Bank of Uganda (BoU) has admitted that Teffe Bank was closed without the list of inventory.
Inventory simply means a list of goods and materials/properties that a business holds for the ultimate goal of resale or repair.
BoU officials made the revelation on Monday while interfacing with MPs on the Committee of Commissions, Statutory Authorities and State Enterprises (COSASE, who are probing the Central Bank over the controversial closure of seven banks.
In his August 2018 report, Auditor General, John Muwanga revealed that he wasn’t availed with the Inventory report, loan schedules, customer deposit schedules and statements of affairs of Teefe Trust Bank to enable him to fulfill the specific audit objectives.
Muwanga argued that due to this limitation, he wasn’t in position to assess the status of the assets and liabilities of Teefe Trust Bank from closure to date.
Teefe Trust Bank was closed in 1993, with the Central Bank arguing that the financial institution was closed due to insolvency.
In their written responses to the Committee, Bank of Uganda stated that Teefe Trust Bank was closed in February 1993 under the provisions of the Banking Act of 1959 which did not contain substantive provisions on reports that the Liquidator was required to compile.
The Central Bank further argued that powers to close the bank were accorded to the Minister and not BOU. However, BOU provided the Liquidator’s report on assets, Liquidator’s final report and listing of assets.
Moses Kasibante, the Rubaga North MP questioned if the documents were misplaced, or the documents are never there in the first place, asking; “What opinion did you base on to close the bank whose documents you didn’t have?”
The same sentiments were shared by Francis Mwijukye, the Buhweju County MP, who asked if the Central Bank is in the know what they took over when they took charge of Teffe Bank.
Deputy Governor, Dr. Louis Kasekende responded: “At the time of the closure, the law was the 1969 law and the nature of documents required didn’t include the inventory so we don’t have the inventory. We have provided information regarding the assets and liabilities and if you notice there is communication on basis of financial position and conclusion was the bank was insolvent and that was the basis for closure.”
However, his response was rejected by COSASE Chairperson, Abdu Katuntu.
“Did the law say don’t make an inventory?” You can’t move into an institution and take over without knowing what you are taking over. But prudent sound professionalism would require you make an inventory,” Katuntu said.
The officials were also asked about to produce the loan schedules for Teffe Bank at time of takeover.
However, Ben Ssekabira, Director Financial Markets, Development and Coordination at BOU admitted that like they didn’t have inventory, even loan schedules aren’t there.
This further infuriated MPs.
“If you are going to take over an institution and your case is that the law didn’t require me to state what you are taking over, really prudently and professionally, you should be able to do that. I mean anybody doing, should be able to list what he is taking over because at some point, your accountability will be what you took over,” Katuntu said.
The Committee was adjourned up to Thursday to allow the Central Bank table documents regarding the takeover and sale of Teffe Bank.
