The Auditor General on Thursday raided the Bank of Uganda (BoU) headquarters as it finally started investigations of the operations of the Central Bank after being given a green light by the Speaker of Parliament, Ms Rebecca Kadaga.
Despite objections by BoU and the Attorney General, Ms Kadaga on May 10 wrote to Mr John Muwanga, informing him to proceed with the investigations into the Central Bank’s controversial closure of over seven banks, among them the locally-owned Crane Bank.
And on Thursday, a team of 15 people from the Auditor General’s office moved to the Central Bank headquarters on Kampala Road with a view to assessing the documents pertaining the closure of the banks over the years. Among closed banks include Teefe, Greenland, International Credit Bank, Cooperative Bank, National Bank of Commerce, Global Trust and most recently, Crane Bank.
Sources told this website that the team was led by Mr James Bantu, a senior auditor, who began the different documents regarding the status of the banks at closure, cost of liquidation, their assets and liabilities of the closed banks, among others.
It is not clear how long the investigation will take and attempts to reach Mr Muwanga were futile.
However, Mr Muwanga will also investigate the circumstances under which Crane Bank was transferred to dfcu Bank without consultation of the key stakeholders. In March, this website revealed that Crane Bank Ltd was sold to dfcu Bank by BoU at a paltry Shs200 billion without consulting the shareholders who valued it at Shs1.3 trillion. The January 25, 2017 sale agreement was signed by BoU Governor Tumusiime Mutebile and Mr Juma Kisaame, the managing director of DFCU, without considering the interests of major shareholders of Crane Bank Ltd.
The AG’s report is expected to furnish Parliament with information regarding the closure of National Bank of Commerce (NBC).
“We ordered for an audit by the Auditor General and the report should be here within 30 days. That is when we will begin investigations. We realised that there are [unanswered] questions,” said Mr Abdu Katuntu, the chairman Parliamentary Committee on Commissions, Statutory Authorities and State Enterprises (COSASE).
Last year, Amos Nzeyi, one of the shareholders and former chairperson of NBC, dragged BoU to Commercial Court for allegedly wrongfully closing his bank (NBC) in 2012. The assets of the bank were later sold to Crane Bank that also collapsed last year after becoming ‘significantly undercapitalized’. Nzeyi alleges that NBC’s financial health had stabilised by the time BoU closed it and now wants court to hold BoU for alleged failure of supervising the banking sector.
In a May 10 letter to the AG, Ms Kadaga quashed the protests by BOU officials led by deputy governor Dr. Louis Kasekende and backed by legal opinions from an official of the office of the Solicitor General, saying that the Office of the Speaker of Parliament retains the mandate to sanction such clarifications.
“Therefore in response to your request for guidance, you should proceed with the audit as directed and submit your report to my office as it is required by the law,” the Speaker wrote.
MPs had earlier insisted that an investigation into the operations of Bank of Uganda by Auditor General must go on despite protests by the Central Bank.
Deputy Governor Bank of Uganda, Mr Louis Kasekende, in an April 19 letter to the Attorney General, said the Auditor General has no authority to audit the Central Bank over its role in the closure of four commercial banks, including Crane Bank Ltd, arguing this contradicts the subjudice rule since the cases related to the collapse of the bank are before the High Court.
However, Shadow Attorney General Wilfred Niwagaba said it is only the Speaker who can make the decision on the subjudice rule and not BoU since the latter is a witness before the parliamentary investigation.
Mr Abdu Katuntu, the COSASE chairman, had earlier written to the Attorney and BoU, insisting that subjudice does not apply to auditing.
MPs want to conduct a broader investigation into the management of BoU after some employees in March petitioned the House, accusing the Central Bank’s senior managers of misconduct.
They also want to comprehensively investigate the motive behind recent staff changes made by BoU Governor Emmanuel Tumusiime-Mutebile last month, which were resisted by some central bank staff.
Inspector General of Government Irene Mulyagonja blocked the changes of eight executive directors, 13 directors, 24 deputy directors and four staff confirmations, key among them the transfer of Ms Justine Bagyenda, the former director of commercial banks supervision.