Exclusive”COSASE Summons Price WaterHouse Coopers the Audit Firm Hired by BOU To Explain In Crane Bank Take Over Figures”
Abdul Katuntu’s Parliamentary Committee on Commissions Statutory Authorities and State Enterprises (COSASE) comes to the final stages of its month long probe into the conduct of BoU officials on the controversial closure and sale of several banks.
Hon.Abdu Katuntu (Bugweri County MP) the chairman of the committee on Wednesday summoned all the top officials at the audit firm Price Water house Coopers (PwC) to come and explain how they arrived at the Shs239 Billion under capitalization figure faced by Crane Bank.
PwC is the audit firm that was contracted by BoU to carry out an inventory of the assets and liabilities as well as a forensic audit on Crane Bank upon its takeover on December 20th 2016.
The latest parliamentary committee summons are as a result of the failure by Bank of Uganda officials to explain the extent of Crane Bank’s under capitalization when the Central Bank took over as statutory managers.
More fresh details emerged last night during the COSASE probe meeting indicating that actually BoU used Shs 487billion to close the doors of CBL yet they (CBL) they only needed shs157 billion to keep its doors open to serve their nationwide clientele. This means that BoU used more Shs330 Billion to execute closure which they would have saved had they taken the share holders’ advice headed by Dr.Sudhir Ruparelia then.
Amidst tough/bad blood between Crane Bank and BoU, this website can exclusively reveal that the President, H.E Yoweri Kaguta Museveni, picked his phone and called on the top echelons of the central bank in regard to Crane Bank issues, he also met them at state house Entebbe and had talks where he also advised them to hold on and give them chance. However, it emerged that they ignored his advice as they were hell bent on the closure as their decision as managers of the affairs of the central bank. This week actually the president hinted on it in his speech though he didn’t want to sound controversial on the matter as ahead of state.
“I called those people and asked them, why can’t you wait a bit? Why can’t you give Sudhir a chance to handle these issues? They instead lectured me, I left them,” Museveni said was quoted saying on Monday.
Museveni however faulted the Katuntu led probe committee for conducting the probe in the media, saying it would have been proper if they did it privately.
“They are doing a good job but my only problem is why are they doing it in the media? I will get time and talk to speaker Kadaga,” he said.
BoU spent 478bn on the entire process of taking over and then selling of Crane Bank to DFCU Bank, according to the August report by Auditor General John Muwanga. The same report showed that part of this cash went to audit firms-KPMG and PWC and a law firm MMAKS led by Timothy Masembe Kanyerezi who is believed to be highly connected to senior officials at BoU.
According to the Auditor General’s report, to conduct a forensic audit into Crane Bank operations and compile an inventory of assets and liabilities, Price Water House Coopers (doing business as PwC) was paid a whooping Shs1.3billion. The AG, however, said he was not privy to details on how this company and other service providers were appointed by BoU and for that reason, did not evaluate the value for money.
Another auditing firm, KPMG was paid Shs428.8m for provision of IT technical support and help BoU officials manage CBL’s IT system. And because “BoU IT team did not have competent and experienced resource team with requisite expertise in Crane Bank’s core Banking system (T24)”, KPMG was again paid Shs190.5m to train BoU staff how to use the IT system.
KPMG team was again paid an additional Shs302.2m for provision of IT technical support. BoU officials explained that the payment was based on the time required by individuals assigned to the engagement plus direct out of pocket expenses and VAT. It is not clear whether the BoU contract with KPMG was availed to AG for scrutiny.
Although COSASE heard in September 2017 that top city law firms, including MMAKs Advocates, were paid Shs1.4b, the audit report found that MMAKs alone was paid Shs3.9b for legal advice and commission of 5 per cent of monies recovered from CBL shareholders.
MMAKs and AF Mpanga Advocates were the external lawyers representing BoU in Crane Bank case involving city tycoon Sudhir Ruparelia.
The two legal firms contracted by BoU were kicked out of the Crane Bank case in December by Justice David Wangutusi after Mr Ruparelia accused them of conflict of interest, because they had been his lawyers and legal advisers.
This morning the probe comes to end after a full month of vigorous exercise, the public will now have to wait for their recommendations and possibly implementation of those recommendations.
The central bank in October 2016 closed Crane Bank Ltd (CBL), previously one of the best performing banks before controversially selling it to dfcu Bank in January 2017 for a paltry Shs 200 billion.
The MPs’ inquiry is also focusing on the mismanagement of closed banks by BoU after the Auditor General Mr John Muwanga issued a stinging dossier against the central bank in a special audit that cited massive flaws in the closure of Teefe Bank (1993), International Credit Bank Ltd (1998), Greenland Bank (1999), The Co-operative Bank (1999), National Bank of Commerce (2012), Global Trust Bank (2014) and the sale of Crane Bank Ltd (CBL) to dfcu (2016).