BoU back in the spotlight, features in US State Dept corruption column



The United States government has faulted Uganda government for failing to take action against Bank of Uganda officials implicated in the massive fraud and illegal closure of seven commercial banks.


In its Country Report 2019, section 4: titled Corruption and lack of transparency in government the US government refers to the Parliament’s Committee on Commissions, Statutory Authorities, and State Enterprises (COSASE) findings into “irregular conduct” by the Bank of Uganda in the process of taking over seven defunct banks.


The US says whereas the report recommended that officials responsible should account for their actions, the government has refused to implement the recommendations.

The US is also concerned by COSASE failure to name all Bank of Uganda officials behind the scam.


“Local media reported that MPs across political lines faulted the COSASE for not naming individuals responsible or recommending any arrests,” the report says.


“On February 19, the Inspector General of Government (IGG) asked ISO to investigate allegations that members of the COSASE had received bribes from officials in the central bank, a move that was rejected by Speaker of Parliament Rebecca Kadaga.

Kadaga wrote that it was an attempt to attack parliamentary investigations and “blackmail” and “intimidate” parliamentarians.”


“By year’s end there were no criminal proceedings or resignations resulting from the COSASE report,” the report noted.


It is only Deputy Government Louis Kasekende that has left the Central Bank after President Museveni refused to renew his contract.


It is not clear whether the president was implementing some of the COSASE recommendations.


The COSASE Report called for the compensation of directors in three banks – the Crane Bank Ltd, National Bank of Commerce, and Global Trust Bank, after the MPs faulted Bank of Uganda for negligently disposing of the defunct banks and breaking several provisions of there Financial Institutions Act (2004).


MPs who investigated the rot at Central Bank led by Abdu Katuntu found that the process of selling Global Trust Bank, National Bank of Commerce and Crane Bank Ltd on several instances “contravened section 95 (3) of the FIA 2004” and lacked the principles of “prudence, transparency and fairness” enshrined in the constitution and the FIA Act.

The MPs called for action against the Bank of Uganda officials involved in the seizure and irregular sale of the banks, as well as compensations to the aggrieved bank owners.

“The BoU having failed to value the assets and liabilities of GTB, NBC and CBL and considering the lapse of time and impossibility in revaluation of the assets should address the probable financial loss involved,” the report recommends.


Directors in the three banks variously faulted Bank of Uganda and her senior officials for acting arbitrarily at the time the officials carried out the bank closures.


The National Bank of Commerce whose key shareholders include the former powerful Prime Minister Amama Mbabazi, the current Prime Minister Dr. Ruhakana Rugunda and prominent personalities from Kizezi region was closed on September 27, 2012, by the Central Bank on allegations that it lacked the minimum capital requirement of UGX. 10bn.


Appearing before the committee the shareholders of the NBC led by the Chairman Board of Directors, Matthew Rukikaire noted that their bank was summary, arbitrary and illegally closed on orders of Justine Bagyenda who was the Executive Director, Bank Supervision.

Global Trust Bank, MPs found, was controversially sold to dfcu Bank through a confidential purchase agreement in which BoU entered into with dfcu Bank on July 10, 2014, before the bank was eventually closed on July 24, 2014.


The central bank in October 2016 closed Crane Bank Ltd, previously one of the best performing banks before controversially selling it dfcu Bank in January 2017 for a paltry UGX 200 billion.


This article was originally published on PML Daily.

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