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Kadaga orders AG to start special audit of BOU

Speaker of Parliament Rebecca Kadaga orders a probe into the operations of the defunct Crane Bank (PML PHOTO)

KAMPALA – The Speaker of Parliament Rebecca Kadaga has ordered the Auditor General John Muwanga to probe the operations of the Central Bank as directed by Parliament.

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.


AG John Muwanga (left) hands over certificate to Bank of Uganda deputy Governor Louis Kasekende after his keynote address in Entebbe recently (FILE PHOTO)

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.

Parliament is yet to select a committee to investigate the operations of the Central Bank since the Deputy Speaker Jacob Oulanyah said this was not necessary since Cosase and courts are handling the same issue.

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.

BOU Governor Emmanuel Tumusiime Mutebile took the centre for the reshuffle and firing of senior staff. (FILE PHOTO)

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.

One of the branches of the defunct Crane Bank Limited (FILE PHOTO)

They will also investigate the circumstances under which Crane Bank was transferred to dfcu Bank without consultation of the key stakeholders. This website revealed that Crane Bank Ltd was sold to dfcu Bank by BoU at a paltry Shs200 billion without consulting the shareholders while auditors 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.

Amos Nzeyi, one of the shareholders and former chairperson of NBC (FILE PHOTO)

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.

Recently, Meera Investments dragged Dfcu Bank to the Land Division of the High Court, seeking to reclaim its 46 branches which it says were acquired illegally following the dissolution of Crane Bank.

The closure of Crane Bank saw Dfcu bank become the third biggest bank after acquiring 46 branches from the financial institution.

Meera, in its law suit, claims that at the time BoU took over the management of then Crane Bank in October 2016 before its eventual sell to DFCU, it was the leaseholder of the suit properties and paying $6,000 every beginning of the year.

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