MPs on the Committee of Commissions, Statutory Authorities and State Enterprises (COSASE) have blamed the board members of Bank of Uganda for abdicating their duties, leaving management to oversee the controversial and irregular closure of the seven defunct Banks.
This has since posed a number of illegalities.
In a meeting that was held today to discuss the governance challenges within the Central Bank and attended by the Minister of Finance Matia Kasaija alongside the Board and top management of Bank of Uganda, MPs noted that had the board played their role, some of the challenges surrounding the closure of the seven banks would have been avoided.
The current Board of the central Bank led by Governor Emmanuel Mutebile who acts as Board Chairman, and deputized by his assistant Louis Kasekende, alongside other members; William Kalema, Josephine Okui Ossiya, Judy Obitre-Gama and James Kahooza were vetted and approve by Parliament Appointments Committee in February 2018.
Abdu Katuntu, COSASE Chairperson said there is need to have a discussion about separation of powers and the Governor concentrates on his monetary mandate and leave Board to oversee the administration and management of the Central Bank.
Asked whether the Board was consulted on closure of the banks and why they abdicated their powers in the closure of the banks, Kalema said that there was limited time for management to consult the board.
“No, we weren’t involved in mechanics of closing the banks. When it comes to mechanics of closing a bank, there isn’t enough time. If we had better supervision, we would have foreseen those problems, in some cases, those problems weren’t revealed. In some cases, the supervision people were taken by surprise,” Kalema said
However, his response angered MPs, with Katuntu saying that if Bank of Uganda had a very strong supervision department, it should have seen this thing coming.
“We don’t see any emergency in any [closure] unless your bank supervision wasn’t working or if it was working, it withheld crucial information. From the facts we have, we don’t see any bank that collapsed from nowhere,” he said.
While appearing before the Committee last year, BoU Deputy Governor, Dr. Louis Kasekende told the Committee that the board delegated their powers and left management to handle the closure of Teffe Bank, Global Trust Bank, Crane Bank, NBC Bank, Greenland Bank, International Credit Bank and Cooperative Bank.
Katuntu also criticized the Central Bank for failing to produce any reports on any of the seven closed banks, and tasked the Minister of Finance, Kasaija to explain why he has never demanded for these reports.
Katuntu said: “Don’t you think in retrospect it isn’t correct to close institutions and you have no final reports. Minister you don’t have a final report and you don’t ask final report. You need to finally resolve these institution. A bank closes in 1999 and still winding up, which process of winding up is this?”
Kasaija admitted that it was wrong for his Ministry not to ask any reports regarding the closure of the seven banks and promised to write to Bank of Uganda formally on the matter.
“I accept it is a big weakness, we shall demand officially for Bank of Uganda to give us those reports,” Kasaija said.