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BoU Fails To Table Crucial Evidence On 7 Controversially Closed Banks

Bank of Uganda (BoU) officials on Monday failed to table vital evidence before MPs on the Committee Of Commission’s Statutory Authorities and State Enterprises (COSASE) regarding the controversial closure of seven defunct banks.

This led to the abrupt end of the exit meeting that was slated to put an end to the probe into the closure of banks in question.  

The controversially closed banks include Teffe Bank, International Credit Bank Limited (ICB), Greenland Bank, Cooperative Bank, National Bank of Commerce, Global Trust Bank and Crane Bank Limited.

Last week, shareholders of all the closed banks described as illegal circumstances surrounding the closure of their banks by the Central Bank. The Committee asked BoU to avail vital evidence countering  the accusations labeled against it by the shareholders.

However, BoU team led by the Governor,  Prof. Emmanuel Tumusiime-Mutebile fell short of tabling documentation to counter accusations brought against them, only choosing to bring narrations, something the Committee rejected.

The Executive Director Bank Supervision at BoU, Twinemanzi Tumubweine, countered accusations by shareholders of Global Trust Bank who argued that loss making wasn’t only unique to their financial institution, but the challenge was cutting across to other banks that came into the market in 2008.

Twinemanzi rubbished these accusations saying that not only was Global Trust Bank making losses right from the time of inception, but the shareholders had written to the Central Bank expressing discomfort with the continued investment.

He read a letter he claimed was from Global Trust Bank shareholders in which the owners of the Bank said they were getting tired of recapitalising the bank.

“Shareholders raised concerns over repeated costs of capital shareholders and were developing fatigue for capital call. At the time of closure, Global Trust Bank had made persistent losses of Shs60bn, they had been loss making since inception in 2008 and this posed risks to depositors’ funds. If you look at the application of banking license by first years and grow profits by 500% in five years that isn’t a company looking for long term stay,” Twinemanzi said.

He added: “From inception in 2008 to 2014, the institution had consistently posted losses except for one year. That one year is not considered when you are evaluating the performance.”

 However when asked to table documentary evidence of shareholders’ letter on fatigue of capital call, Twinemanzi had no letter which prompted MPs to ask to have the meeting postponed, while some MPs demanded to have the meeting go on since the Committee had no time.

However, Abdu Katuntu COSASE Chairperson who had earlier indicated that the tenure of the Committee had been extended to 22nd February 2019 with no chance of extension asked to give chance the Central Bank to adduce its evidence, saying it would be better than the Committee executing shoddy work.

 “We do have a crisis of time; much as we have a crisis, we need to do a thorough job. Just rushing because we are trying to beat the deadline will not help the process. We would rather reach somewhere. And if we have not completed it, those who will come after us will complete it. We would rather utilize the small time we have, for whatever we are going to do, we need thorough examination. We are adjourning this meeting,” Katuntu said.

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