COSASE Report On Closed Banks Ready, Harsh Penalties Await Top BoU Officials

KAMPALA, Uganda: The probe into the closure of the seven commercial banks by the Committee on Commissions, State Authorities and State Enterprises (COSASE) of Parliament has been finalized.

The Cooperator News has established that all the committee members of the outgoing COSASE probe have appended their signatures into the report to be tabled on the floor of parliament for further debate.  This development means all the MPs agreed to the recommendation.

The Members of Parliament started probing BoU on October 2018 basing on the Auditor General John Muwanga’s report on seven defunct banks which he said were closed in disregard of laid-down guidelines as stipulated in the Financial Institutions’ Statute and Bank of Uganda Act.

The seven banks in question include Teefe Bank, International Credit Bank Limited, Greenland Bank, Co-operative Bank, National Bank of Commerce (NBC), Global Trust Bank and the most recent Crane Bank Limited.

The probe heard that some of these banks were reportedly closed in hours, while some were sold on the phone call.

The committee during its probe heard from all the BoU officials and all board members of the seven closed banks.

It should be noted that on 28th  November 2017,  COSASE requested the Auditor General to undertake a special audit on the closure of all Commercial banks by the Central Bank.

After seven months, the special audit report came out, revealing how BoU controversially closed some of the banks.

The special audit report revealed that during the statutory management period, the Central Bank splashed Shs478.8bn into Crane Bank as liquidity support between 21st October 2016 and 9th January 2017.

According to close sources that attended the drafting of the report, COSASE has among others outlined very stringent and exacting measures against the Bank of Uganda officials implicated in the irregular sale of the defunct banks.

The top BoU officials such as Governor Emmanuel Tumusiime-Mutebile, his deputy Dr. Louis Kasekende and Ben Sekabira, Director Financial Markets Development Coordination and Margaret Kasule, the legal counsel, were among those grilled for several weeks by the committee.

The Cooperator News has established that the committee has among others recommended that contracts of Governor Bank of Uganda. Prof. Tumusiime Mutebile and his deputy Louis Kasekende, that are due to expire not be renewed. The duo is also due for retirement.

In the report to be presented to parliament, the MPs also want MMKAS Advocates to be delisted as one of the service providers of BoU following the firm’s controversial payments of Shs4.2 billion even as its officials also serve as directors of some commercial banks which are regulated by BoU. The MPs took that as a conflict of interest, saying with such BoU cannot act decisively on such banks in case of a problem.

The MPs have also recommended that BoU workers should not buy any shares in banks through the Staff Retirement Benefits Scheme. They say this also creates a conflict of interest like it happened when BoU transferred assets of Crane Bank Limited and Global Trust Bank Uganda to Dfcu Bank where the central bank’s staff had 0.59 percent of the shares in Dfcu Bank.

In the report, MPs also want BoU to compensate former shareholders of the banks that they were closed. The Shareholders who appeared before the MPs during the inquiry asked for compensations that will see BoU pay in trillions of shillings. The MPs also want BoU officials to cough about Shs270 billion injected in Crane Bank Limited (CBL but cannot be traced as BoU officials failed to account for the money that was part of Shs478 billion said to have been put in CBL as liquidity support and other costs during the receivership between October 20, 2016, and January 25, 2017.

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