MPs, BoU set for showdown as closed banks inquiry starts
Not happy. Former workers of Crane Bank speak to the media after petitioning Parliament Speaker Rebecca Kadaga over their terminal benefits at Parliament yesterday. PHOTO BY ALEX ESAGALA
What you need to know:
- In the Auditor General’s forensic audit that was also referenced in the petition, auditors discovered that assets worth Shs23b that were formerly owned by Global Trust Bank were not transferred to dfcu in the purchase and assumption agreements when the bank was closed in July 2014.
Parliament. Bank of Uganda (BoU) Governor Emmanuel Tumusiime-Mutebile will today lead a team of top management from the Central Bank to face the lawmakers on the Parliamentary committee investigating irregularities in the closure of commercial banks.
The Parliament’s Commissions, Statutory Authorities and State Enterprises (Cosase) inquiry will focus on the mismanagement of closed banks and dealings with external lawyers as unearthed by the Auditor General in his special audit report to Parliament.
The lawmakers will ask the governor and his deputy Louis Kasekende to answer queries raised by the Auditor General, Mr John Muwanga. A whistle-blower also told Cosase that BoU officials wrote off Crane Bank loans amounting to Shs600b through unclear circumstances.
A confidential special audit report of the Auditor General (AG) has revealed weaknesses in the management of the Central Bank and questioned the governor and his team for the hitches in the closure of at least seven commercial banks. The board chaired by the governor will be required to respond to these queries.
For instance, Mr Muwanga queried BoU officials on the 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). All the former directors of the above closed banks will also be cross-examined by the committee this week.
The governor and his team will also respond to queries regarding unaccounted for funds, missing land titles and customer loans that were inherited from closed banks and sold at an undervalued rate. The MPs led by Abdul Katuntu will also seek to open the veil on the disputed sale of Crane Bank to dfcu at Shs200b. The AG observed that the assets and liabilities of Crane Bank were sold without any valuation.
Pressure was further piled on BoU and dfcu Bank by 400 ex-employees of Crane Bank who yesterday sought audience with Speaker Rebecca Kadaga to present a petition demanding an investigation into a Purchase of Assets and Assumption of Liabilities (P&A) agreement that was signed between BoU and dfcu Bank without the knowledge of ex-Crane bank staff. The AG also queried this agreement. They are demanding Shs48b in terminal benefits.
“Your petitioners further contend that BoU and dfcu Bank acted in bad faith, negligently, fraudulently and in breach of their respective duties under the Constitution and the law regarding the protection of workers’ interests during and after the impugned takeover of CBL,” the petition reads, in part.
The case of Global Trust Bank
In the Auditor General’s forensic audit that was also referenced in the petition, auditors discovered that assets worth Shs23b that were formerly owned by Global Trust Bank were not transferred to dfcu in the purchase and assumption agreements when the bank was closed in July 2014.
The assets included cash balances [Shs6.6b], amounts due from other banking institutions [Shs2.3b], other assets [Shs5.1b], amounts due from group companies [Shs9m], property and equipment [Shs5.6b], intangible assets [Shs758m] and deferred tax [Shs2.4b].
Auditors failed to trace Shs9b that was taken from other banking institutions as indicated in the inventory report but was not reflected on the recovery account.
