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Bank of Uganda closed ghost bank

Bank of Uganda (BoU) Governor Emmanuel Mutebile and his deputy, Louis Kasekende before Parliamentary COSASE.  (FILE PHOTO)

KAMPALA – The Committee of Commissions, Statutory Authorities and State Enterprises (COSASE) has learnt that Bank of Uganda closed a ghost bank in the name of Cooperative Bank after it emerged that two banks had been registered in the same name, yet the last bank to register never materialised

While meeting with officials from the Uganda Registration Service Bureau (URSB) Tuesday, February 12, the Committee tasked the institution to explain circumstances under which two banks were registered in the same name.

Caroline Egesa who represented the Registrar General told the Committee that Cooperative Bank filed Memorandum of Article of Association on November 20, 1997, with the main aim of taking over assets and liabilities of Cooperative Bank that had earlier been incorporated in 1964 by the Cooperative Act 1963.

The new bank also urged in their application forms that upon taking over, the Cooperative Bank Limited shall cease to exist and the new team will carry on business of banking as defined in the Financial Institutions Act.

Some of the owners of the new bank were: William Kalema, John Muwanga, Anthony Sekweyama, Jacob Nsereko, Samuel Magona, among others. These claimed to have sought the authorization of both Kigezi and Bugisu cooperative unions.

URSB’s statement attracted more questions than answers with COSASE chairperson, Abdu Katuntu tasking the Bureau to table the authorization from the co-operators giving authority to the new team to take over their company.

He lashed out at the Registrar of Companies at the time for failing to carry out due diligence arguing: “There is a company, it has assets somebody says I am going to take over assets and you just register without ascertaining whether it is true. If somebody had asked those questions at the time, we wouldn’t be asking these questions (today).”

Katuntu added that the hands of the Committee are tied because when the former shareholders of the first Cooperative Bank appeared before the Committee, they wanted to know how their bank was closed and who took their assets.

“Bank of Uganda told us that it was Cooperative Bank of 1997. What happened to Cooperative Bank of 1964? The owners want to know how their assets were taken over by 1997 including their name,” said Katuntu.

Phiona Egesa, who also represented the Registrar General, admitted that it was an oversight on their part not to conduct due diligence and weren’t aware of the existence of Cooperative Bank.

However, this was rubbished by Katuntu, saying: “You can’t say you didn’t know about Cooperative Bank. Even the premises, assets and business were the same. Looks like the Company Registrar didn’t do adequate due diligence. There are a few questions he should have asked. There was never a process of this company taking off and therefore taking over assets,” Katuntu said.

The COSASE chairperson then admitted that the Committee was faced with a crisis because the owners of the first bank are asking who took over their assets and how another bank could have taken over assets without taking off.

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