Dirty secrets of Sh200 billion Crane Bank sale

While away, many assumed that his situation was getting worse. But the Governor returned with energy many have not seen in the last three years. Insiders say he takes charge of meetings, cracks jokes in the same and stops officials in the corridor for a chat. Previously, he was seen as struggling and would often just pass without even a nod.

It also became clear that the Governor had used the two months—December and January—of sick leave abroad to strategise on how to deal with the crisis at BoU.

His major public decision was on Feb.7, when he directed immediate transfer of over 50 top officials of the Bank, including nine executive directors, 13 directors and 24 assistant directors.

Mutebile also appointed several new managers, including TumubwineeTwinemanzi, as executive director supervision. Twinemanzi was recruited from the Uganda Communications Commission, where he was the director of Industry Affairs and Content.

Prominent among those Mutebile kicked out was Bagyenda.

In an unprecedented move, Bagyenda refused to vacate office and instead petitioned the IGG to order her sacking by Mutebile unlawful and, on March 12, the IGG – who reportedly enjoys a very cordial relationship with her complied.

She swung Mutebile a memo asking him to defend his actions and roped in the Bank of Uganda Board of Directors urging them not to ratify Mutebile’s staff changes generally.

Bagyenda’s revolt and the IGG’s order have the look of a double-barreled attack on Mutebile who has always insisted that “central banks need operational independence”.

In fact, IGG Irene Mulyagonja anticipated that Mutebile would peddle this line and in her March 12 memo warned him that “Please note that we are fully aware of the constitutional independence of the Bank with regard to the execution of its functions as laid out under Article 162 of the Constitution of Uganda.”

She added: “However, such independence is only guaranteed where the Bank is deemed to be acting in good faith and in accordance with the law, relevant regulations and policies and the principles of natural justice”. She implied that Mutebile was acting outside these tenets. Mutebile has also been accused of tribalism and sectarianism.

Mutebile’s misery mounted when the Board of Directors of the central bank appeared to side with Bagyenda and the IGG.  The board reportedly asked Mutebile to explain Twinemanzi’s appointment since the position was never advertised as required.Twinemanzi has a PhD in economics from University of Texas and his thesis on commercial banks is titled “Interest Spreads and the Margin Setting Behavior of Commercial Banks: Evidence from Uganda”

But he is also said to be well known to Mutebile— his father having sat on the board of the central bank a few years ago. That appears to be the point Bagyenda is making to the IGG.

Mutebile was forced to eat humble pie. He has reportedly allowed Bagyenda, whose contract expires in June, to stay in office. But he has also created an office for Twinemanzi who is reportedly functioning as the executive director supervision.

So why is Bagyenda fighting to stay on – at least for three more months?

Bagyenda’s secrets leak

The fight with Mutebile has lifted the lid off Bagyenda’s alleged role in the controversial Crane Bank transaction. Documents that Bagyenda previously kept under lock and key have leaked raising questions over the deal and sparking off fresh suits.

Key amongst these documents is the purchase of assets and assumption of liabilities agreement entered between BoU and DFCU Ltd on January 2015 last year.

The agreement, which The Independent has obtained, had remained a top secret. Not even the former shareholders of Crane Bank had been able to access it.

Sudhir’s lawyers say they are shocked that the agreement states neither what DFCU bought when it took over Crane Bank or the price it paid and on what terms.

What kind of agreement doesn’t state a purchase price? How can an agreement not state payment terms? These are questions Sudhir’s lawyers as in a document titled “Major Contentious Issues with the purchase of Assets and Liabilities Agreement Entered into between Bank of Uganda and DFCU Bank Limited”.