Finance (35)

Bagyeda Faces 20 Years In Prison Over Money Laundering

Former Bank of Uganda director in charge of commercial banks supervision Justine Bagyenda faces 20 years in prison if it is proven that the billions she has amassed and hidden in different banks was laundered, Budadri West Member of Parliament Nathan Nandala Mafabi told journalists this week.

“The law we passed, states that whoever participates in money laundering has to be imprisoned for 20 years. That is why Bagyenda should have been in Luzira by now, and the law stipulates that the money she stole should be returned,” Mafabi told journalists.

Last month, leaked bank statements indicated that Bagyenda has Shs20 billions transacted and stashed in DTB bank, Centenary Bank and Barclays Bank. It is however not been revealed how the former supervisor got the huge sums. She has not come out to explain the matter.

“We are going to carryout investigations and we are going to deal with those banks because they have been doing illegal things with Bagyenda. Actually those banks should be closed because they have been involved in money laundering,” he said.

Barclays Bank and DTB came out to apologize to Bagyenda saying that the banking details were illegally leaked by their employees and promised to take punitive measures to the employees who Mafabi described as whistles and called for their protection.

“The whistle blower act states that a whistle blower is entitled to all the security of the state and of the organisation where he is employed. If they have been sacked, we are going to ask Bank of Uganda to employ them,” the opposition MP said.

Adding: “We are going to ensure the police protects them and President Museveni should also come out to protect them, unless he loves thieves like Bagyenda,”

Bagyenda was recently dropped by Bank of Uganda governor Emmanuel Tumusiime Mutebile is faulted for failing to supervise the banking sector leading to money commercial bank closing shop. She was at the apex of Crane Bank falling with speculators saying she witch hunted the private bank.

Gaps In Crane Bank Sale By Bank Of Uganda Revealed

Bank of Uganda’s takeover and eventual sale of Crane Bank, a commercial bank started in 1995 by businessman Dr. Sudhir Ruparelia, rocked the country late in 2016 and early 2017 leaving the banking sector panicking and uncertain.

A year later, the debacle is still shaking up the banking sector as the central bank, Crane Bank shareholders and dfcu bank the financial institution that bought Crane Bank from the receiver, Bank of Uganda take on each other in fruesome court battles.

The sale of Crane Bank to dfcu however left many Ugandan with questions as it was not clearly and thoroughly explained by the central bank. A leaked sale agreement between Bank of Uganda and dfcu however bares a few details and inconsistencies.

In this article published by CEO East Africa reveals gaps and mistakes made by Bank of Uganda its adventure of selling Bank of Uganda to dfcu. Read on.

We have all been told that Crane Bank was a very toxic bank whose bad debts had eaten into their core capital and were therefore insolvent, thus justifying its takeover by the central bank in October 2016 and subsequent sale to Dfcu in January 2017.

In technical terms, Bank of Uganda told us — and we believed — that “Crane Bank’s Core and Total Capital was eroded to below the minimum on-going Capital Adequacy ratios of 8% and 12%, effectively making Crane Bank undercapitalized.”

But up until now, no one has satisfactorily explained why the very rushed sale but most importantly how a very troubled bank could single-handedly help Dfcu Bank attain a 396% growth in net-profit in just 5 months of acquisition.

It should be recalled that Dfcu took over Crane Bank on January 27, 2017, and by end of June 2017, Dfcu reported in their half-year results that profit for the period had grown five times from UGX23 billion in the first six months of 2016 to UGX114 billion in the first half of 2017.

This is regardless of the fact that Dfcu’s expenses almost doubled from UGX48 billion to UGX91 billion in the same period.

Comparatively, other banks such as industry leader Stanbic witnessed an 11.07% decline in profit- from UGX107.3 billion to UGX95.42 billion. Bank of Baroda, also listed on the stock exchange and nearly as big as the pre-Crane Bank acquisition Dfcu, also reported a 33.21% decline in profitability to UGX16.70 billion in H1 2017 compared to UGX24.98 billion in the same period in 2016.

Surely there was something so good about Crane Bank so good, that all banks were rushing to buy it and even when Dfcu did the bidding and buying, the agreements were kept too secret- until they surfaced recently, with the help of a whistle blower.

UGX1.3 trillion for a price of UGX200 billion

Perhaps even more baffling is the fact that Dfcu was asked to pay a mere UGX200 billion for Crane Bank, for over a period of three years–money that Dfcu, at this rate, will make in just from merely the cash assets it acquired from Crane Bank.

While it is difficult to estimate the real value of Crane Bank as it was not listed on the stock market, using the 2013 sale of Dfcu Bank, the CEO East Africa team can estimate the worth of Crane Bank.

In May 2013, London-based private equity fund, Actis, sold a 45% stake in Dfcu at (USD43.2 million) to Rabo Development B.V. and The Norwegian Fund for Developing Countries (Norfund). This would roughly put the value of the entire Dfcu which at the time had Shs1.196 trillion in assets at about USD96 million.

Comparatively, Crane Bank, which at the time was UGX250 billion larger than Dfcu, with assets above UGX1.451 trillion should at least have been much more than USD100 million.

Selling Crane Bank at an equivalent of just USD55 million (UGX200 billion) three years later and moreover to be paid within a period of three years, was equivalent to the proverbial peanuts.

For this, Crane Bank’s former shareholders, want the central bank which took over and in their words, “fraudulently sold” their bank, Dfcu bank and its laweyers who partook in the said “fraud’ be brought to book.

Collusion to undervalue assets

The shareholders, we understand, believe there was a “deliberate and fraudulently ploy to over-estimating the problems of the bank so as to capture it and sell it off for a fraction of its worth.”

An insider close to the case says this explains why the shareholders were never given options to redeem their bank when they had all the means to and this was characterized by a hurried sale- in less than two weeks, without even a market valuation of the assets of Crane Bank prior to their transfer to Dfcu as required by law under the FIA.

“The Central Bank had a year within which to take action as a receiver but they were in a hurry to sell. The shareholders also want to know why some assets were deliberately under-valued during the sale of Crane Bank and once they were in Dfcu’s hands, their value immediately appreciated,” said the source.

For example, the shareholders claim that at the time of takeover by Dfcu, the branch network valued at only UGX10 billion but “within just days of taking over the assets, Dfcu revalued the same at UGX47 billion; showing an overnight discrepancy of UGX37 billion given to Dfcu.

“This undervaluation benefited Dfcu and Bank of Uganda officials (as well as their legal advisors) on this transaction,” contend the shareholders.

Massive UGX600 billion suit to be brought against BoU, Dfcu and lawyers

According to other sources close to the suit that is in the works, the above issues form part of the crux of the multibillion case.

This follows the surfacing a the prior top secret agreement signed between Bank of Uganda and Dfcu on January 27, 2017.

The BoU Governor, Tumusiime Mutebile, and Margaret Kasule, a legal counsel, signed on behalf of the central bank, while Juma Kisaame and William Sekabembe, the Dfcu managing director and executive director, respectively, signed on behalf of Dfcu.

So secretive was the deal that the contract itself, mentions nothing about the sale price, payment terms and the nature and extent of the assets sold. The agreement however gives a blanket cover to Dfcu, should they be sued for anything arising out of the sale agreement, except for their own negligence.

Shareholder rights trampled upon as BoU illegally assigns UGX600 billion loans to Dfcu

Shareholders are to contend that while part of the contract states that BoU has “negotiated and concluded an arrangement in the interests of and for the benefit of the depositors and creditors of Crane Bank, with the purpose of releasing the receiver from depositors’ and creditors’ claims” the same contract ignored the interests of the shareholders.

“This is wrong because the Receiver is also obliged by law to also cater to the interests of the shareholders of Crane Bank. The nature, structure and detail of the agreement are directly intended to defraud the shareholders and to benefit DFCU and Bank of Uganda at the expense of the Shareholders,” observed the source.

Crane Bank’s shareholders are also riled that in the run-up to the sale of Crane Bank, BoU classified a set of Shs600 billion as bad loans and removed them from the list of Crane Bank assets to be sold.

BoU then made the shareholders of Crane Bank to pay for these loans out of their share capital and as a result of this transaction, the shareholders lost capital worth UGX350 billion (as payment for these loans). In addition the shareholders subsequently paid to BoU an additional amount of UGX23.5 (UGX85 billion) to make for some of these bad loans.

“By this arrangement, these non-performing loans were no longer the property of the property of Crane Bank (in receivership), but belonged to the shareholders who had paid for them with their capital contributions. Surprisingly, the non-performing loan book (which was not an asset on Crane Bank’s balance sheet) was also secretly transferred to Dfcu in this transaction,” said the source close to the shareholders and familiar with the pending suit.

“Double-dealing lawyers”

Also to be sued are the two law firms that represented BoU–MMAKS Advocates and AF Mpanga (BOWMANS) Advocates who, despite being legal advisors of BoU in this sale transaction, immediately became Dfcu’s legal advisors and “began to make collections for Dfcu on the same assets and portfolio they had just transferred to it.”

“This is evidence of collusion to defraud the tax payer and shareholders of Crane Bank,” said the analyst, adding: “This explains why the agreement is lopsided and in favour of Dfcu and completely against the interests of Crane Bank, BoU and Crane Bank’s shareholders.”

“They acted for BoU and DFCU to make money on both sides! That is illegal, fraudulent and unprofessional conduct. They have made billions of shillings in fees from both BOU and Dfcu. The money BOU has paid them is on account of Crane Bank’s shareholders. The shareholders intend to file a legal claim against these lawyers to recover all the legal fees that have been made on these illegal transactions,” said a source close to the case.

It shall be remembered that recently, the High Court of Uganda struck off the two law-firms from the list of BoU lawyers in the suit in which BoU and Crane Bank, brought against Sudhir and Meera Investments Limited- his property investment arm.

UGX1 trillion legal suits

What started off as a normal BoU takeover of a troubled bank, is not promising to be perhaps Uganda’s largest commercial case history with claims and counter-claims in billions of shillings.

It all started off with the main suit in which the Central Bank sued Sudhir and Meera Investments for Shs400 billion, prompting a counter-suit for USD8 million (UGX29 billion) for breach of clause 12 of the Confidential Settlement and Release Agreement (CSRA).

Additionally, he argued in the CSRA, the two parties (Sudhir and BoU) had agreed “not to sue, commence, voluntarily aid in any way, procure, instigate, prosecute or cause to be commenced or prosecuted against any other party or its related parties any action, suit or other proceedings concerning released claims, in Uganda or in any other jurisdiction.”

The main suit is yet to be heard, and Sudhir’s legal team has fired off a series of legal suits this time against Dfcu for trespassing on his 42 pieces of property, previously occupied by Crane Bank as well as for breach of contract. Both case are to the tune of over $20 million alone.

Should the UGX600 billion suit come to pass, claims and counter-claims on this case alone will be well over UGX1 trillion, a new record in Uganda’s commercial jurisprudence.

SOURCE: CEO East Africa

How Bank Of Uganda Sold Off Crane Bank At A Paltry Price

When Bank of Uganda sold off Crane Bank to dfcu bank early in 2017, the central bank never really revealed the worth of the transaction leaving the public to speculate. This didn’t go down well with the suspecting members of the public.

It raised many questions that were not really answered until almost a year later when the sales agreement between Bank of Uganda and dfcu leaked into the public domain and has been widely published by the media.

The agreement was signed by Emmanuel Tumusiime-Mutebile, governor Bank of Uganda and Juma Kisaame, the chief executive officer of dfcu bank on January 25, 2017. The two entities were aided by the respective legal teams to pull this off.

This happened a few months after the central bank had taken control of Crane Bank in October, 2016 citing mismanagement of the commercial bank by its owners led by businessman Dr. Sudhir Ruparelia and his family.

According to the sales agreement that leaked, dfcu was asked to pay a mere Shs200 billion for Crane Bank. It is widely believed that Crane Bank and assets were worth about Shs1.3 trillion. Crane Bank was founded in 1995 by Dr. Ruparelia.

Industry analysts have faulted Bank of Uganda for not only hurriedly selling off an indigenous bank but also doing it under unclear circumstances and excluding Crane Bank shareholders in the negotiations contrary to the financial institutions Act.

The shareholders of the Crane Bank included Dr Sudhir Ruparelia (28.83%), Ms Jyotsna Ruparelia (13.8%), their children Ms Sheena Ruparelia, Ms Meera Ruparelia and Mr Rajiv Ruparelia (1.99%), White Sapphire (47%), Jitendra Sanghani (4%) and Kampala businessman, Tom Mugenga (0.003%).

In the agreement, Bank of Uganda seemed to care more about depositors and creditors of crane bank. “The receiver (BOU) has negotiated and concluded an arrangement in the interests of and for the benefit of the depositors and creditors of Crane Bank Limited.” The agreement reads in part.

Financial sector analysts argue that the central bank disregarded a number of factors, breached several laws, and made a number of miscalculations before handing their Bank to DFCU. The agreement doesn’t list assets (outside branches) that dfcu was taking over.

As a result, CBL’s total assets worth Shs1.3 trillion were valued at only Shs10 billion by BoU’s accountants PWC. Dfcu’s half year profits rose from Shs23bn in the previous year to a whooping Shs114bn thanks to the Crane Bank takeover.

Now, the former shareholders of Crane Bank are seeking redress. “The nature, structure and detail of the agreement are directly intended to defraud the shareholders and to benefit DFCU and Bank of Uganda at the expense of the Shareholders,” the shareholders said in a complaint.

Should the shareholders go to court, it will add to a number of legal actions taken by both Bank of Uganda and former owners of Crane Bank. The battle ground remains in the chambers of the courts of law and for the presiding judges to determine.

Money Laundering Claims Haunt BoU’s Bagyenda

The recent months have left former Bank of Uganda director in charge of supervision, Justine Bagyenda naked and under public scrutiny after it was known that she has stashed billions of shillings in several local – DTB, Standard Chartered, Barclays and Centenary Bank.

The manner in which she transferred the money, let alone how she earned it, according to financial experts, breed suggestions that Bagyenda might have practiced money laundering, a dreaded vice in the banking business.

This, if true, experts say it is unfortunate because she was supposed to be the chief whip of the banking sector in the country. Last year during the much publicized Crane Bank scandal, Bagyenda was criticized for failing at her job after several commercial bank mysteriously closed business.

Bagyenda is reportedly hiding over Sh20bn in separate Banks in Uganda. This report by the CEO East Africa indicate that Bagyenda who owns Shillings and Dollar accounts in multiple local banks made several irregular transactions in an attempt many people would think was an attempt to cover up the source of the money.

The CEO Report reads in part:

For example, as of December 28, 2014, Bagyenda held a cash balance of $238, 563 on her Diamond Trust Bank US Dollar account.

From this account, she on December 29, 2016, made a fixed deposit of $1776, 717 which matured in December 2017. On maturity, she on December 29th 2017 topped it up and made another fixed deposit of $214,149 on December 29, 2017 at an interest rate of 3 percent.

This amount is set to mature on December 29, 2018, and she will make an interest of $5,536 after a tax deduction of $977.

Bagyenda has also been making Shilling based fixed deposits in the same bank.

For example in March 2014, she fixed Shs900,029,548 for 31 days, which matured on 26th April 2014. She later fixed some Shs568m in November 2014 for another 31 days.

In January 2015 and September 2017 she made other short term fixed deposits of Shs480,000,000 and Shs179.3 million respectively.

Bagyenda is said to hold another account in Standard Chartered.

It is however her outbound transactions at her two personal current accounts in Barclays Bank (Kampala Road) and Diamond Trust Bank that could give a crew to at least how Bagyenda invested her money, whose source is not yet clear.

A closer analysis of these two accounts, shows three patterns.

For example, on her DTB account, she would start by making various cash deposits (ranging between $5,000 to $50,000 or the equivalent in Shillings), then raise enough amounts to invest in fixed deposits.

She would then after making some gains in interest rate, eventually clear the accounts to third parties who are variously linked to real estate development. It is believed, the money at this point would be ‘cleaned’ in form of real estate.

On her Personal Current Account held at Barclays, in just a year–between August 2015 to September 2016–Bagyenda made 47 wire (RTGS) transactions to account No. 2120011273 in Centenary Bank, belonging to a one Kenny Muwonge in Centenary Bank.

In total Shs693 million was wired to Kenny Muwonge.

The money would be wired at regular intervals in tranches of between Shs10 million to Shs30 million and would almost be withdrawn immediately in cash and or via mobile money. Muwonge would also on some occasions wire the money to another account in the same bank, belonging to Ken and Joe Construction Company Limited.

Read full article HERE

DTB, following widespread media reports regarding Bagyenda’s cash galore issued a statement confirming the existence of Bagyenda’s money and the said transitions. DTB revealed Bagyenda’s details were leaked by their employee. The commercial went on to apologies to Bagyenda.

It has also emerged that Bagyenda has not been paying taxes and is now being investigated by Uganda Revenue Authority operatives

After realizing that Bagyenda is extremely wealthy but her tax remittance schedule is greatly lacking, URA operatives have reportedly launched an audit investigation into her operations so as to ascertain why she has been evading taxes, with intent to make her cough all the taxes she hasn’t remitted for the period under review.

Ugandans Question Source Of Justine Bagyenda’s Billions Stashed In Various Banks

Many Ugandans are perplexed at how the former director supervision at Bank of Uganda accumulated over Shs20bn she has stashed in three local banks. Apart from the said huge sums of money, Bagyenda has vast property portfolios spread across the country.

Justine Nuwagaba Bagyenda, the former Bank of Uganda Director for Supervisions has broken the record in Uganda by turning out to be richer than her former boss Dr. Emmanuel Tumusiime Mutebile, who is the BoU governor.

Bagyenda, according to sources at BoU, is hiding over Shs19, 302441,183, on three accounts in separate Banks in Uganda. What is shocking and surprising many of her colleagues at BoU is that she made all that money in just six years from 2013 to this year when she was shown the exit.

This means that Whereas her former boss Mutebile earns Shs53.3 million per month and is the highest salary earner in Uganda, Bagyenda’s is said to have been earning or saving Shs266,7223732 per month or Shs66.6 million per week between 2013 and 2018, which saw her bank balance accumulate to the tune of over Shs19Bn.

Auditors at BoU were further shocked on learning that Bagyenda operates both Shillings and Dollar accounts in Diamond Trust Bank, Centenary, Barclays banks on which she is stahing away the billions, although how she accumulated all this money has remained subject to lots of queries.

Sources reveal that Bagyenda owns account number 5106903903 in Diamond Trust Bank described as ‘low start savings account’ which as of December 01, 2017, had a total of Shs11.4 billion.

The same account is expecting another Shs429 million on March, 07 2018 when the Shs179 million she fixed in September 2017 at 10 per cent rate matures. It is also said that by October 21, 2017, her shillings account at Barclays had a balance of Shs98 million, while her dollars account number 5106903904 in Diamond Trust Bank, named Prime Dollar Saving, as of November 20, 2017 had US $1,074,450 which, at a conservative Shs3500 exchange rate translates to Shs3.76 billion.

Her bank statement does not however capture the US $315,717(Shs1.1 billion) which, a certificate of deposit shows she earned from a fixed account transaction after she had deposited $176717 on 29 December 2016 at a 4.75 per cent rate. The transaction matured a year later.

The same account is expecting US $214,149(Shs750 million) to drop on December 29, 2018 when a US $214149 fixed deposit she made matures. The question that has remained on the lips of her bosses and auditors at Bagyenda accumulated all this money within just the six years she has worked with BoU.

On top these billions, Bagyenda also owns 20 properties in various parts of the country also worth billions of shillings. These include: Land comprised in LRV 2897 Folio 11 Plot N0. 21 at Museveni Road in Ntungamo district, LRV 2897 Folio 12 Plot 19 land at Museveni Road in Ntungamo district, LRV KCCA 86 Folio 22, Plot No. 1-7:53 land at Bugolobi Nakawa.

Other properties are LRV 3553 Folio 23 Plot No.43 Land at Peninsular Road, Kampala Central Division, LRV KCCA 89 Folio 24 Plot No.50 Land at Kampala Central Division, FVR 629 Folio 11 Plot 5 land at Sunderland Avenue, LRV 2631 Folio 10 Plot No.28 land at Kimera Close, LRV 3255 Folio 10 Plot No.410-411 Land at Makerere Hill Road, Kampala.

Also LRV 2139 Folio 8 No. 20 Land at Balikuddembe Road, Kampala, LRV 2139 Folio 8 Plot 20 Balikuddembe Road, LRV 325 Folio 10 Plot No. 41-411 Block 82 Land at Bugolobi, LRV 2631 Folio 10 Plot No. 28 St. Kizito Close, Bugolobi, LRV 629 Folio 11 Plot No. 5A Block 82 Bugolobi, Block 20 Plot no. 629 Kiwatule Nakawa Division belong to her.

And Block 20, Plot No.629 land at Busega, Rubaga Division, Block 252, Plot No. 105A land at Nakawa Division, Block 200, Plot No. 1548 Land at Munyonyo Makindye Division,   Block 205 Plot No.1352 land at Nakawa Division, LRV 2156 Folio 10 land at Ntungamo, LRV 2890 Folio 10 Plot No. 10 land at Kaguta Road, Mbarara Municipal Council, among others.

How Sudhir Kick Started Uganda’s Financial Sector

In the mid 1980s not many people would risk to come to Kampala with their hard earned savings to invest in an economy which had failed for decades. The ruins left behind by years of political and economic turmoil were a deterrent to would be investors.

Yet one man dared to risk. Even having suffered at the hands of President Idi Amin, when the dictator expelled Ugandans of Asian origin, a youthful Sudhir Ruparelia, born in Kasese, western Uganda, and raised in parts of Jinja and Kampala, returned from exile to establish businesses.

The year was 1985, armed with a paltry US$25,000 earned from several casual jobs including working in supermarkets, factories, and butcheries in London, Sudhir Ruparelia made a decision to return home; a decision that would later make him one of the greatest entrepreneurs in Africa.    

Then, the country was healing from a five year guerilla war that had just ushered in President Yoweri Museveni’s regime. The economy was bleeding, no infrastructure, broken systems, no trade – it was chaotic, one could barely see an opportunity. The risk was too heavy to shoulder.

Sudhir Ruparelia’s stint as a beer dealer paved way for what would become a turnaround for not only the young audacious businessman but the Ugandan economy at large. Because the beer trade was largely transacted in foreign currency, Sudhir Ruparelia saw a life changing opportunity – trading in currencies.

Entering forex bureau business

A decision by government was made to ban importation of beer. This momentarily put the youthful businessman out of business however the misfortune of banning importation of beer drove him to start trading in currencies. This gave birth to Crane Forex Bureau, the first in Uganda and the first of his many financial business ventures.

Crane Forex Bureau was a success – making the businessman adorable profits. He would later add on a commercial bank and other forex bureaus. In a 2012 interview with Forbes Magazine, Sudhir Ruparelia claimed that the two forex bureaus he owned at the time made a daily profit of $45,000.

Crane Bank Is Born

As the Museveni government retrieved the country from its ruins, Sudhir Ruparelia was in tow. He was succeeding as a businessman. The success of the forex bureau gave birth to the first privately owned commercial bank – Crane Bank – in 1995.

The idea of Crane bank was actually born in 1993 by Dr Sudhir Ruparelia and his wife Jyotsna Ruparelia, who at the time were running a forex bureau.

Former Crane Bank Managing Director Mr. P K Gupta in a previous interview said Uganda then needed a customer friendly bank that understood business and catered for the needs of the people. And from the time it opened its doors on 21st of August 1995 Crane Bank never looked back. It continued to grow its footprint.

According to online sources like Wikipedia, as of 31 December 2015, Crane Bank's assets were Shs1.81 trillion, with shareholders' equity of Shs28 billion. The commercial bank was estimated to have 750, 000 customers as of October 2015.

Crane Bank under the stewardship of Sudhir Ruparelia was part off and facilitated Uganda’s economic transformation, by offering financial services like loans and saving facilities. The bank grew together with its clients and transformed private enterprises.

From one branch (main branch) in 1995, through funding its self by ploughing back its profits, Crane bank grew its branch network to a total of 46 branches and 100 ATMs Country wide until 2016 when it was put under receivership by Bank of Uganda.

Sudhir Ruparelia took Crane Bank to Rwanda, establishing the first branch on 30 January 2014 in the capital Kigali – Sudhir Ruparelia established Crane Bank Rwanda Limited. He talked of takng Crane Bank to South Sudan and DR Congo

In September 2012, Crane Bank acquired the assets and some of the liabilities of the National Bank of Commerce, giving Sudhir Ruparelia extended dominance in the country's financial sector. Crane Bank was getting bigger and better. Sudhir Ruparelia was even considering listing the bank on the local stock exchange.

End of an era

All was going well until Bank of Uganda came calling. Apparently Sudhir Ruparelia had plunged his baby – Crane Bank – into deep debt. It is said Crane Bank had fallen from a profit making bank to one which could barely sustain its operations. Its asset base had plummeted too and lost value.

Bank of Uganda advised Sudhir Ruparelia and other shareholders – the board – of Crane Bank to recapitlise through acquisition of other investors. It was a tough call. It didn’t happen and the central bank cracked the whip. It took over the operations of the commercial bank before eventually selling it and its assets to dfcu in 2017.

The highly publicized takeover of Crane Bank by Bank of Uganda brought an adventurous journey to a crashing halt. Monies and jobs were lost. There was panic in the country’s banking sector, local and foreign investors lost trust in the economy.

The crane bank scandal didn’t spare the forex business as the laws of the land bars Sudhir Ruparelia to run a financial business going by what happened at crane bank.

Ongoing Legal battles

Sudhir Ruparelia was not about to go down easily as both sides – Bank of Uganda and Sudhir Ruparelia – sought legal redress in the courts of law. Bank of Uganda sued Sudhir Ruparelia accusing him of fraud and causing huge financial losses to his own bank, the businessman said he was being maliced and targeted by mafias.

The past year has been a busy one for both parties in the courtroom. Many issues continue to be raised and argued. Whichever way these legal battles end, one sure thing will remain – Sudhir Ruparelia’s contribution to the economy.


Sudhir’s Meera Sues dfcu, Demands Billions In Rent Arrears

Meera Investments dragged Dfcu Bank to Land Division of the High Court, seeking to reclaim its 46 branches that were allegedly acquired illegally countrywide following the dissolution of Crane Bank by Bank of Uganda.

Meera Investment contends that it’s the rightful owner of the 46 branches formerly trading as Crane Bank and for that matter dfcu must pay rent arrears estimated to be $ 8.6 million. Meera says dfcu is occupying their premises (branches of crane bank) without their consent.

The Commissioner of land registration was sued alongside dfcu and is accused of conniving with the commercial bank to take the land away from Meera. Meera Investments claim it’s the “current registered proprietor of the freehold and Mailo interests in the land,” on which the branches sit.

Meera Investments wants court to direct the commissioner to immediately cancel out Dfcu Bank as being the right full owner of those said properties and reinstate them as the rightful owners. Meera in the suit insists the dfcu is trespassing on their property.


Mutebile Fires Bagyenda In Latest Bank Of Uganda Reshuffle

Bank of Uganda Wednesday announced Justine Bagyenda with immediate effect ceased to be the Central Bank’s executive director in charge of supervision. Bagyenda’s departure comes a few months before her pending retirement from the Central Bank.

Bagyenda will be replaced by a one Dr. Tumumwine Twinemanzi who has been working as the Director for Industry Affairs and Content (Economic Affairs) at Uganda Communications Commission (UCC).

The change was among the many transfers and appointments the Central Bank’s governor Prof. Emmanuel Tumusime Mutebile announced officially. These appointments which involved executive directors, directors and deputy directors took immediate effect.

Bagyenda in her capacity as executive director in charge of supervision oversaw the Central Bank’s takeover of Crane Bank. Bank of Uganda later sold Crane Bank which was largely owned by businessman Dr. Sudhir Ruparelia to dfcu Bank in a questionable manner to many.

Bagyenda and the top management of Bank of Uganda were criticized by the public for their failure to manage the banking sector leading to many commercial banks failing to sustain their operations and closed shop. The Crane Bank dispute is now a mantter in the courts of law.

In other changes Mary Katarikawe takes over executive director operation, Joyce Okello as executive director and personal assistant to the Governor while Richard Mayebo becomes executive director risk and strategic management.

Phillip Wabulya became executive director petroleum nvestment fund while Elliot Mwebya and Deborah Kabahweza were made executive directors for Information Technology and Finance respectively. David Kalyango will serve as the Internal Auditor.

Bank of Uganda also revealed new directors who inlude Dr Charles ABuka (Statistics), Dr Kenneth Egesa (Fianncial Stability), Valentine Ojangole (Banking), Olive Kamuli (Medical Administrator), Mackay Aumo (National Payments Systems).

The governor noted that the reshuffle will ‘enhance operational efficiency and effectiveness’ and enable the Central Bank ‘fill existing internal vacancies and manage transitions arising from pending retirements’.

Mutebile said the reshuffle is in line with normal staff deployment procedures at the Bank of Uganda. “The Bank of Uganda remains committed to the recruitment, placement and development of high caliber staff for continued delivery on its mission to foster price stability and a sound financial system.” He said.


Crane Bank Saga Leaves Bank Of Uganda Naked, Facing Public Scrutiny

Bank of Uganda (BoU) had a torrid 2017 as the Crane Bank saga weighed on the country’s central bank. What began as an everyday activity to supervise and regulate the banking sector when they took over and subsequently sold Crane Bank to DFCU turned out to be a big speck in the Emmanuel Tumusime-Mutebile led regulator’s eye.

As events unfolded and more information made its way into the public domain, it turned out that Bank of Uganda which is mandated by the law to regulate and monitor the banking sector was largely at fault for failing efforts by former Crane Bank owner Dr. Sudhir Ruparelia to recapitalize the commercial bank.

In a defense filed by Dr. Sudhir Ruparelia contesting the fraud charges brought against him by Bank of Uganda, the businessman denied all fraud charges and wrong doing which reportedly caused Crane Bank to lose about Ushs400Bn. The businessman tasked Bank of Uganda to prove their allegations.

To settle the scores, mediation between Crane Bank and the businessman was suggested. The mediation proceeding have yield more positives for Sudhir Ruparelia than Bank of Uganda. Information coming through indicate that Bank of Uganda was incompetent and failed to execute their mandate something that worried the public.

Claims of corruption and conflict of interest made rounds in public domain. At one point a private citizen sued the central bank for incompetence and supposed conflict of interest.

Some sections of the public wonder why Bank of Uganda rushed to sell off Crane Bank yet the owners, the Ruparelia Group, were looking for reinvestment capital. Dr. Sudhir Ruparelia, who founded the bank in 1995, and is a leading and renowned investor in the country, maintained a leading role in bank’s growth.

The lack of clarity of issues contested and bizarreness of how the central bank handled the Crane Bank issue was a big concern to many experts in the banking sector with many predicting a collapse in the banking sector. This saga in the long run has kept significant numbers of bank users away from the banking halls as many withdrew their money and kept it home or on mobile money.

Since 2015, Bank of Uganda has closed down more than three commercial banks. In the process, many customers lost their money and businesses. The warring manner in which Crane Bank was taken over and sold was a worry to bank users.

Many people lost trust in commercial banks and Bank of Uganda. They felt safe with their monies in their houses instead of commercial banks that would be closed down easily.

Bank of Uganda reportedly spent four billion shillings (Shs4bn) on lawyers and auditors while pursuing Dr. Sudhir Ruparelia in the Crane Bank saga. The money was reportedly paid to a local law firm Messrs. MMAKS Advocates and two international audit and accounting firms, PriceWaterHouse Coopers (PwC) and Klynveld Peat Marwick Goerdeler (KPMG) in legal and ‘management’ costs, respectively.

However the money that was spent to MMAKS Advocates and David Mpanga from FK Mpanga and Company Advocates was money wasted. In late December, tycoon Sudhir Ruparelia received an early Christmas present from the justice system after the high court disqualified the two firms due to “conflict of interest” and “breach of advocate-client relationship”.

The commercial division of the high court ruled that lawyers David Mpanga and Kanyerezi Masembe who previously represented Crane Bank were privy to confidential information regarding Sudhir and that this information could be used to the businessman’s disadvantage.

Sudhir Ruparelia represented by Kampala Associated Advocates also argued that the lawyers are principal witnesses in the Crane Bank Case. This gave Sudhir Ruparelia the first round win he needed. Bank of Uganda is now represented by Sebalu, Lule & Co. Advocates.

While it is too early to predict what will come out of the mediation, one thing for sure is that the battle will be with us for a long time. Also this case will set for this country a big precedent on how commercial banks should manage their operations and how Bank of Uganda regulates the sector.

KCB Trains Agency Banking Players

KCB Bank Uganda has trained potential banking agents in preparation for the roll out of agency banking services to Ugandans.  According to Michael Ssekyondwa, the KCB Agency and Digital Finance Manager, the bank is expecting to officially start agency banking services early next year.

“We have taken a lot of time to make sure that we identify quality agents, those who are able to provide infrastructure, premises and invest money in their business and have the capacity to serve our customers,” noted Ssekyondwa “So far, we have 27 agents that have been approved by the Central Bank.

Agency banking is where a commercial bank appoints a third party (agent) to transact business on its behalf. The agent could be a petrol station, a retail or hardware shop, a supermarket, among others.

According to Bank of Uganda, Agency Banking is expected to stimulate financial inclusion and deepen the financial sector. Customers will now be able to deposit, effect withdrawals and carry out other transactions through the bank agents.

In addition to training agents in preparation for the roll out, the bank has also invested in a robust system technology.

“We know that for agency banking to work to successfully, it has to be anchored on a very stable and strong platform and we have done a lot of groundwork to test our systems to avoid any system failures.”

According to Ssekyondwa, agency banking is still a new concept in the market and a learning area for both bankers and agents. “There is still a lot of knowledge gaps,” he notes “We need to bridge these gaps by constantly training our agents for them to appreciate how the agency banking channel is going to operate,”

Senteza Musa, one of the KCB agents present during the training noted that agency banking will increase traffic into his printing business which he can turn into sales meaning additional revenue for his business. “I now know how a point of sale machine will work, I have also learnt the kind of services that I will offer to my customers who want to bank,” he notes “I hope that my printing business will make additional profits because of agency banking.”

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