Finance

Finance (252)

8 Worrying Things M7’s Tripartite Committee Discovered At Bank Of Uganda

Bank of Uganda is going through one of its hardest seasons and it keeps getting worse by the day. The latest news involving the central bank point to an institution that is being mismanaged and setting a bad precedent in the echelons of public service.

In February, 2019, a damning report by parliamentary Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) after probing the irregular sale of commercial banks by Bank of Uganda unearthed how the central bank flaunted laws, protocol, procedures and perfected negligence when taking and selling banks deemed unfit to serve in the banking sector for various reasons.

New exposes emerging from various news wires reveal how Bank of Uganda governor Emmanuel Tumusiime Mutebile illegally hired people in key high bank’s positions, demoted and transferred others without prior approval of the board of directors and following the layed out laws governing Bank of Uganda.

This, according to information available, went on even after the interference of the Inspector General of Government. Apparently, when the IGG intervened, Mutebile was quick to remind the IGG of the central bank’s autonomous status and how they are not answerable to the IGG office.

These development sucked in President Yoweri Museveni who was not happy with the bad publicity the central bank was getting. The president then instituted the Presidential Tripartite Committee to investigate and make a report. The committee did its work and filed a report which as expected is going to be studied and cause action.

The Presidential Tripartite Committee had the following members: Hon Abdu Katuntu(MP) Chairperson , Hon Anita Among (Hon) member, Hon Micheal Tumusiime(MP) member, Hon Elijah Okupa (MP) Member , Lady Justice Irene  Mulyagonja Kakooza (IGG) Member, David Makumbi (IG Staff) member, Justus Kareebi (IG Staff) member, Sarah Birungi (IG Staff) Committee Secretary, Judy Obitre-Gama (BOU Board) member and Keith Muhakanizi (BOU Board) member.

Mutebile, on 7th February 2018, issued an internal memo in which he communicated a number of staff transfers and appointments. The memo communicated appointments of five staff from outside the bank to various juicy positions in the bank of Uganda.

After the Governor made these reshuffles a number of complaints were filed with the Inspector General of Government and the parliamentary committee on Commissions, statutory authorities and state enterprises (COSASE).

The Allegations that were picked by the Presidential Tripartite Committee were eight in number and they are below.

1-      The complainants wondered how six new staff were appointed from outside the bank without interviews. They include Dr Twinemanzi Tumubweine, Executive Director Supervision, Valentine Ojangole as Director Banking, Edward Mugerwa as Director IT Operations Department, Ms Kande Sabiiti as Procurement Assurance Manager (Director), Dr Natamba Bazinzi as Assistant Director Currency Administration in currency Department.

2-      The newly appointed staff were granted permanent and pensionable terms contrary to probationary policy.

3-      Two new externally recruited staff lacked the minimum academic requirements for entering bank of Uganda, they are Twinemanzi Tumubweine and Kande Sabiiti.

4-      Governor Emmanuel Tumusiime Mutebile created five new positions that did not exist on approved structure of Bank of Uganda and some lacked job descriptions.

5-      The Governor Promoted nine staff members to assistant director level without conducting interviews.

6-      Two new Directors have been appointed to departments with substantive directors creating confusion as to what happens to existing directors.

7-      One deputy Director was demoted to assistant director without justification, Ms Angela Kasirye.

8-      The appointment of Tubemanzi Tumubweine was premised on nepotism, influence peddling and conflict of interest.

After the complainants were filed the Inspector General of Government wrote on 23rd February 2018 to the Governor and requested him to respond. On 6th March 2018, Governor Mutebile responded to the IGG’s letter saying he followed the law.

Bank Of Uganda In Trouble Over NSSF Unmet Remittances

Just before the dust resulting from the revelations made by parliamentary Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) regarding the closure of commercial banks settles down, Bank of Uganda (BoU) is yet faced by another money misappropriation scandal, this time involving National Social Security Fund (NSSF).

News coming from the Bank of Uganda indicate that the central bank has not paying the mandatory monthly remittances of about Shs2 billion deducted from eight employees’ salaries as required by the Act establishing the NSSF.

And for facilitating the fraudulent practice, Eagle Online reports that some BoU legal team members are also in trouble after the Law Council denied them practicing rights after it emerged that they helped some of the former employees at the central bank to evade sending the remittances to NSSF. The head of the legal team Margret Kasule has been implicated.

According to the news report by Eagle Online, Bank of Uganda under declared the ages of some employees even as they were of age having clocked 60 years, the mandatory retirement age in Uganda for public servants.

“It is said that when NSSF continued asking for remittances of the officials whose age was under declared, BoU administrators made a u-turn and made it clear that the officials had retired, forgetting that they had lied about the ages of the officials,” the online news agency reported.

Eagle Online also understands that NSSF has declined to grant BoU a clearance licence as regards the affected officials which has resulted into denial by law council to grant them a practicing license. Law Council says that the due processes has to be followed before the certificate can be issued.

According to a leaked letter dated March 6, 2019, NSSF wants BoU to provide them with copies of National Identity cards for its staff so that they can verify the correct ages of the affected employees with the National Identification and Registration Authority (NIRA).

“We refer to the above subject and the emails between NSSF and Bank of Uganda on the matter. We understand the urgency of the situation , however, you will appreciate that we have to follow due process of assessing an employer’s records to ensure compliance with NSSF, before we can issue out a clearance certificate” reads the letter in part.

Isharaza Leaves dfcu In Latest Employee Exodus

DFCU Bank feels like a haunted house lately if the continued employee exodus is anything to describe the troubled commercial bank. After a recent management shakeup that saw long serving managing director Juma Kisaame leave, more senior managers are leaving.

The latest departure is Ms Agnes Tibayeyita Isharaza who has been working as the chief legal officer and company secretary. The respected Isharaza has moved to National Social Security Fund (NSSF) where she has been appointed by the finance minister Matia Kasaija as Corporation Secretary and head of legal.

At NSSF, Isharaza replaces Mr Richard Wejuli Wabwire, who in February was appointed High Court Judge. Kasaija said Isharaza will serve NSSF on a five-year contract. Her appointment was recommended by the NSSF board headed by Patrick Byabakama Kaberenge.

Isharaza holds a Bachelor of Laws from Makerere University, a post graduate diploma, legal practice from Law Development Centre and an Executive MBA from Eastern and Southern African Management Institute (Esami).

She leaves DFCU when they are being faced with a reputational crisis emanating from the fraudulent takeover of Crane Bank from Bank of Uganda. This damage on their image has reportedly affected investors’ confidence with many considering quitting the commercial bank.

Gadenya To Hear Sudhir Case Against dfcu Lawyers

Justice Paul Gadenya will now handle the case in which property mogul Sudhir Ruparelia sued city law firm Sebalu & Lule Advocates, seeking to stop them from representing dfcu Bank for alleged conflict of interest.

This comes after after Justice David Wangutusi, the head of the court, and his deputy, Justice Elizabeth Jane Alividza, declined to hear it, Solomon Muyita, the Judiciary senior communications officer, told Daily Monitor.

“The file was allocated to Justice Gadenya. However, he has not allocated it a hearing date because he is away in the field,” Muyita stated, explaining that initially, the case was allocated to Justice Alividza but she felt that it would be better if it was handled by Justice Wangutusi, since he was handling similar matters.

He added that when the file was sent to Justice Wangutusi, he also declined to hear it on grounds that it was a different matter that should be handled by another judge and the file was thus sent to Justice Gadenya.

In the case, Mr Ruparelia claims that Sebalu and Lule Advocates is “guilty” of conflict of interest and should not represent dfcu Bank which he sued. Mr Ruparelia, through his Crane Management Services, sued dfcu Bank over rental arrears owed by the sister company Crane Bank, which was closed by the central bank in 2016 and later sold to dfcu Bank. 
Mr Ruparelia claims there exists an ‘advocate-client’ relationship between him and Sebalu & Lule Advocates because the same law firm had previously represented his companies. 
He further avers that because of that relationship, confidential information was discussed between the two and will use such information to his disadvantage if the law firm represents dfcu Bank.

SOURCE: Daily Monitor

Bad Investment Choices Forcing dfcu Shareholders To Exit

Poor investment choices made by dfcu Bank in Uganda are pushing shareholders away, leaving the commercial bank in an enviable state, media reports say.

Without naming the uncomfortable shareholder, Eagle Online Wednesday reported that Dfcu bank’s major shareholder is said to be unhappy with the bank’s business and is interested in detaching from the bank.

Once such bad investment choice is the Shs1.8 billion Dfcu Financial Centre built at Kampala Industrial Business Park in Namanve, Wakiso District. The building continues to eat into the bank’s finances in terms of security, power and other costs even though the bank is not gaining from it.

The bank reportedly only Shs60 billion in profit despite making an investment of about Shs3trn over the recent years.

Dfcu Bank continues to face scrutiny ever since they took over Crane Bank in 2017 in a manner the public says was dubious. Some shareholder were not happy with the transaction that has put the bank in bad image.

In July 2018, UK’s CDC Group indicated its desire to exit the investment. Other shareholders in Dfcu Bank include Arisse BV, National Social Security Fund Uganda, The Rock Creek Group LP and Old Mutual Investment Group (Pty) Ltd.

Russell Investment Management LLC, Bank of Uganda Staff Retirement Benefit Scheme, Vanderbilt University Foundation, Conrad N. Hilton Foundation and Jubilee Investment Co. Ltd. are the other shareholders.

Bagyenda Replaced On Financial Intelligence Authority Board

The composition of Financial Intelligence Authority (FIA) Board of Governors is now complete after estranged Justine Bagyenda, formerly executive director in charge of supervision at Bank of Uganda (BoU), has been finally replaced on the board.

She was controversially named on the board by finance minister Matia Kasaija at a time the Authority was investigating her for money laundering. Many stakeholders in the finance sector petitioned parliament to force the minister drop her from the board.

Bagyenda, who in a report by parliamentary Committee on Commissions, Statutory Authorities and State Enterprises (cosase) was highly blamed for the dubious sale of seven commercial banks, was replaced by Titus Wasswa Mulindwa, a lawyer at Bank of Uganda.

Speaker Rebecca Kadaga who chaired the Parliament’s Appointments Committee approved Wasswa Mulindwa. The other FIA board members who have already been approved by Parliament are; Mr Leo Kibirango as chairman, Patrick Ocaillap, deputy secretary to the treasury and Grace Akullo, CID Director.

The FIA was established under the Anti-Money Laundering Act, 2013 to combat money laundering activities.

BoU Has Upto April To Agree With Sudhir In Crane Bank Case

Bank of Uganda has up to 3rd April to reach an out of court agreement with former Crane Bank owner Dr. Sudhir Ruparelia. The two parties are currently engaged in out of court negotiations but should they fail, the courts of law will apply.

In 2017, Bank of Uganda sued the property mogul and his Meera Investments Company accusing him siphoning over Shs400 billion from his defunct Crane Bank. Dr. Ruparelia in defence said the accusation was false and tantamounts to witch-hunt by the central bank.

While appearing before Commercial Court in Kampala in January, both parties asked Justice David Wangutusi for more time to enable them conclude their negotiations. Justice Wangutusi accepted their request and adjourned the case to April 3 for the Central Bank and Sudhir to return with the progress on their talks.

Bank of Uganda in 2016 took over management of Crane Bank saying it was undercapitalized and posed a threat to the banking sector. The central Bank would later sell Crane Bank of DFCU Bank in a manner that has been described as dubious by experts in the sector.

But a report by the auditor general in 2018 revealed irregularities in the way Bank of Uganda was taking over selling commercial banks. The auditor report asked parliament to investigate the central bank.

And when Parliamentary Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) probed the sale of commercial banks by the central bank since 1993, it found out the central bank was breaking and sidestepping the laws of the land.

In the case of Crane Bank, cosase said Bank of Uganda flaunted the Financial Institutions Act categorically pinning deputy governor Louis Kasekende, former director in charge of supervision Justine Bagyenda and the board for neglecting their duties and failing their duties at the central bank.

Wangutusi Refers Sudhir, Sebalu And Lule Case Back To Justice Alividza

Commercial Court head judge Justice David Wangutusi has ‘sent back’ the case between business mogul Sudhir Ruparelia and law firm, Sebalu and Lule Advocates to Justice Jane Alividza so ‘she can finish what she started’.

In the conflict of interest case, businessman Ruparelia demands that a permanent injunction be put on Sebalu and Lule Law Firm, banning them from appearing before the court as the shielding units for dfcu bank, and the other court cases that Crane Management Services and dfcu are engaged in.

In the suit, Sudhir says Sebalu and Lule Advocates were unfit to represent Bank of Uganda (BoU) and dfcu bank because they once represented Crane Management Services which owned Crane Bank in several court cases.

The case has been in court since November 2018 and its first hearing was before Justice Alividza.

However, according to information from the commercial court, since Wangutusi was handling other cases involving Ruparelia Justice Alividza decided to hand him this particular case.

However, both parties involved in this case were not aware of these changes, even after it had been adjourned from February 20 to March 1.

At the Commercial Court on Friday, both parties were surprised when Wangutusi said the case would be handled by justice Alividza. “We have sent the case to lady Justice Alividza to finish what she started,” said Wangutusi.

Unfortunately, the court registrar did not communicate the next date of hearing under lady justice Alividza.

Rajiv Ruparelia, the managing director of crane management services said, “All this is time wasting and money. Unfortunately, we came expecting another thing but now the case has been taken back to the initial judge. Nothing to do we trust them. And I am sure they know what they are doing. Most of all we trust in Uganda’s judicial system so we are waiting for the next date of hearing and we shall come.”

Man Threatens To Sue Bowmans, MMAKS Lawyers For Fraud

Two legal firms under the names of Bowmans Advocates and MMAKS Advocates are on the verge of being sued by a one Steven Masanso, a concerned citizen, for colluding with individual Bank of Uganda officials to sell of key commercial banks including Crane Bank Limited which belonged to businessman Dr. Sudhir Ruparelia.

In two separate notice to sue addressed to Bowmans Advocates and MMAKS Advocates dated 26 January, 2019, Masanso says by the two law firms to meet his demands in will leave him with no choice but to login in ‘criminal and civil proceedings’.

In the notice copied to President Yoweri Museveni, Director Legal Department, Bank of Uganda, Inspector General of Police, Director Criminal Investigations Department and Finance Minister, Masanso demands the following.

“As you are, it’s on record that as part of resolution of various banks facts of which are well with in your knowledge you continually received various monies in collusion with individual Bank of Uganda officials which sums were charged on received banks.”

“You also routinely billed way beyond permissible scale and in instances for no work done at all. A case In point is with respect on the monies taken out as legal fees for purported drawing of the Crane bank sales agreement even when it clearly shows having been drawn by the Legal Department of Bank of Uganda.”

"You also perjured yourselves during the COSASE Parliamentary proceedings while under oath" “You accordingly offered no consideration and per took in an illegal and criminal enterprise”

"Furthermore, you performed a regulatory coup variously significantly advising the banking regulator while at the same time sitting on different boards of the regulated commercial banks and/or acting for them"

"In the case of Crane Bank Limited's resolution, you acted without the proper authority of Bank of Uganda and/or its legal department."

"Your activities were constructed in bad failed, self-interest and usurped the constitutional mandate/purpose of the regulator."

"Take notice that unless: 'Publish a public apology in the nation’s media' 'Refund all you illegally levied on the public purse and/or the received banks by close of business week, I shall proceed to lodge criminal and civil proceedings against you and you accomplices.

David Mpanga is a leading partner at Bowmans Advocates while Timothy Masembe Kanyerezi is also a senior partner at MMAKS Advocates (Masembe, Makubuya,Adriko, Karugaba & Ssekatawa). The two lawyers have been at the center of controversy attached to sale of Crane Bank Limited.

COSASE Report Calls For Reforms At Bank of Uganda

A committee of Parliament has called for governance reforms at the Central Bank after finding flaws in the way it handled the liquidation and sale of insolvent banks.

A report by the committee on Commissions, Statutory Authorities and State Enterprises (Cosase) tabled in Parliament yesterday evening said Central Bank officials had made “questionable decisions” and flouted the law in closing and selling seven commercial banks.

The 64-page report, issued after months of public hearings, also invites the police to investigate whether there was loss of taxpayer money in the bailouts of stricken commercial banks or during their disposal.

Presenting the report to Parliament committee chairperson Abdu Katuntu (Bugweri, FDC) questioned “serious security laxity” at BoU and said bank officials who flouted relevant laws and regulations ought to be held personally responsible.

The committee’s findings followed public hearings and a special audit by the Office of the Auditor General into the closure of seven commercial banks between 1993 and 2016.

The banks include Teefe Trust Bank, International Credit Bank, Cooperative Bank, Greenland Bank, Global Trust Bank Uganda, National Bank of Commerce and Crane Bank Limited.

The committee report noted several instances in which the central bank did not follow the Financial Institutions Act (FIA) and its own regulations on appointing auditors, taking inventories, managing confidential information, and reaching out to potential buyers of the failing banks.

The committee also found serious problems with the disposal of liquidated banks. For instance, it noted that Nile River Acquisition, a company tapped up to recover Shs145b in loans owed to ICB, Greenland and Co-operative banks was not registered and benefitted from “an incredibly outrageous” discount of 93 per cent.

The report also questions dealings with Octavian Advisors Plc, a firm that bought the loan book at $5.2m – less than an earlier offer of $10m – and which received a grant of exclusivity in the dealings.

“The committee concludes that the transaction between BoU and M/s Octavian Advisors Plc. and her agents lacked transparency and the officers involved should beheld responsible for commissions and omissions which resulted in marshalling the greatest amount from the assets of the distressed financial institutions,” the report recommends.

It also called for the Inspector General of Police to immediately seize land titles and other securities from Mr Kakembo Katende of JN Kirkland and Associates and SIL Investments arising from the management of the loan portfolio Nile River apparently farmed down to them.

The MPs also asked the tax authorities to investigate the named firms’ tax compliance statuses.

In its report, the committee directed the Bank of Uganda board of directors in consultation with the Minister of Finance to issue new regulations for managing stricken financial institutions within six months.

Other recommendations by the committee include amendments to the FIA to spell out timelines for resolution of stricken institutions, taking the role of resolving financial institutions in distress away from the commercial bank supervision function and a strengthening of the Central Bank’s capacity to supervise financial institutions.

The committee also recommends widespread improvements in the management of the Central Bank’s records, security and documentation of processes and meetings.

On the disputed sale of Crane Bank Limited to dfcu bank at Shs200b, the committee highlighted violation of the FIA, the absence of records and queried the valuation of the bank’s assets and liabilities.

SOURCE: Daily Monitor

 

Subscribe to this RSS feed

Kampala