MPs sitting on the Committee of Commissions, Statutory Authorities and State Enterprises (COSASE) have noted with concern the informal manner in which Bank of Uganda (BoU) officials conducted business with their partners to fraudulently sell some of the local banks.
This was after MMAKS advocates, the legal advisors of BoU
informed the committee that they never took any minutes as they transacted
legal advice on the pre-takeover of Crane bank Limited.
The conflicted city lawyers led by Timothy Masembe were on Tuesday grilled by
MPs sitting on COSASE, who sought a detailed explanation on what role he played
in controversial sale of Crane Bank to DFCU.
Masembe of MMAKS, it is understood, pocketed Shs914.2m for legal advice during
Crane Bank intervention, resolution and advice on the sale of the Bank’s assets
and assumption of liabilities to DFCU by the Central Bank.
Masembe previously represented Sudhir Ruparelia, the former owner of Crane Bank
which was projected as insolvent resulting into closure.
It however, turned out that Crane Bank was sold out in bad faith by a few
officials in the Central Bank who had ill motives about its operations in the
way of expansion to spread branches countrywide.
It is Crane Bank’s fraudulent sale that has unearthed and exposed conspiracies
orchestrated by Masembe, DFCU and Bank of Uganda.
While making his presentation, Masembe displayed documents from the Central
Bank which were neither signed nor dated just like what DFCU did while
appearing before the same committee last week and this angered MPs sitting on
COSASE probing the irregular sale of seven banks to trash the documents.
Crane bank limited was sold in 2017 to dfcu bank at Shs200bn on the orders of Bank
of Uganda upon advice by MMAKS Advocates.
Masembe
informed the committee members that the whole process of offering legal advice
on the pre closure of crane bank (CBLl) took them 432 hours and for every hour
they were paid US$217 at an exchange rate of 3,330.
It should be noted that in total, MMAKS advocates were paid 914.2m for legal
advice during the CBL intervention, resolution and advice on the sale of the
Crane bank assets and assumption of liabilities.
The firm would rather be paid extra Shs3bn as 5 percent commission on monies
recovered from CBL shareholders which amounts was exaggerated to benefit some
BOU senior staff who were involved in the sale of CBL.
During the hearings on Tuesday some legislators including the Busiro east MP
Medard Lubega Ssegona sought for minutes which capture legal advice given by
the law firm to BoU, but Masembe explained that as lawyers, they never take
notes and it was not their responsibility to do so.
“The issue of minutes has been for a long time a need to be guided in a formal
meeting, who should be taking minutes of such discussions? Ssegona asked.
Masembe responded that: “if minutes were to be taken they would have been taken
by bank of Uganda, lawyers do not take minutes of meetings, it is not our role
to answer whether minutes were taken that would be a question to bank of
Uganda.
Aruu County MP, Odonga Otto wondered how the huge sums of tax payer’s money
could simply be paid to the law firm without a single paper to explain how they
came to earn the amount.
“How can shs4.2bn of tax payers’ money be given for legal advise without any
minutes? This is ridiculous,” MP Odonga Otto said.
The COSASE chairperson Abdu Katuntu found it strange for a public institution
to advance massive payments to a private law firm without any minutes for
reference. The committee left wondering how bank of Uganda has made it a norm
in the casual manner to handle public affairs without minutes and sometimes the
needed due diligence.
“We need minutes of such meetings with the Central Bank that show the kind of
legal opinion that you gave to the Central Bank. As a public institution, how
does one say this was a proper payment?” Katuntu said.
Both Bank of Uganda and Masembe have failed to produce documents showing their
terms of reference in offering legal opinion in the sale of Crane Bank.
The committee is expected to end its probe into the closure of seven defunct
banks after which it will write a report expected to be presented on the floor
of parliament before February 22.
