BoU tasked on closure of Cooperative Bank

The Solicitor General has written to Bank of Uganda (BoU), demanding to know why Cooperative Bank was sold in a controversial deal that has been questioned by the Auditor General and Parliament.
In a January 11 letter addressed to BoU Legal Counsel Margaret Kasule, Mr JBR Suuza, who wrote on behalf of the Solicitor General, asked for all information pertaining to the winding up of Cooperative Bank.  
This comes after the Minister of Trade, Industry and Cooperatives, Mr Henry Mwebesa, sought legal opinion from the Solicitor General regarding the re-establishment of the Cooperative bank.

Mr Suuza sought to know why BoU seized and sold assets of the bank that was established under the Cooperative Societies Statute of 1963. BoU closed the Cooperative Bank that had been established in 1997 under the Companies Act. The bank was closed on May 20, 1999, over inadequate capitalisation and insolvency.
President Museveni has since given the Trade ministry a go-ahead to re-establish Cooperative Bank to provide financing to the cooperative movement.
Minister Mwebesa also demanded details of shareholders who borrowed money from the defunct Cooperative Bank.

When contacted, Ms Charity Mugumya, the BoU director of communications, explained that Cooperative Bank was transformed into a corporate entity and its liquidation was concluded without any issues.
“The Cooperative Bank was established under the law in 1963, and transformed into a corporate entity in 1997 under the Companies Act, as a precondition to receiving USAID funding. This transformed entity is what was closed in 1999 and whose liquidation was concluded on July 25, 2020.”

However, Ms Mugumya could not respond to follow-up questions on why BoU sold off the bank assets.
However, Mr Leonard Okello, the chief executive officer of Uhuru Institute for Social Development, which was set up to support the revival of cooperatives in Uganda and Africa, told Monitor yesterday that “the Cooperative Bank still exists and is not closed in the books of the registrar of companies and the Registrar of Cooperatives.”
“The truth is that Cooperative Bank was a cooperative registered by the Registrar of Cooperatives under the then Ministry of Cooperatives and Marketing, with 25 cooperative unions and 25 primary cooperative societies as shareholders to date,” Mr Okello said.

He explained that “nine clever Ugandans registered a similar private bank (a private corporation of individual shareholders) with identical names as a private company at the then Registrar of Companies under the Ministry of Finance.”
Mr Ivan Asiimwe, the General Secretary, Uganda Cooperative Alliance Ltd, yesterday said when the Bank was closed on May 19, 1999, Uganda Cooperative Alliance (UCA) wrote to the Inspector General of Government (IGG) on October 20, 1999, seeking to understand why and how the Cooperative Bank had been closed.
But he said there was no response.
He revealed that the bank was closed and sold before the registrar of cooperative societies had even cancelled its registration as a cooperative.