Earth Finds

Earth Finds

COSASE Summons Owners Of Closed Banks

The Chairperson of the Committee of Commissions, Statutory Authorities and State Enterprises (COSASE), Abdu Katuntu has revealed that the shareholders of all the seven defunct Banks have been summoned by Parliament to explain circumstances that led to the closure of their financial institutions.

Katuntu made the revelation on Friday while interfacing with officials of Bank of Uganda as the Committee comes into its final days of probing the Central Bank on the procedures they used to close down all these Banks.

“We have invited all former directors of the Defunct Banks. The Shareholders of Global Trust Bank sent me an email that they are re flying in from Nigeria and we are going to ask the same questions,” he said.

In a period of 23years, the Central Bank has overseen the closure of seven defunct Banks including Teefe Bank (1993), International Credit Bank Ltd (1998), Greenland Bank (1999), The Co-operative Bank (1999), National Bank of Commerce (2012), Global Trust Bank (2014) and the sale of Crane Bank Ltd (CBL) to dfcu (2016).  

Museveni Backs MPs Inquiry Into BOU Top Officials

President Museveni blocked an attempt by Finance Minister Matia Kasaija to obtain a Cabinet memorandum to stop the ongoing Parliamentary inquiry into Bank of Uganda over unilateral closure of commercial banks, it has been reported.

According to emerging press reports, the president who chaired Monday’s Cabinet meeting spanned into an attempt by Mr. Kasaija to seek Cabinet protection of Bank of Uganda, with the minister reasoning that inquiring into its affairs would negatively affect the financial sector.

But President Museveni reportedly told Cabinet that he would not protect officials at the central bank being undressed before the Parliamentary inquiry because he tried to restrain them from closing Sudhir Rupareria’s Crane Bank Limited but they refused to listen to him.

“I advised those people (BoU) against closing Crane Bank. I even went on to suggest that we carry out a silent investigation but they refused. Let parliament do its work and let them face the music,” the president reportedly told Cabinet.

The Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) is conducting an inquiry into the conduct of Bank of Uganda and it’s officials in the closure of seven banks, with some of the actions ending up in massive controversy.

The MPs inquiry is also focusing on the mismanagement of closed banks by BoU after the Auditor General Mr John Muwanga issued a stinging criticism of the central bank in a special audit that cited massive flaws in the closure of Teefe Bank (1993), International Credit Bank Ltd (1998), Greenland Bank (1999), The Co-operative Bank (1999), National Bank of Commerce (2012), Global Trust Bank (2014) and the sale of Crane Bank Ltd (CBL) to dfcu (2016).

President Museveni indicated in Cabinet that he was upset after the central bank officials refused to listen to Mr Sudhir, one of the president’s key allies from the Asian Community and went on to close his bank under the disguise of non-performing loans.

The Auditor General Mr. John Muwanga in his report faulted BoU for selling off some of Crane Bank’s assets and liabilities when they had the chance to revive it, most especially that BoU claims it spent Shs478.8 billion on the bank during its takeover. Mr Muwanga in his report says he doesn’t understand why BoU spent all that money on Crane Bank and later sold it to DFCU Bank at a paltry Shs200 billion.


Bagyenda Pinned On Selling GTB to DFCU Without Board Approval

The sale of Global Trust Bank (GTB) to DFCU Bank in 2014 has really become a sharp thorn for former director for commercial banks supervision, Justine Bagyenda. Information emerging from COSASE inquiry indicate that Bagyenda bypassed the Bank of Uganda (BoU) Board and sold the GTB fraduantly.

The revelation was made on Thursday by BoU officials during the parliamentary inquiry into the controversial sale of seven commercial banks by the Central Bank. The inquiry is being handled by the Committee on Commissions, Statutory Authorities and State Enterprises (COSASE).

Susan Kanyemibwa, the Secretary Board Affairs at BoU, told the committee headed by Mr Abdu Katuntu that Ms Bagyenda signed a Memorandum of Understanding (MoU) with DFCU in 2014 to sell GTB yet the BoU board had never discussed the matter nor been consulted.

She presented before the committee minutes of the board meetings between January and December 2014 indicating that the matter was never discussed. Evidence before the committee indicates that BoU closed GTB on 25th July and sold it to DFCU 15 days after.

However, in defence, Ms Bagyenda told the MPs that when taking a decision on troubled institutions like GTB, it is the bank senior management comprising the Governor, Deputy Governor and director banks supervision that meet and take decisions without taking minutes.

“When an institution is a troubled institution like GTB, there are confidential discussions between the Governor, Deputy Governor and EDS which are not minuted,” Ms Bagyenda said.

However, the MPs overruled Ms Bagyenda, saying the MoU with DFCU violated Section 40(3) of the BoU Act that stipulates that the bank shall not publish, disclose any information regarding the affairs of a financial institution unless the consent of the institution has been obtained.

The BoU Legal Counsel, Ms Margaret Kaggwa, also told the Committee that Ms Bagyenda illegally entered the central bank into a MoU with DFCU as her signing contravened the BoU Act.

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