KAMPALA – Fresh evidence has been tabled before the committee of parliament investigating irregularities in the closure of commercial banks by Bank of Uganda and pins the beleaguered former Executive Director for Supervision Justine Bagyenda for waiving the Financial Intelligence Authority (FIA) rules for dfcu Bank to evade loan regulations.
The new evidence before the MPs, indicates that BoU officials wrote off Crane Bank Ltd loans amounting to Shs600b through unclear circumstances, and Ms Bagyenda’s January 25, 2017 letter to dfcu Bank Managing Director Juma Kisaame, giving the bank several waivers to evade the rules, is set to rattle the MPs on the Parliamentary committee on Commissions, Statutory Authorities and State Enterprises (Cosase) who are investigating irregularities in the closure of commercial banks, including Crane Bank Ltd.
For instance, Ms Bagyenda, allowed dfcu 60 days to integrate assets of Crane Bank Ltd, and to report separately on the assets acquired and liabilities assumed from the controversial transfer, presided over by the central bank.
“The non-performing loans and advances acquired by DFCU will be managed and reported on separately from DFCU’s per-transaction balance sheet for the period of at least 12 months,” Ms Bagyenda wrote.
“All fully provisioned and advanced acquired by DFCU will be ring-fenced and managed separately and will not be part of the DFCU loan portfolio for reporting purposes until rehabilitated in conformity with the Financial Institutions Regulations, 2005,”
The new evidence is bound to land Ms Bagyenda, the deposed former executive director for supervision and board member of the Financial Intelligence Authority in trouble, with the motive of offering such waivers, a source of questioning by the MPs.
Ms Bagyenda’s re-appointment by the Finance Minister Matia Kasaija to the board of the FIA has since been blocked by a section of MPs who question her integrity.
The MPs on COSASEC have kicked off the inquiry acting on a confidential special audit report of the Auditor General (AG) that revealed weaknesses in the management of the Central Bank and questioned the governor and his team for the hitches in the closure of at least six other commercial banks.
The AG Mr John Muwanga also queried BoU officials on the flaws in the closure of Teefe Bank (1993), International Credit Bank Ltd (1998), Greenland Bank (1999), The Co-operative Bank (1999), National Bank of Commerce (2012), Global Trust Bank (2014) and the sale of Crane Bank Ltd (CBL) to dfcu (2016).
All the former directors of the above closed banks will also be cross-examined by the committee.
Ms Bagyenda was at the helm of all the bank closures and faces the spotlight of the parliamentary inquiry.
Crane Bank Ltd was sold to DFCU Bank by Bank of Uganda (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 now-deposed managing director of dfcu Bank, without considering the interests of major shareholders of Crane Bank Ltd.
The shareholders of the defunct bank, who include the Sudhir Ruparelia family, White Sapphire, Jitendra Sanghani and Tom Mugenga, have since taken on the BoU, accusing its officials of fraudulent conduct.
The shareholders also poke holes in the section of the document that gives BoU sole authority to negotiate the sale of Crane Bank, disregarding the stakeholders’ interests and only catering for depositors and creditors.
The Parliamentary committee on Commissions, Statutory Authorities and State Enterprises (Cosase) will pronounce itself on the matter, that may see several BoU officials sacked.