BoU bosses quizzed on Shs900m legal fees

Margaret Kasule (BoU legal counsel): Most of the legal opinions were given during meetings and then there were agreements on what should be done.
Abdu Katuntu (Cosase chairman): But there are no minutes for the said meetings.
Kasule: It is already admitted by the central bank that no minutes were kept but decisions were implemented.
Katuntu: How do you convince us that there was legal advice when we don’t see it, and then you pay these legal fees for the work we can’t see?
Byandaala: (committee member): Why did they make a mistake on having the outputs in writing?
Kasule: Just for information to this committee, there were attempts to have minutes but the meetings were so frequent. People would walk from one meeting to another that it became very difficult to have the minutes.
Okupa (committee member): In a meeting, people are not walking, they are seated and that is when minutes are written. The question is very clear, can we have the legal advice?
Kasule: Mr chairman, I don’t have any written legal opinion.
Okupa: So how did you pay the legal advisers? There are no minutes, there is no legal advice, how did you compute the legal fees?
Kasule: With regard to how we computed the fees, some of these fees were agreed and with regard to how they were agreed, I know the Governor approved them.
Okupa: Before the approval, how did you arrive at the figures? There must be a formula and evidence.
Among (committee vice chairperson): That is one of the reasons why we asked for the terms of reference for those lawyers. What is it that they did that they deserved all that amount ($251,045 or Shs923m).
Kasule: Mr chairman, for us not to waste time of this committee, we have the documents in which the terms for MMAKs Advocates were laid out. There are two documents.
Okupa: Can you give us the names of the documents.
Kasule: There is a memo by the former executive director for supervision (Justine Bagyenda) to the Governor detailing the terms of reference and what was supposed to be done.
Byandala: How can one person write these documents on behalf of BoU? This is a serious matter, you can’t just write things anyhow.
Katuntu: For the purposes of record from Mr Okupa’s question, there is no written legal opinion, is that correct?
Kasule: Yes.
Katuntu: So we can’t interrogate that any further, there isn’t any.
Among: Chairman, it is also in the record that there are no terms of reference because when you look at the letter which is here, the letter says we propose to work with BoU external lawyers, which is MMAKS Advocates, as transaction advisors.
Kasule: Mr chairman, there is another document.
Okupa: If she has them, let her hand them over.
Kasule: The document is dated November 30, 2016, to the Governor from Ms Bagyeda. It is a request for the Governor’s endorsement of letters of engagement for and payment of professional fees in respect of services undertaken by MMAKS Advocates, KPMG and PWC.
Katuntu: That is a bid.
Among: Madam Kasule, as a lawyer, are those terms of reference? This looks to be a bid. These are two different things.
Katuntu: Madam Kasule, that was a request for payment after the work was purportedly executed. That cannot be terms of reference. Terms of reference should be before the work is executed, they are the terms of engagement. So what we required was the terms of engagement.
Kasule: Mr chairman, this document says ‘request for Governors endorsement of letters of engagement and payment for.’ So it was requesting for endorsement and approval of payment for professional fees.
Katuntu: For the work already executed?
Kasule: May be because I did not sign this memo. I would request the former executive director for supervision (Bagyenda) to speak about it.
Bagyenda: Thank you chair, the documents, as read, had two requests; now according to the way we used to write these memos, we requested the Governor to approve payments and we also requested the Governor to endorse the letters of engagement which were attached.
Okupa: You were asking for approval of payment whose work had already been done. How do you ask again for endorsement of letters of engagement when the work has been executed?
Bagyenda: That was the practice in the Bank that you present the letters of engagement, which is studied by the approving authority, and you also present the PLS.
Byandala: Why don’t you give us the letters of engagement, since you refer to them in your letter?
Katuntu: From Mr Byandala’s question, when was that letter of engagement, after work had been executed or before?
Bagyenda: The practice was…
Katuntu: Just answer the question.
Bagyenda: I have to explain because…
Katuntu: Please, Madam Bagyenda, just answer the question then you will explain later.
Bagyenda: Mr chairman, again I will have to tell you that I need to go and check when. I don’t remember the dates.
Katuntu: Can you clarify, please?
Bagyenda: May I request that if I am under oath and I don’t remember these dates, the questions are leading me into what was first or the other; I am not remembering those dates and I am reading a letter, may I request, Mr chair?
Katuntu: Do you think, logically, that you an issue the letter of engagement after the work has been executed?
Bagyenda: That was the practice.
Byandala: You cannot send there how payments are going to be before the consultant has accepted your terms of engagement. How can you accept terms of payment when you have not accepted what you are going to do?
Bagyenda: It is because I read half of the request. Can I read what is entirely contained in the letter?
Katuntu: It is your letter; you can proceed so long as what you read answers the question.
Bagyenda: (reads) If I got the question correctly, as I read in the request, final payment would be done when the work is done. The firm (MMAKS advocates) was engaged as transaction advisers who offered legal services available to continue participating in the first takeover activities and coordinate everything that was necessary for Crane Bank resolution.
Okupa: So where is the letter of engagement?
Bagyenda: Mr chair, can I request that this letter be tabled because I am no longer privy to bank documents. Can I have a look at the file?
Katuntu: We do not have the documents you want.
Anywar (committee member): I just wanted to seek clarification from the executive director for supervision (Tumubweine Twinemanzi). Is it a practice not to have minutes?
Twinemanzi: I don’t think it is a practice for any institution to have meetings without minutes.
Katuntu: You remember before we broke off for Christmas, we interrogated issues about records. The issue is that there are no records; it is now upon us to form a conclusion; there are no minutes, there are no records.
Kasibante (committee member): I would like to get it from the legal counsel, these meetings without minutes, did they have agenda? Did you sit to process any agenda?
Katuntu: Without even records, how would you know that was their agenda?
Kasibante: So, without an agenda, what were you doing? Were they breakfast meetings?
Katuntu: Mr Kasibante, the issue is that there are no records, let us not flog a dead horse.
Among: We have heard it from the leader of delegation (Mr Twinemanzi) and the legal counsel that there are no minutes, and if there are no minutes, can we move on to another issue since there are quite a number of issues?
Katuntu: I suggest we have interrogated that enough, so let us proceed to another question.
Kasibante: Mr Chairman, but for the good of this committee, let Ms Bagyenda tell us whether the Governor indeed honoured the request to endorse the letters of engagement.
Bagyenda: According to this document, the Governor put ‘approved.’
Katuntu: By the time you sent the requisition for that money, was there any work that had been completed?
Bagyenda: Allow me speak to the documents that are in front of me dated November 28, 2016, addressed to legal counsel on instructions we had given to MMAKs as a transaction adviser. And we were saying, “instructions to advise the pre-takeover stage on the intervention of crane bank.”
We took over Crane Bank on the October 20 2016, all the instructions are there and a fee was attached. In effect, the payment we made was 70 per cent of the work.
Katuntu: Just answer the question, by the time you wrote the memo, is there any work that had been accomplished, and was there any invoice attached?
Bagyenda: Yes, Mr chairman.
Katuntu: And that work attached was already worth 70 per cent?
Bagyenda: No, I don’t remember that.
Katuntu: How much money was being requisitioned in the invoice?
Bagyenda: You want to know the amount?
Katuntu: When I say how much, then you ask whether I want to know…
Bagyenda: Two hundred fifty one thousand forty five US dollars ($251,045, about Shs923m).
Katuntu: Was that request paid?
Bagyenda: Yes.
Katuntu: I think we close our case on that.
Brig Takirwa: I am disturbed by the members of that negotiating team because in the first place, there was no legal officer on that team. Otherwise, minutes should have been prepared with a legal opinion provided. So was the negotiations voluntary or you were forced to meet and come up with whatever decisions you made? Secondly, why was there a rush in the sale of the banks when you were aware the process was not complete, and can we claim this money back if the transaction was illegal?
Katuntu: The second one will be a recommendation of the committee after we have analysed the facts.
Bagyenda: Mr chairman, may I again plead to have these documents on MMAKs in my hand over envelope? There was MMAKS letter of engagement, there was a service level agreement between BoU and MMAKS.
Katuntu: I don’t have those documents, Mr Twinemanzi, where are the documents because Ms Bagyenda keeps referring to them and we don’t have them.
Twinemanzi: What she refers to as a letter of engagement is the same document we have been reading here.
Bagyenda: Tomorrow as we are coming back, let them bring this envelop marked 11, where there was MMAKS letters of engagement for recoveries dated January 20, 2017; Service-level agreement between BoU and MMAKS commencement date January 16, 2017, and also this letter of engagement that was attached to this memo to the Governor.
Katuntu: We do not have them here; they are not before the committee.
So Mr Twinemanzi, you are hereby directed to come here with those documents, actually come with envelop 11.