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Teffe Bank closed without inventory documents-BoU

BoU officials while appearing before the COSASE admitted Teffe Bank was closed without inventory report. (FILE PHOTO)

KAMPALA– Officials from Bank of Uganda have admitted before Parliament that Teffe Bank was closed in absence of inventory report.

The revelation was made Monday morning during a meeting held between MPs on the Committee of Commissions, Statutory Authorities and State Enterprises (COSASE) and officials of Bank of Uganda.

COSASE is probing findings in the special audit report by the Auditor General that is looking into closure of the seven defunct Banks by the Central Bank.

In his August 2018 report, Auditor General, John Muwanga admitted that he wasn’t availed with the Inventory report, loan schedules, customer deposit schedules and statements of affairs of Teefe Trust Bank to enable him to fulfill the specific audit objectives.

Muwanga argued that due to this limitation, he wasn’t in position to assess the status of the assets and liabilities of Teefe Trust Bank from closure to date.

Teefe Trust Bank was the first Bank to be closed in 1993 with the Central Bank arguing that the financial institution was closed due to insolvency.

In their written responses to the Committee, Bank of Uganda stated that Teefe Trust Bank was closed in February 1993 under the provisions of the Banking Act of 1959 which did not contain substantive provisions on reports that the Liquidator was required to compile.

The Central Bank further argued that powers to close the bank were accorded to the Minister and not BOU. However, BOU provided the Liquidator’s report on assets, Liquidator’s final report and listing of assets.

The admission angered the MPs with Medard Sseggona questioning how Bank of Uganda could take over somebody’s bank and later say there is no list if property.

Moses Kasibante (Rubaga North) questioned if the documents were misplaced, or the documents are never there in the first place, asking; “What opinion did you base on to close the bank whose documents you didn’t have.?”

The same sentiments were shared by Francis Mwijukye (Buhweju County) who asked if the Central Bank is in the know what they took over when they took charge of Teffe Bank.

Deputy Governor, Louis Kasekende responded: “At the time of the closure, the law was the 1969 law and nature if documents required didn’t include the inventory so we don’t have the inventory. We have provided information regarding the assets and liabilities and if you notice there is communication on basis of financial position and conclusion was the bank was insolvent and that was the basis for closure.”

However, his response was rejected by Katuntu who fired back stating that: “Did the law say don’t make an inventory”. You can’t move into an institution and take over without knowing what you are taking over. But prudent sound professionalism would require you make an inventory.”

The officials were also asked about to produce the loan schedules for Teffe Bank at time of takeover.

Ben Ssekabira, Director Financial Markets, Development and Coordination BOU admitted that the just as the inventory, even loan schedules aren’t there.

This further infuriated MPs with Katuntu stating, “If you are going to take over an institution and your case is that the law didn’t require me to state what you are taking over, really prudently and professionally, you should be able to do that. I mean anybody doing, should be able to list what he is taking over because at some point, your accountability will be what you took over.”

The Committee was adjourned up to Thursday to allow the Central Bank table documents regarding the takeover and sale of Teffe Bank.

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