UETCL orders closure of accounts in Stanbic Bank over Shs8b dispute

Uganda Electricity Transmission Company Limited (UETCL) board has ordered closure of the agency’s accounts in Stanbic Bank, according to details seen by Daily Monitor.

This decision follows a UETCL board meeting on January 24, which made a number of resolutions over a dispute involving Shs8b.

“Effect a transfer of all funds held with Stanbic Bank ... to any other bank where UETCL [holds] a corporate account and UETCL projects operational account ... to the Bank of Uganda,” a document seen by Daily Monitor reads in part, noting the decision will be implemented after ascertaining whether the Public Procurement and Public Disposal of Assets Authority Act and regulations are meant to be upheld in selecting an appropriate commercial bank.

Genesis
UETCL, according to the documents, holds a corporate and projects account with Stanbic Bank on which the agency had been earning interest rate of 6.5 per cent and 3 per cent per annum, respectively.

The projects account is where UETCL places money for compensation of project affected persons before it is handed over.

However, an audit report of the power transmitter for the period ended June 2019, noted that Stanbic Bank was paying lower interest on the projects account than on operations yet the former holds larger amounts of money.

The audit committee recommended for the bank to pay higher interest and a claim of Shs8b.
In response, Stanbic Bank instead offered Shs1.2b goodwill.

The document further states that Stanbic Bank in November 2019 started crediting UETCL’s operations account with 7.5 per cent interest despite UETCL’s request for implementation in October 2019.

Consequently, the board directed management of UETCL to revoke a June 2018 decision to open an escrow account with Stanbic Bank, which would have otherwise managed funds meant to service a loan between UETCL and ZTE for reinforcing its fiber network. UETCL management was also ordered to search for another commercial bank agreeable to both UETCL and ZTE where the escrow account would be held.

Furthermore, UETCL would, according to the documents, lodge a complaint to the executive director banking supervision, Bank of Uganda to recover the Shs8b.

The board also threatened legal action against Stanbic Bank incase no remedy was rendered through Bank of Uganda.

UETCL also called for an investigation into the matter to ascertain whether there was any negligence from its staff leading to under declaration of interest income saying appropriate disciplinary action will be taken to that effect.