Parliament rejects BOU Legal Opinion on Probe of Closed Banks

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COSASE probes Bank of Uganda on closure of 7 commercial banks
By :

Geoffrey Baluku

Parliament’s committee on Commissions, Statutory Authorities and State Enterprises (COSASE) Monday rejected a legal opinion by Central Bank concerning an ongoing investigation into the closure of seven commercial banks.

This is after Titus Mulindwa, the Acting Legal Counsel for Bank of Uganda (BoU) wrote to the Committee expressing his displeasure on how it was conducting the probe.

The investigation stems from a 2017 forensic audit report by Auditor General, John Muwanga who highlighted irregular operations at the Central Bank and the controversial closure and sale of the banks.  The banks include Teefe Bank, International Credit Bank Ltd, Greenland Bank, Co-operative Bank, National Bank of Commerce, Global Trust Bank, and Crane Bank Ltd.

In response to Mulindwa, the COSASE Chairperson Abdu Katuntu criticized the legal opinion and wondered what the basis of the opinion was since parliament had not sought for it.

Katuntu also expressed discomfort with the different officers of the Central Bank writing to him directly without going through the Governor’s office, the deputy Governor Louis Kasekende or Bank Secretary.

The COSASE chairperson further noted that the lawyer’s opinion seems to contradict the spirit of an earlier letter written by Mutebile on 5th November 2018 in which he stated that some documents availed to the committee to facilitate the investigation were confidential and therefore should be treated as such.

In same letter, Mutebile indicated that disclosing the information, records and documents to the public could cause substantial harm to the independence of the Central Bank from political and industry pressures which would thus compromise supervisory independence and the pursuit of financial stability.

In view of Mutebile’s letter, Katuntu disagreed with Mulindwa’s legal opinion saying that it insinuates that BOU can hide information from Parliament which institution he described as a representative of the sovereign who are the people of Uganda. He said that Parliament and its committees act according to the law and not what individual people think.

Katuntu asked the Legal Department of Parliament to write back to the BoU lawyer in question and also made emphasis to the fact that, the powers of Parliament were constitutional, and so were the powers of the Committee. He advised BoU officials to read article 90 of the constitution.

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