to DFCU Bank on phone to offer them Crane Bank Limited. DFCU Bank officials were last week kicked out of parliament for failure to produce all documentation related to the sale of Crane Bank Limited.

Meanwhile MPs investigating the closure of seven banks on Monday kicked out BoU officials over the poor presentation of responses to queries raised by shareholders who said last week that their banks were closed unfairly even as most of them had injected in some of the required capital, as undercapitalisation was a major reason for their closure. MPs who sit on parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE), were shocked as BoU’s executive director of bank supervision Dr. Tumubweine Twinomanzi presented the responses causally without addressing issues as presented by shareholders of the defunct banks.

The BoU officials who included both the management and board members had come prepared to respond to issues raised by seven closed banks such as Teefe Trust Bank, Greenland Bank, International Credit Bank, Cooperative Bank, National Bank of Commerce, Global Trust Bank Uganda and Crane Bank Limited. The banks were closed between 1993 and October 20, 2016.

The BoU officials will again defend themselves before MPs tomorrow. For instance, shareholders of Global Trust Bank in their presentation to COSASE said they injected in some of the capital required but BoU still closed their operations. “Our total direct cash equity investment as at July 25th, 2014 was US Dollars 35.2 million or Shs132 billion at today’s exchange rate.

The committee is kindly requested to note that we injected over US$10.5 million (about Shs39.5 billion) between January 2013 and 31st May 2014. It is also important to note that the last equity capital investments were made on May 8, 2014,” Bayo Folayan the former Managing Director explaining the financials of Global Trust Bank Uganda (GTBU) at the time it was closed to COSASE on December 14, 2018. Responding to the above concern by GTBU Dr. Twinomanzi, could only say that the bank was closed because it was continuously making losses to the tune Shs60 billion at closure, the response MPs said was not convincing enough as it did not address the above queries. MP Moses Kasibante asked BoU officials why they failed to save the bank and several others. He equated BoU to a doctor who does not treat a patient but instead looks for the ways of killing him off. “Why didn’t you help these banks instead of closing them,” he asked. It is from here that MP Medard Ssegona, asked that BoU be given 10 minutes to sort out themselves but MP Nathan Byandala interjected, saying the officials should be send away so that they come with all required documents on Tuesday but particularly also respond to specific issues raised by shareholders of banks.

COSASE Chairman who sustained the MPs’ request told BoU officials to come well prepared tomorrow. Monday’s meeting was supposed to be an exit meeting for BoU officials, having been postponed last Friday. The committee is supposed to write and hand in a report to the Speaker of Parliament by February 22, 2019 as the new COSASE Committee led by MP Mubarak Munyagwa and is supposed to handle some of the issues as well.

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