The Independent Uganda: You get the Truth we Pay the Price
Both the GTB case and NBC case showed, as Katuntu noted, that BoU did not use the right procedures in selling these banks. Yet these are not the only cases, almost every case of a bank sold reveals major excesses and possible self-enrichment by BoU staff.
These revelations are also a major contradiction of what Governor Mutebile has told the public in the past.
Mutebile lashes at The Independent
When The Independent first broke the story of mismanagement at BoU, Mutebile wrote a lengthy article lambasting it. The Independent published the article detailing the excesses by officials at BoU in its March 30 – April 05, 2018 issue under the `Mutebile versus Kasekende’.
Mutebile responded immediately in an April article in Daily Monitor. He wrote that “allegations that the Deputy Governor or other staff could have acted single handedly and with personal interest in the resolution of Crane Bank or in executing their technical or administrative responsibilities as designated by the Board betrayed a clear lack of understanding of the established processes within the BoU and with other stakeholders within Government regarding the Bank’s mandate.”
He added that BoU and Government broadly “have in place robust systems that ensure that we are all held to the highest possible levels of integrity”.
“Decisions in the BoU are not taken by individual staff on their own, but through a committee structure and set policies and procedures which have been established by the Board of Directors,” Mutebile added.
Yet while appearing before COSASE, BoU officials themselves have testified how they acted individually and flouted almost all existing policies and procedures.
Mutebile also disputed claims that the BoU management was guilty of incompetence. He cited the central bank’s performance in relation to its core strategic objectives: controlling inflation and regulating the banking sector to protect depositors and the overall stability of the financial sector,
On controlling inflation, Mutebile said that over the last three years, annual core inflation had averaged 5.1 percent.
“That hardly suggests that, in terms of macroeconomic management, the BoU is incompetent,” Mutebile said.
With regard to supervision of banks, the Governor explained that the central bank had only intervened in three (NBC, Global Trust, and Crane Bank) out of the 26 banks operating in Uganda.
“The interventions of the BoU followed the procedures set out in the banking laws; the Financial Institutions Act,” Mutebile said, “Because of prompt interventions by the BoU, customers never lost any of their deposits in any of these banks.”
However, what is clear now is that BoU never followed these banking laws and as a result while customers never lost their deposits, they stand a risk of losing their money as taxpayers should the central bank have to pay shareholders of the several closed banks.
Already, BoU spent a staggering Shs500 billion on Crane Bank before selling it to DFCU. They then sold assets of the same bank at Shs200 billion payable over several years. The taxpayer already lost hundreds of billions on this transaction and risks losing more should BoU lose the case with the bank’s shareholders led by tycoon Sudhir Rupaleria.
Away from the banks, the Inspectorate of Government is investigating BoU officials over claims of ill-gotten wealth.
And President Museveni was forced to convene another investigation led by Abdul Katuntu, the chairman of COSASE to investigate a controversial Feb.8 staff reshuffle at BoU.
While Mutebile could have been right in shuffling staff, the resultant in-fighting at BoU that sucked in the IGG, and almost caused a near coup against him by the board, also hardly suggested that all was well at the central bank.
Over all and as the year ends, it is clear that all these developments have dealt a severe blow to BoU’s most valued assets—its reputation and its once celebrated bankers; especially Mutebile, Kasekende, and Bagyenda and her former deputy Ssekabira.
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.