Bank of Uganda wants commercial banks, microfinance institutions and other credit-taking initiatives to report on any financial transactions of civil society think tank, Advocates Coalition for Development and Environment (Acode), Sunday Monitor has established.
In a March 16 memo to all financial institutions signed by Central Bank Governor, Emmanuel Tumusiime Mutebile said his attention had been “brought to the activities of an NGO called Advocates Coalition for Development and Environment (Acode) which is suspected to be engaged in suspicious transactions.”
Summoning his powers under Section 118 of the Financial Institutions Act and Section 82 of the Micro Finance Deposit Taking Institutions of 2003, he asked all financial institutions with “which Acode operates any account(s) are required urgently to provide particulars relating to Acode’s accounts not later than Wednesday March 21, 2012.” He asked all recipients of his letter (financial institutions) to “respond to this circular even in the case of a Nil report.”
Dr Jan Tibamwenda, the Director Communications at Bank of Uganda, confirmed that the Central Bank had probed Acode accounts. “Is the letter by the governor on Acode accounts dated March 16, 2012 authentic? The answer is yes,” Dr Tibamwenda said in response to questions from Sunday Monitor.
He said it was “according to common practice in the banking system, when Bank of Uganda receives information from other commercial banks or security agencies to the effect that transactions on a certain bank account may be suspicious, BoU has to investigate the matter to ensure there is no illegal financial transaction. This does not mean there is anything wrong with the account. It is simply aimed at guaranteeing financial stability and a sound financial system in the country.”
This position was backed by Mr Emmanuel Kikoni of the Uganda Bankers Association who told Sunday Monitor that the Central Bank request was “perfectly normal” though he said he was not aware of the specific request in respect of Acode’s accounts.
Move not necessary?
Acode Executive Director Godber Tumushabe told Sunday Monitor that the organisation had also learnt of the existence of the instruction and the letter through a bank they transact with. He said Acode was yet to petition the Central Bank to seek clarification.
“We think it (the Central Banks demand) is something that is unnecessary and uncalled for because we would have provided all the information that the governor is asking for in that letter if he had approached us directly,” Mr Tumushabe said.
Though he said he could speculate about the motive, Mr Tumushabe said the instruction to their bankers bore the hallmarks of “the beginning of a witchhunt of NGO’s and Civil Society organisation typical in countries that discover oil (especially in less democratic societies).”
It was not possible to establish whether any other accounts held by civil society actors were being targeted in this kind of investigations.
Other sources said government was generally paying a closer look at selected NGO’s over “fears that foreigners are channeling money through the civil society to mobilise masses against it.”