BoU didn’t listen to me on sale of Crane Bank, let them face Cosase – Museveni

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President Yoweri K. Museveni. /Courtesy Photo
By :

AT Team

President Yoweri Museveni on Monday rejected attempts by Cabinet to halt the ongoing parliamentary probe into the operations of Bank of Uganda (BoU) and the circumstances that prompted the bank to close seven commercial banks amid concerns that bank officials flouted laws.

Sources privy to the meeting say that the Finance Minister, Matia Kasaija had tabled a motion in cabinet requesting President Museveni to reign on parliament and have the ongoing inquiry halted.

However, as Kasajia’s request was being debated, the president chipped and said he disagreed with BoU on the sale of Greenland Bank in 1999 and the closure and sale to dfcu of Crane Bank in 2016, but that the central bank executives did not listen to him.

“I advised those people (BoU) against closing Crane Bank, I even went on to suggest that we carry out a silent investigation and I went ahead to contact Abdu Katuntu who agreed with my suggestion but they refused and so let parliament do its work and let them face music.”

Mr Museveni is said to have informed the cabinet that BoU officials, whom he reportedly branded as “arrogant”, rejected his guidance, leaving him with no alternative but to support the probe.

In their defence, BoU officials had told Mr Museveni during their meeting that the central bank is an independent institution and does not capitulate to any authority.

The bank team reportedly cited Article 161(2) of the Constitution that provides that in performing its functions, BoU shall conform to the Constitution but shall not be subject to the direction or control of any person or authority.

Mr Museveni on Tuesday re-echoed his frustration with graft at the central bank, telling anti-corruption crusaders that there are “bean weevils” at BoU, KCCA and Uganda Revenue Authority.

“Bank of Uganda, there is corruption there! There is kawunkuumi [bean weevils] there now,” Mr Museveni said at an anti-corruption conference in Kampala on Tuesday.

The presidents assertion is suported by the Auditor General, John Muwanga’s special audit report on Bou on seven defunct banks.

Mr. Muwanga in his report faulted BoU for selling off some of Crane Bank’s assets and liabilities when they had chance to revive it, most especially that BoU claims it spent Shs478.8 billion on the bank during its takeover. Muwanga noted in his report that he had failed to understand why BoU spent all that money on CBL and later sold it to DFCU Bank at Shs200 billion.

Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) is using Mr. Muwanga’s report to probe BoU top officials and so far BoU has been exposed as an institution that is disorganized in terms of writing reports, keeping documents and violation of its own operational procedures.

“I noted that BoU did not carry out a requisite valuation of assets and liabilities of the three defunct banks (GTB. NBC and CBL) resolved using the purchase and assumption arrangement at the time of signing the P&A. In absence of the valuation and or documented evaluation of alternatives and assumptions used, I could not establish how the terms for the transfer of assets and liabilities in the P&A were determined,” Muwanga’s report reads in part.

Sources further say that, Museveni is happy with Cosase which has so far exposed BoU top officials. They even can’t find reports and other critical documents related to the sale of banks.

MPs probing the sale of the defunct banks have also heard that embattled former BoU director for banks supervision Justine Bagyenda closed Global Trust Bank and sold it to dfcu in 2014 within a day without procurement guidelines.

Cosase Committee chairman Abdu Katuntu said the country has tough choices; either to keep a blind eye on the irregularities at BoU until they get into a full blown crisis or allow the inquiry to expose and fix them before it is too late.

“Based on what has already transpired, Cabinet should be the first to let the processes go on. This country has one central bank, whatever happens to that bank hurts the economy. If there are challenges, they should be addressed,” Mr Katuntu said.

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