Crane Bank closure: Bank Of Uganda officials fail to account for sale of Sudhir’s Bank
Mutebile has failed to justify the sale of Crane Bank

In a report presented by the parliamentary Committee on Commission, Statutory Authorities and State Enterprise before parliament, argued government not to renew BoU Governor Emmanuel Tumusiime Mutebile and his Deputy Dr Luis Kasekende contract after it expires.

Accusing them of mismanagement the time it closed and sold off the seven commercial banks particularly Crane Bank Limited.

COSASE also wants Justice Bagyenda, the former Executive Director for Commercial Banks supervision, Legal Counsel Margaret Kasule and Benedict Ssekabira the Director of Financial Markets Development Coordination (FMDC) reproached.

The 27 under writers of this report out of the 35 MPs on the committee indicated that BoU Board needs to strengthen the role played by its supervisory department.

“The Board did not adequately supervise management in the process of liquidating the financial institutions,” the report reads in parts.

“Good corporate governance principles would require that the position of chairperson and Vice chairperson of the board is separated from the position of Chief Executive (Governor) and his Deputy. It’s therefore, the recommendation of this committee that article 161(4) of the Constitution be reviewed to separate the offices of the leadership of the board and top management of BoU,” COSASE report indicated.

The report also filed illegalities during closure and sale of Crane Bank.

“The principles of legality therefore, was highly compromised. This is exacerbated by the absence of minute or any record detailing the process of arriving at the figures.”

Further observation also indicated BoU failure to value CBL assets and liabilities before selling them to DFCU. A process they called “imprudent”.

The committee proceeded to say that “the inevitable conclusion therefore, is that BoU did not know the exact assets and liabilities it was disposing off. The reliance by the Central Bank on the due diligence undertaken by an interested party and eventually purchaser to purport to determine the value of assets and liabilities was imprudent and an abdication of the Statutory responsibility.”

COSASE also discovered that CBL Board did not endorse the selling of their bank. BoU made sole decision.

“The Board having resolved as above, it was ultra vires (acting without legal authority) for management to agree, conclude and indeed execute a P&A that excluded some assets and liabilities as stipulated in schedules 2&3 contrary to the resolutions of the Board. These exclusions disadvantaged both BoU and CBL.”

The report also said: “the opinion of the committee was irregular to commit the CBL share-holder for diligence on the part of BoU officials, by their action. The BoU Officials occasioned loss of CBL and ultimately BoU. Further, by the Boards resolutions to charge the interest on the shareholder for money ‘lent’ to DFCU, the committee find it inconceivable at CBL shareholders who were not party to the P&A and also Shs200billion liability agreement between DFCU and BoU would be called upon to bear the cost of negligence on the part of BoU officials.”

“The above notwithstanding, at pages 7&8 of the special audit report of February 2019, on the accountability for the Shs478billion injected into CBL, the Auditor General observed that CBL liquidity position was significantly below compliance level for the first two months of the statutory management period. However, in the last month of statutory management, from 13 Jan 2017 to 24 Jan 2017, CBL met the required liquidity compliance levels. Therefore, the banks liquidity position had stabilised.” The committee members added.

Other recommendations by COSASE members in the report include confiscation of properties of some BoU Officials and others for participating in the sale of the seven commercial banks.

They also recommended further investigation by police to find out the location of 50b claimed by BoU, that they injected into the seven banks to prevent their collapse.

And next week, legislators are believed to start discussing the COSASE report.