The Independent Uganda: You get the Truth we Pay the Price
But more than all these, the biggest victim of these scandals is likely to be the central bank itself. Once seen as an island of integrity in Uganda’s government system largely seen as corrupt, the central bank now finds itself heavily questioned and confidence in it severely undermined.
In a turn of events, BoU, which was once the hunter of fraudulent private bankers who risked jeopardising depositors’ funds, now finds itself the hunted.
Pigs at Central Bank
For many, nothing captures this situation, albeit symbolically, as much as the Nov.05 dropping at BoU’s premises of piglets draped in placards with the pictures of Mutebile and Juma Kisaame, the managing director of DFCU bank, which BoU hand-picked to acquire assets of the defunct Crane Bank.
In the past, piglets painted in yellow colour—the colour of the ruling party NRM—and tagged with names of certain legislators, have been dumped at parliament to protest the “greed” of legislators belonging to the ruling party.
This explains why the dumping of pigs at BoU was seen as the lowest moment in the history of the central bank and a major protest against its leadership over their mishandling of the financial sector. What remains is the unveiling of the financial price the taxpayer will pay for the wrongdoing at BoU.
In the case of Global Trust Bank, for example, the shareholders have learnt, four years after their bank was gobbled, that BoU sold their bank without following due procedure. They have learnt that Bagyenda sold their bank 15 days even before the central bank closed it. They are demanding compensation to a tune of over Shs300 billion.
Elias Edu, the former company secretary for GTB told the COSASE committee that following a demand on the July.4, 2014 to recapitalise the bank, the central bank did not give them time to comply—it shut down the Bank on July 25.
“Highhanded, reckless and ill-motivated” are the works Edu used to describe the actions of the central bank officials.
No bank employee could have used such language to refer to the central bank officials, at least not in reference to Bagyenda, before these scandals emerged.
Yet the shareholders of NBCU too now see Bagyenda in the same or worse light.
When COSASE asked about the minutes on the sale of NBCU to Crane Bank, they were told the minutes did not exist. Bagyenda told the committee that there was no official record detailing what transpired before and during the sale.
When Katuntu pressed the former EDS to explain to the committee what happened during the transaction in the absence of an official record, Bagyenda turned to her former deputy; Ssekabira, who she referred to as the “one with a younger brain”, to respond saying she did not remember the details.
“You see the crisis you have caused the nation,” an infuriated Katuntu charged, “You caused a crisis because you did not do things the way they are supposed to be done. Now we have to rely on brains that are younger. The problem, governor, is that when people retire they retire with the information and when asked they say `I don’t remember’.”
Of the loss of memory and bank records could be feigned and a ploy to deny the prosecution evidence. That was the view when COSASE on Nov.20 kicked BoU managers out of the hearing amidst allegations that they were deliberately withholding vital information on the movement of assets, including cash, of some of the sold banks. Special mention was made of Bagyenda.
On his part, Ssekabira explained that NBCU was facing a shortage of capital and battling a shareholder dispute, which threatened the bank.
He explained that the potential buyer of the bank was identified via phone calls between Bagyenda, BoU legal counsel Margaret Kaggwa, lawyers from MMAKS Advocates and former Crane Bank managing director A. R. Kalani.
“When that decision was taken, the process to acquire an acquirer who would give comfort to depositors to easily access their money was deployed in confidence. That process was conducted on phone. All the other banks were shy; it is only Crane Bank that was strong enough to swallow NBC. Crane Bank was strong and willing to transact on this and we proceeded to write a confidential agreement,” Ssekabira told the committee.
Bagyenda explained that after getting the buyer, they drafted a confidential sale agreement two weeks before the actual closure of NBCU. Bagyenda signed that agreement on September 7, 2012. The rightful signatory should have been the governor – but so what?
Upon hearing the tale of the NBC sale, Katuntu labeled the BoU to be “hawkers” of NBC even before its closure.
“For you to start getting phones and calling people, there is a bank here, will you buy it?’ Yet at this point you are neither a statuary manager, you are neither a receiver, neither are you a liquidator. That is nothing other than hawking,” Katuntu said.
These sorts of revelations have only served up ammo for the shareholders of the bank. One of Mbabazi’s daughters could be seen taking notes as the committee proceedings went on. The NBCU shareholders already took BoU to court over the manner in which there bank was closed. The Independent now understands that the revelations before COSASE have further emboldened the group to take on BoU.
This is an interesting article. Knowing a bit about my country Uganda, how was Bagyenda this powerful iron lady without backing? I may need to be corrected incase i hv a poor perspective as to the way power and authority games are played in Uganda. Was she powerful because she was firm and principled and made decissions knowing she is backed by the law and her position OR was she powerful because she had an invisible fighting hand/tool.
There is a cabal in this country that eats everything. When they are half done, they “invite” other Ugandans to join in. They later clean their plates by piling all the leftovers on the invitees’ plates and then the whole world can point a blaming finger. Bagyenda couldn’t have done this single handedly. Abbas Mawanda worked with Bank of Uganda before joining Greenland bank. By the time Bagyenda sought “consultation” from him about NBC, he had helped in the sinking of Greenland bank. So, what motivated his hiring when NBC was facing financial difficulties? We’ve seen him in the Mubende gold scandal and how the military finally came in. Military military military!!!!
This article is unresearched and repeats allegations made in the previous media reports that are sensational. You refer to some of the banks as ‘defunct’ and then question their closing. Make up your mind. What you describe, in NBC bank, is a bank in disarray. As you should know, Greenland and ICB were insolvent. That means they could not carry on business. The only scandal is an Auditor General’s report full of mischief. How can it matter that a former President came to rescue his bank? Why did he not put in more money? Because it was badly managed and selling was a better option. The media love a good story, but in this case, the media is too hungry that it has swallowed all the contradictions in the AG report and in the Inquiry. Crane Bank was also insolvent. BOU is not obligated to rescue a failed bank. The problem, as you clearly describe, is inside the commercial banks. Why complicate matters further? Anyway, why is Global Trust, UCB, and Crane Bank included in an inquiry into bank closures????? They were never closed! They were sold!
“Anyway, why is Global Trust, UCB, and Crane Bank included in an inquiry into bank closures????? They were never closed! They were sold!”
SO , sir, in your wisdom , you cannot close an entity, bank, shop etc, and then sell it later.
Educate us please.
Well, Banks are not like shops which can be closed and sold. Instead of closing it, you have to transfer the customers, loans, liabilities etc to a buyer for a smooth transition to keep operating. Closing and reopening is not an option because it means customers stop getting services for sometime and the bank collapses. Nobody would then want to invest in it anymore.
Great article but you have hidden a lot of background information on how this Justine bagyenda made it to the top in the banking sector . You may have to agree with me that most scandals and con jobs that have impacted on this economy have been by ugandans from the western region.
A few examples will suffice here. In the 90s talk was that the world bank had insisted on Dr Frank Mwine to revive and expand UCB. but did it cross your mind that he was a brother to one of Museveni’s fallen bush war comrade? The rest is history. The late Cheeye Sezi in his confidential used to talk about the fall of General parts and the name Ezra suruma features prominently.you can tell how the once rich Hajji is faring today compared to the bureaucrat Suruma. And finally in the earlier days of” Andrew Mwenda live ” and the Monitor newspaper do you still think of the arrested Mwenda being tortured in dentetion while his elder brother (a decorated miiltary officer) looks on ! And an elder sister at the heart of the ruling party central committee. Many cases and many hoaxes are common today its only a keen eye that can spot them. and for all their misdeeds sudhir inclusive , these people stiill remain very important in the wider scheme of things. And by the way what became of Frank Katusime (don’t ask which one?] – godfrey.