A new audit report sactioned by Parliamentary Committee on Statutory Authorities and State Enterprise (COSASE) but conducted and compiled by the Auditor General (AG) office reveal that Bank of Uganda (BoU) id not follow the lawful procedures in the closure of Crane Bank and six other commercial banks.
The audit by COSASE was meant to guide a wider investigation the committee intends to carry out and understand circumstance under which seven commercial banks collapsed unceremoniously.
The affected banks include Crane Bank, Teefe Bank, International Credit Bank Ltd, Greenland Bank, The Co-operative Bank, National Bank of Commerce and Global Trust Bank.
On 28th November 2017, COSASE requested the Auditor General, John F.S Muwanga to undertake a special audit on the closure of commercial banks by Bank of Uganda.
The Auditor General report, according to media reports, has been handed over to COSASE. It indicates that BoU did not follow any guidelines/regulations or policies in the sale of Crane Bank to dfcu Bank last year and in the closure of the other banks.
“I observed that there were no guidelines/regulations or policies in place to guide the identification of the purchases of the defunct banks. There were also no guidelines to determine the procedures to be adopted by Central Bank in the sale/ transfer of assets and liabilities of the defunct banks to the identified purchaser,” the AG report reads in part.
The AG, Mr John Muwanga, also said the Central Bank did not carry out an evaluation of the assets and liabilities of Crane Bank before they were transferred to dfcu Bank.
“On April 10, 2018, I requested for P&A agreement, including details of the assets and liabilities transferred after taking into account the requisite valuation. I noted that BoU did not carry out a valuation of the assets and liabilities of CBL. In the absence of the valuation, I could not establish how the terms for the transfer of assets and liabilities in the P&A were determined,” Mr Muwanga’s report reads in part.
The AG’s report has also raised questions on how BoU signed a Purchase of Assets and Assumption of Liabilities agreement with Dfcu on January 25, 2017, for the purchase of Crane Bank.
“I was not provided with the negotiation minutes leading to the P&A agreement. In the absence of the minutes, I could not determine how BoU selected the best-evaluated bidder and how the terms in P& A were determined. I also noted that the P&A did not have complete details of assets and liabilities transferred to dfcu with their corresponding values; I was, therefore, unable to establish the status of assets and liabilities transferred to dfcu,” the report adds.
The AG has also questioned the source of Shs478.8b the Central Bank injected into Crane Bank in 2016 to keep it liquid.