Troubled deputy Governor Bank of Uganda (BoU) Dr.Louis Kasekende had wanted to hoodwink office of the Auditor General into accepting to carry out a fresh audit into the now questionable Shs.478 billion BoU allegedly ‘injected’ into Crane Bank while under statutory management between October 20, 2016 and January 25, 2017, reports indicate.
Officials from the Office of the Auditor General (AG) (names withheld) told this reporter that the Bank of Uganda (BoU) Deputy Governor Dr Louise Kasekende wanted to just take advantage in asking for what was provided to him before but opted to confuse COSASE by saying they didn’t have paper work on major queries the members raised to them. He said pretending to have now got the ‘paper work’ after the closure of the probe is foolery and taking institutions like AG’s office for granted. “This guy thinks we don’t have other work to do?”, he wondered on phone.
He continued; “They wanted to hoodwink us that the verification was honest yet it was a trick, they are stuck because they denied our boss (Auditor General) documents and this is a crime under national Audit Act. It is Dr.Kasekende and his colleagues at BoU to blame for failing to account for the money that was drawn from taxpayers’ coffers, AG did his job, finished his report and handed over to parliament, running back to him now is a waste of time” the source adds.
On January 25, 2017, BoU sold CBL to dfcu Bank at Shs200 billion, moreover to be paid from the collections of CBL’s bad book of Shs570 billion, which meant that dfcu Bank acquired its rival CBL without paying a single coin. But worth noting also is that, this shs.200billion, which deal was cut on phone was to be paid in installments!
“Am told the reason why BoU wants verification of Crane Bank cash is for court purposes. They want AG to clear them. Half of Shs478 billion was diverted. Now they are trying to forge accountability. Asking now for verification is to somehow save themselves. It should not be allowed now when Kasekende resisted it despite AG demanding for it. In fact direct beneficiaries were largely Justine Bagyenda, Kasekende and Benedict Sekabira,” the source revealed.
The official said his boss John Muwanga who is the Auditor General (AG) has declined to touch any crane bank documents until he gets clearance from parliament.
“Ask yourself if indeed BoU injected 478 billion in Crane Bank, why did they sale it? This money was enough to restore the financial position to required standards because CBL needed lesser than that amount to stay afloat,remember? So, the big question is….who benefited from this? Who had taken those documents and why?” he queried.
Muwanga, days ago rejected arequest to carry a fresh audit on the Shs478 billion the central bank alleges to have injected in Crane Bank after the takeover.
In a letter dated March 11, 2019, Kasekende wrote to AG requesting for the said inquiry but Mr. Muwanga in his reply dated April 4, 2019 to Dr. Kasekende said he couldn’t carry out the verification because the report on the same subject was already with the Speaker.
“Regrettably, I am unable to undertake the verification since the report has been issued to the Rt. Hon. Speaker of Parliament on February 18, 2018. Any additional verification on the already issued report can only be undertaken with the authority of parliament. We will keep the documents and wait for further communication from COSASE” reads Mr Muwanga’s letter which was copied to the Speaker, Rebecca Kadaga and the chairperson, Committee on Commissions, Statutory Authorities and State Enterprises (COSASE).
Kasekende had requested the AG to undertake a verification of documents that had not been availed during the audit.
During the probe, Dr. Kasekende said when they put CBL in receivership, they acted as lender on side and borrower on the other side, something the then Committee Chairman Abdu Katuntu said created controversy in terms of accountability and transparency.
The MPs argued that BoU officials should have used a private or official receiver to manage CBL instead of doing it themselves. Interestingly BoU wants CBL shareholders to refund the Shs478 billion yet they did not enter into any contract with CBL’s shareholders.
CBL shareholders led by Sudhir Ruparelia told the probe that they would not pay that money since they don’t know where it came from, who received and how it was used. BoU officials have no documentation about the use of the money. CBL needed Shs157 billion to stay afloat even as BoU spent Shs478 billion on its liquidation.
BoU on the other handed has not presented any accountability of the money it says it spent as liquidity support to CBL as well as other service costs related to its liquidation.
The probe of BoU by the MPs was a result of the Auditor General John Muwanga’s report on commercial banks which faulted BoU for the closure of banks without following proper guidelines. Some of the other banks closed include; Teefe Trust Bank, Global Trust Bank Uganda, International Credit Bank, Cooperative Bank and Greenland Bank.
AG report on did a special Audit Report on the Shs478 Billion Injected into CBL by Bank of Uganda and it pinned the central bank officials for failure to account for Shs478 billion.
The Auditor General Muwanga carried out the audit as ordered by COSASE on December 20, 2018.
BoU officials during their exit meeting with COSASE failed to account for Shs478 billion they say they spent as liquidity support and other intervention costs on CBL receivership between October 20, 2016 and January 25, 2017.
Muwanga in the report released on August 27, 2018, says out of Shs478 billion injected into CBL, a sum of Shs157.9 billion had been recovered from Dfcu Bank and CBL Non-Performing assets leaving an outstanding balance of Shs320.8 billion at the time of writing the report. CBL at the time was sold to Dfcu Bank while it only needed about Shs157 billion to remain afloat.
However, Muwanga noted in the report that much as BoU has a financial crisis management plan which provides for decision-making in the event of a systemic shock to the banking sector, the plan does not provide the process of injection of liquidity support to financial institutions during the statutory management period like it happened with CBL. MPs told BoU Governor Emmanuel Tumusiime-Mutebile and his staff who were appearing before COSASE to ensure that the loophole is closed.
According Muwanga in his August 27, 2018 report on seven defunct banks, BoU presented about Shs466.6 billion as money injected in CBL as liquidity support but in his scrutiny of documents, he established that about Shs459.50 billion was spent for this purpose, leading to a variance of Shs7.1billion.
Dr. Kasekende told COSASE that the money was spent as; telegraphic transfers (TTs) and LC payments, Real Time Gross Settlement (RTGS), clearing and cash requirement requests.
An extra Shs12.2 billion was also spent on service providers including MMAKS Advocates who pocketed about Shs4.2 billion. The latest report on Shs478 billion spent on CBL did not however audit the Shs12 billion paid by BoU to service providers, reasoning that it was extensively dealt with by the MPs.Download Our News App Here