Senior Tropical Bank managers, including the executive director Denis Muganga Kakeeto, have been sacked over fraud, according to Bank of Uganda.
Mr Kakeeto, Mr Maurice Mugwiri, the Tropical bank head of operations, and Mr Hussein Sentamu, the bank’s head of credit, were fired last Friday for undisclosed reasons.
However, Bank of Uganda, yesterday told Daily Monitor, the trio had been sacked because of fraud, contrary to claims that they had resigned due to the unhealthy financial conditions of Tropical Bank.
“The stories in the media are misleadingly stating that they quit because the bank is bankrupt. The information we have [is that] Mr Kakeeto [the executive director] and his colleagues were dismissed for fraud and they did not resign as alleged,” Dr Adam Mugume, the Bank of Uganda director for research and acting deputy governor, told Daily Monitor in an email.
However, Dr Mugume did not provide details of the alleged fraud but emphasised there was no reason to panic because the bank remains sound.
Yesterday, a statement emailed to Daily Monitor by Mr Johnson Galabuzi, the Tropical Bank head of retail banking, said the bank was investigating any “fraudulent activities and shall take action against anyone found culpable including those who have left”.
The statement did not give details on the extent or subject of the fraud, which Tropical Bank said had been reported to the Bank of Uganda and Uganda Bankers Association.
“The senior members were subjected to a disciplinary process and subsequently dismissed by the board over fraudulent activities and gross violation of policies and procedures,” the statement said.
Efforts to reach the implicated former staff were futile.
At least 99.91 per cent of Tropical Bank is owned by the Libyan government through the Libyan Foreign Bank.
Uganda government owns the remaining 0.09 per cent through the Ministry of Finance.
Struggle with losses
Tropical Bank has been struggling with growing losses for at least three years now. During the period ended December 2019, Tropical Bank posted a loss of about Shs23.9b. This had grown substantially from Shs5.7b in 2018.
The bank also saw total expenditure grow to Shs53.6b from Shs48.9b in 2018.
Total assets grew to about Shs316b from Shs289.5b while customer deposits grew to Shs223b compared to Shs182b in 2018.
During the period, the bank reported a drop in core capital to Shs21b, which had fallen below the Central Bank’s Shs25b minimum requirement.
Core capital had by December 2019 fallen by at least Shs3.8 billion while core capital to total risk weighted assets ratio stood at 8.22 per cent.
Prior to the publication of the bank’s financials, the Central Bank had directed Tropical Bank to submit a capital restoration plan.
In notes published along its financials, Tropical Bank said it had complied with the directive before the end of March 2020, and during this time, shareholders had injected additional capital amounting to Shs3.8b.
“The implementation of the submitted capital restoration plan is ongoing, and is in accordance with the timeliness specified, which allows for up to 180 days for this process,” the bank said then.
Ownership of the bank
Tropical Bank is licensed and supervised by Bank of Uganda. As of December 2019, Tropical Bank’s assets stood at Shs316b. The bank was established in 1973 as the Arab Libyan Bank for Foreign Trade and Development.
In 1994, the name was changed to Tropical Africa Bank and again changed to Tropical Bank. During the war that overthrew Muammar Gaddafi, the government temporarily took charge of the bank but later exited.