Finance

Finance (159)

Audit Firm PwC Summoned To Explain Crane Bank Books

Audit firm Price Waterhouse Coopers (PwC) will be summoned to appear before the inquisitive Committee on Commission’s Statutory Authorities and State Enterprises (COSASE) to explain how they arrived at the Shs239Bn undercapitalisation figure that led to closure of Crane Bank Limited (CBL), the committee chair Abdul Katuntu said.

“That document was written by PwC and PwC will be called to explain.” Katuntu said after Bank of Uganda officials failed to inteprete parts of the report authored by the audit firm. BoU officials also failed to explain the extent of Crane Bank’s undercapitalization when the Central Bank took it over on 20th October 2016.

Price Water Coopers was the audit firm that was contracted by BoU to carry out an inventory of the assets and liabilities as well as a forensic audit of Crane Bank upon its takeover.

Rubaga North MP, Moses Kasibante noted that CBL never refused to recapitalize and there were engagements on how to get lending from BoU. He said Crane Bank shareholders asked BoU to reduce g interest rate from 5% to 2%, but BoU took over the bank without a response.

“CBL shareholders had contributed Shs27bn to recapitalize; BoU had requested CBL to recapitalize by end of October and BoU closed [Crane bank] before the end of the month,” Kasibante said. This was after CBL shareholders requested to borrow from the Central Bank.

Benedict Ssekabira, Director Financial Markets at BoU revealed that the request was  for liquidity support not capital.

“The lending doesn’t translate for capitalisatiomn. The request was for 115.4M USD. At the time, we read the law under which BoU can lend. BoU can only lend 20% of its core capital, we were limited even with that limitation, BOU approved a facility and it had to be secured, we asked for collateral from Crane Bank, we didn’t get it,” Ssekabira said.

Crane Bank Needed Shs157bn To Get Back Up But BoU Spent Shs478b To Destroy It

Members of Parliament on the Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) are baffled how Bank of Uganda could spend Shs478bn to revive Crane Bank that only needed Shs157bn to recapitalize, but then also failed to save the commercial bank. And in this astonishment, the central bank bosses are failing to explain let alone understand what they did.

Parliament’s COSASE are conducting a probe into the closure and sale of seven commercial banks, following an Auditor General’s report that pointed at possible corruption within the central bank.

On Tuesday, Central Bank officials failed to explain how much undercapitalised Crane Bank was before taking the decision to close it. Governor Tumusiime Mutebile admitted he didn’t have the figure while Benedict Ssekabira, the Director Financial Markets Coordination, put the figure at Shs157b.  

Justine Bagyenda the former Executive Director Commerical Bank supervision said the bank required an additional capital of atleast Shs32b by September 15, 2016 and progressive capital of Shs56b if capital adequacy was to be restored by October 31, 2017.

Wednesday morning, Sekabira insisted the figure was Shs157b after COSASE Chairman asked how much Crane Bank needed to return to adequate capitalisation at the time of closure.

At this point, MP Medard Ssegona asked for documentary evidence before Odonga Otto questioned why Shs478b was spent on a bank that needed only Shs157b at the time of closure.  “If Crane Bank was in deficit of 157b, why did you use Shs478b to clear mess? Why didn’t BoU just capitalise Crane Bank with 157b,” MP Odonga Otto queried.

MP Abraham Byandala wondered why there was a rush to take over Crane Bank since it had been given up to end of October 2016 to recapitalise. “A bank can even be recapitalised within a day but it was taken over 10 days before the time it was given in August 2016 MoU,” he said. BoU spent Shs478b as liquidation support to keep running Crane Bank for three months, before it was sold to DFCU for Shs200b in January 2017.

We Will Not Probe Bank Of Uganda In Secrecy – Katuntu

The chairperson of Parliamentary Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) Chairperson, Abdu Katuntu, has vowed not to probe Bank of Uganda’s mismanagement of the banking sector in secrecy.

Katuntu was responding to President Yoweri Museveni who expressed fears that probing the central bank publically will send shivers down to the public and abate potential foreign investors from coming to the Uganda thinking the country is in deep financial mismanagement.

However Katuntu said they are well aware of the speculation but assured the President of total probe confidentiality saying they are aware of the potential dangers their probe presents to the country. COSASE is currently investigating BoU officials regarding the controversial closure of the seven defunct banks since 1993.

“It isn’t that we aren’t aware of potential dangers of the probing to the banking sector if we become reckless, but I would like to comfort the President that reckless isn’t in our name in this process,” Katuntu said.

“We owe it to the public, if we lock ourselves in a room, it leads to speculation and remember at the beginning of this process, there was a lot of speculation,” Katuntu added.

President speaking to the media shortly after launching a state house based anti-corruption unit had said the BoU probe procedure was wrong. “If you want to investigate it (BoU), why don’t you do it quietly not in camera,” the president wondered.

Inquiry is good

Despite the president expressing his thoughts on the procedure of the probe, he said it is good and necessary. Earlier reports had indicated that officials at ministry of finance had tried to persuade President Museveni to stop the inquiry but refused.

Similar reports also suggested that President Museveni was not happy with the central bank management who refused to listen to his counsel when the central bank was pondering closing Crane Bank. The central bank didn’t just listen to the president.

Bank Of Uganda Criss Blamed On Bagyenda, Ssekabira

The mess and eventual crisis which is eating up Bank of Uganda is a making and responsibility of Justine Bagyenda, the former executive director supervision and Benedict Ssekabira, director financial markets, believes the Chairperson of the Committee of Commissions, Statutory Authorities and State Enterprises (COSASE), Abdu Katuntu.

Katuntu during the ongoing inquiry into the sale and collapse of seven commercial banks blamed both Bgyenda and Sekabira for selling National Bank of Commerce as well Global Trust Bank without taking a record of the negotiation minutes.

On Monday, Mackey Owumu, the director of national payment systems and Timothy Ssekirai Kajja deputy director banking denied taking part in negotiations leading to the sale of Global Trust Bank as pointed out by Bagyenda.

Bagyenda defended herself saying she was given their names by officials from Bank of Uganda, after admitting she only recalled attending negotiation meetings with Ssekabira because she is too old to recall what transpired and that is the reason she resigned from the bank.

However, Katuntu rejected her explanation arguing: “It shouldn’t be an excuse. The names came from Bank of Uganda, it didn’t come from the Committee. If you had told us from the beginning, we shouldn’t have wasted time interrogating others.”

When asked how long negotiations lasted leading to the sale of Global Trust Bank, Bagyenda feigned ignorance saying she doesn’t recall the time it took to negotiate and asked to cross check with Bank records, saying all she knows is that Global Trust never closed in one day.

Katuntu warned Governor of the crisis awaiting the Central bank if the Central bank staff don’t have the record and will only resort to saying they don’t remember.

“You see the crisis you have caused this nation, the two of you. Now we have to rely on brains. The problem is that when people retire, they retire with information about the institution and that shouldn’t happen under any circumstances ever,” Katuntu said.

He added: “You have new ED if you tell him how to resolve a bank, he doesn’t know and this is a Central Bank. Selling a bank is a complicated issue, you can’t sell a bank like selling a goat, you need to have records. This isn’t very sophisticated science.”

 

When asked how Juma Kisaame came to attend a meeting to discuss the sale of Global Trust Bank, Bagyenda revealed she invited him through a phone call, a statement that attracted shock from the Committee with Katuntu wondering how a full Executive Director Supervision would invite a prospective buyer, casually on phone.

Bagyenda Sold Banks On The Phone, No Documentation Made

Justine Bagyenda, the former executive director banking supervision at Bank of Uganda, sold Global Trust Bank (GTB) and National Bank of Commerce on the phone, without authorization from Bank of Uganda board or governor and without keeping basic records of the transaction.

The revelation was made Monday by Bagyenda and Benedict Ssekabira, director financial markets, while appearing before parliament’s Committee of Commissions, Statutory Authorities and State Enterprises (COSASE) investigating the sale of seven commercial bank by Bank of Uganda.

Ssekabira told the Committee that at the time that Bank of Uganda was forced to close NBC after the bank failed to resolve challenges regarding its shortage of capital as well as disputes among shareholders.

“The same process we used for GTB was also deployed in NBC. We had meetings with shareholders but capital couldn’t come and disputes couldn’t be solved. Process of finding an inquirer was deployed in confidentiality and was conducted on phone,” Ssekabira said.

When asked to clarify on the matter, Ssekabira  said that it was only Crane Bank that was willing to buy NBC Bank after the other banks shied was from the purchase, saying it was only Crane Bank strong enough to swallow NBC. 

Ssekabira also said that the Non-Disclosure Agreement between Crane Bank and Bank of Uganda was signed on 7th September 2012 two weeks before the Central Bank intervened to take over NBC.

COSASE Chairperson, Abdu Katuntu wondered how the Central Bank would indulge in hawking NBC Bank even before it had taken over as a  statutory manager, liquidator, receiver.

However, Mr. Ssekabira protested the use of the word hawking saying the phone calls made never stated the names of the troubled institution but the information was only passed onto institutions that were willing to buy off the troubled banks.

The MPs then asked Deputy Governor, Louis Kasekende how he came to sign the Purchase of Assets and Liabilities Agreement leading to the sale of NBC Bank without the necessary documentation.

Dr. Kasekende denied ever signing the P&A agreement saying he was out of the country and delegated his powers to Ms Justine Bagyenda, something he admitted was wrong as the office of the Deputy Governor is constitutional whose powers can’t be delegated.

#BoUProbe: Security Officer Released But Bagyenda Is In More Trouble

The Magistrate’s Court sitting at the City Hall in Kampala Monday released Beatrice Kyambadde, security personnel working at the Bank of Uganda (BoU), after spending a week on remand at Luzira Prison.

She was locked up under accusation that she neglected her duty the day former bank of Uganda executive director supervision Justine Bagyenda stole important documents a few days to her resignation.                                          

Grade One Magistrate Mr Patrick Talisuna released Kyambadde on cash bail of Shs500,000 and ordered her to report back to court on January 14 next year for mention of her case.

Kyambadde was arrested jointly with her colleague, Charles Mollo on orders of the Parliamentary Committee on Commissions Statutory Authorities and State Enterprises (COSASE) that is investigating the closure of several commercial banks.     

Mollo is expected to appear tomorrow (December 11) before the presiding magistrate, Beatrice Kayinza for ruling on his bail application. The suspects were arraigned before separate magistrates where they denied charges of alleged neglect of duty.

They were arrested jointly with the bodyguard and driver of former BoU executive director for Supervision, Justine Bagyenda. Both the driver and body guard were not presented in court on Monday.               

Meanwhile Bagyenda has put herself in an uneviable situation when she confessed that she solicited for the buyers of Global Trust Bank and National Bank of Commerce by calling potential and eventual buyers dfcu Bank and Crane Bank. She also said no basic documentations was prepared prior to the said phone calls.    

Bagyenda’s revelation seemed to rile the committee members who in the last six weeks of the inquiry have not been kind to Bagyenda who they think is arrogant. The Bank of Uganda governo Bank of Uganda said he didn’t authorize Bagyenda to make the phone calls or initiate the sale of the said commercial banks.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

BoU Probe Exposes Poor Governance Practices, Says IGG

Justice Irene Mulyagonja, the Inspector General of Government (IGG) has observed that the on-going probe on Bank of Uganda (BoU) is a result of poor governance practices, Uganda Radio Network (URN) reports.

Mulyagonja says that failure to enforce good governance practices enabled corrupt officials at Central Bank to engage in corrupt tendencies. She stressed the need to increase accountability for governance in the fight against corruption.

The parliamentary committee on Commissions, Statutory Authorities and State Enterprises (COSASE) is currently probing BoU’s decision to close 7 banks namely; Tefe Bank, International Credit Bank Ltd, Greenland Bank, The Co-operative Bank, National Bank of Commerce, Global Trust Bank and the sale of Crane Bank Ltd to DFCU in 2016.

The committee also found that the International Credit Bank (ICB) was fraudulently closed in 1998 while the 35-year-old Cooperative Bank that was closed in 1999 was closed unclear circumstances with no report from BoU.

Speaking at a media briefing, Mulyagonja said that preventive measures such as civic engagement of citizens to be able to demand for accountability from their leaders as well as increased government accountability are more effective than investigations, arresting and prosecuting those involved in corruption cases.

According to Mulyagonja, over the past three years, her office has managed to investigate and prosecute a total 142 public officials out of which 99 were convicted, accounting for 69.7 per cent of the cases prosecuted.

Mulyagonja also says that there are no significant gains by arresting and prosecuting since the chances of recovering the money are low.

She calls for major focus on preventive measures rather than carrying out investigations after damage has been made.

Bank of Uganda Officials Bought Assets In Closed Banks

Parliament’s Committee of Commissions Statutory Authorities and State Enterprises (COSASE) is investigating into the possibility that some of the staff at the Central Bank who had been hired to oversee the liquidation of some of the closed Banks are the very people that bought the assets in question.

Mbarara Municipality MP, Michael Tusiime Tuesday tabled a letter written and signed by Benedict Ssekabira, the Director Financial Markets and Development Coordination at BoU on behalf of Nile River Acquisition Company on the loan portfolio of Greenland Bank, International Credit Bank and Cooperative Bank yet the Central Bank had designated Ssekabira as the liquidation agent to oversee the sale of the loan portfolio.

The loan portfolio under contention was over Shs135bn but Bank of Uganda sold them at Shs8bn to Nile River Acquisition Company, which was said to be based in Mauritius. This indicates a 93% discount. Tusiime wondered how the agent of the liquidator who was paid for liquidation took part in identifying the buyer- the Nile River Acquisition.

COSASE Chairperson, Abdu Katuntu wondered how such a mess could have taken place at an institution like BoU. “Governor I don’t know if you see the predicament you are in, this doesn’t look tiny. I can’t understand how a Bank of Uganda officer can be an agent of Nile River Acquisition,” Katuntu said.

He added: “He was hired by BoU to do the exit strategy; these documents show that he is eventually the buyer of the portfolio. He is signing on behalf of Nile River. He ceased being consultant. This is something that needs to be interrogated.”

Another person that is said to have benefited from the loan portfolio is said to have been one of the consultants of J N Kirkland Associates, Kakembo Katende.

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.

 SOURCE: PMLDaily.com

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