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Scandals that have rocked BoU over the years
Bank of Uganda headquarters in Kampala. PHOTO/ FILE
What you need to know:
- Officials in the Bank of Uganda in charge of currency, procurement and security were arrested by the State House Anti-Corruption Unit following an incident where a chartered plane carrying Uganda currency also carried extra private cargo, which triggered suspicion of illegally printed currency
Investigations by this publication and security agencies have established that the loss of billions of shillings at the Bank of Uganda may have been an insider job orchestrated through collusion, contrary to earlier reports that the bank’s systems were breached.
In this article, we also look at the previous scandals that have rocked the central bank over the years.
2011: Shs5b bicycle scandal
The Bank of Uganda (BoU) was accused of enabling the loss of Shs5b to a ghost company for failing to
detect forgeries in the bill of lading used to pay the ghost company. The money was meant for the procurement of 70,000 bicycles meant for local council officials.
The Ministry of Local Government said they had paid Shs100m to authenticate the documents of the company, a job they failed to do leading to the loss of huge sums of money. The parties involved argued that the BoU should have noticed the inconsistencies and not effected the payment. About five
government officials were in 2014 sentenced to 10 years in jail for their involvement in the scandal, but none was from the Bank.
2011:$740m fighter jets
Under the cover of classified expenditure, the Bank of Uganda handed out $740m to the Ministry of Defence to purchase fighter jets and other military hardware without Parliamentary approval as required by law. The purchase, which came shortly after the general election, further cast the Defence docket as a conduit through which the central bank channelled public finances to fund politics. President Museveni, in an attempt to regularise the expenditure, persuaded the National Resistance Movement (NRM) Parliamentary caucus to pass the supplementary retrospectively.
The then Secretary to the Treasury, Keith Muhakanizi, while appearing before a Parliament Committee apologised on behalf of the institution for having enabled the misuse of taxpayer money. Mr Emmanuel Mutebile, the then governor, told The Financial Times newspaper that he had disagreed with Mr Museveni’s decision to spend the money, which at the time pushed reserves down from six to four months of import cover.
Shs142b Basajjabala case
BoU was accused of facilitating the loss of billions of shillings when it guaranteed loans for businessman Hassan Basajjabala. Between 2000 and 2011, Mr Basajjabala entered into contracts with the Kampala Capital City Authority to manage and redevelop Owino, Nakasero and Shwuliyako markets as well as the Constitutional Square but the contracts were cancelled following unrest from traders.
The businessman then got loans worth $65m from different commercial banks using letters issued by the Central Bank which said the government owed Basajjabalaba money in compensation. The businessman, however, defaulted on the payment, and the commercial banks used the letters to recover the money from the Consolidated Fund. Leading to the loss of Shs142b taxpayer funds 2015: Multiple cyber attacks Between July and December 2015, hackers and government officials attempted to steal Shs81b from the BoU. The first attempt happened in July targeting $12m, but was foiled, only for the masterminds to resurface in December, this time aiming at $2m.
Government officials are believed to have shared passwords with tech-savvy individuals, who made another attempt to seal funds in January 2016.
2018: Crane bank sale scandal
Parliament ordered the Auditor General to conduct a broad forensic audit into the operations of the bank and demand accountability for Shs200b injected into the defunct Crane Bank before it was sold off. The taxpayers’ money into a privately owned bank was invested under the guise of capitalisation. But shareholders of the defunct bank accused the BoU of mismanaging the bank while under its management from 2016 and selling the bank at a giveaway price. Accordingly, they argued the sale agreements did not state the value of assets and liabilities, a contravention of the Financial Institutions Act of 2003.
2019: Currency saga
Officials in the Bank of Uganda in charge of currency, procurement and security were arrested by the State House Anti-Corruption Unit following an incident where a chartered plane carrying Uganda currency also carried extra private cargo, which triggered suspicion of illegally printed currency.
BoU governor Mutebile wrote to the anti-corruption unit asking them to investigate the matter, which also led to the arrest of officials in the Customs Department, the airport office and the Civil Aviation Authority. The investigation sought to establish whether extra cash had been printed more than what was ordered and whether procedures for printing currency had been followed. Three top employees of the Bank, the Director of Currency, the Assistant Currency Director and the verification officer were forced out of office, arrested and charged in the Anti-Corruption court with abuse of fiche, negligence of duty and corruption.
November 6, 2024: Theft of old notes
The Anti-Corruption Court sentenced the former head of verification at the BoU to three years imprisonment for stealing old currency notes that were meant for destruction. He was found guilty of abuse of office, for splitting bundles, removing and pocketing notes instead of feeding them to the punching machines. His accusers said his actions damaged the trust of the officials in charge of the country’s monetary system.
