Bank of Uganda resolution on Crane Bank has obvious gaps
The big newspapers in town will thank 2017 for its great share of big events - funerals, Bobi Wine’s thundering victory, Crane Bank and soon the debate over amending the Constitution. Who knows what next?
There are some smaller stories too, the routine habit of grabbing land which had begun hitting hard to reach areas like a new toothbrush forcing the Bamugemerire Commission to briefly halt proceedings.
In the story of Crane Bank, there is a lawsuit by Bank of Uganda suing for recovery of Shs400 billion; there is also now a list of 48 mostly trivial properties being sought by BoU from Crane Bank. Little is mentioned by Mr Ruparelia’s prime properties.
Munyonyo Commonwealth Resort constructed in a wetland is a red herring because it has two owners; any resolution of Munyonyo is likely to pit Bank of Uganda against government, the minority shareholder as the final accounting for equity is still pending.
Bank of Uganda has also been able this far to continue without disclosing how much of its money exactly was lost in Crane Bank; that is monies that were pumped in for which prospects of recovery are very few.
Crane Bank turned out to be too big to fail, a very costly assumption by the Central Bank. Depositors were covered 100 per cent that is those who had not fled by the time the bank closed.
Crane Bank’s affairs have also been fortunate to have the helping hand of government machinery brokering a deal between Sudhir and BoU headed by the President and assisted by the Attorney General. Very few smaller fish have had their affairs receive such attention. When Greenland was sent straight to liquidation, the amounts in question even when indexed for inflation, were much smaller.
The problem of Greenland Bank was more the problem of Suleiman Kiggundu and a political side of him which only became public much later.
The situation of Cooperative Bank, which took with it so many cooperative unions, was just a by the way. It was supposed to be replaced by an Agricultural Finance Bank, which also never materialised, but allowed the agricultural produce sector to be dominated by foreigners.
Anything short of unqualified is doomed for closure, the fate that befell National Bank of Commerce. All transactions so far reported on the purchase and liquidation of shares in Crane Bank are candidates for the anti-money laundering but it seems BoU had the information, but simply looked the other way.
The Shs400 billion as documented in the court filing leaves out some of the biggest loans that have failed or are likely to fail raising further charges on BoU’s finances.
There is a list of mostly minor debtors, briefcase businessmen and ordinary traders who owe Crane Bank small sums of money the likes of Shs5 billion or less ($1.5 million) in trade finance or some small-town deals.
These are the people the President was making fun of at Ssebaana’s funeral wake as small timers in the Kwagalana group.
The old man posted about Shs1.386 billion in profits at SWICO in his last year on this planet.
Crane Bank and a few other local banks provided finance of the last resort. This practice had systemic risks, take the money now, bring the titles later or simply bring the titles early and forget about them.
It is possible that not all of Crane Bank’s loans are properly documented as the recent disclosures show that for most key financial events, there were two books kept - one for compliance andthe other for the actual business. Some people have already gotten quite lightly and others are making a killing of this huge carcass.
Mr Ssemogerere is an Attorney-at-Law and an Advocate. [email protected]
