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Shocker! BoU Sold Two Banks On Phone Calls

In a shocking revelation, the Committee of Commissions, Statutory Authorities and State Enterprises (COSASE) has learnt that Bank of Uganda (BoU) sold Global Trust Bank (GTB) and National Bank of Commerce (NBC) on phone calls.

The Committee also learnt that there were no minutes taken during the reported negotiation meetings, leading to the sale of the two banks.

COSASE is probing BoU officials over the controversial closure of seven defunct banks.

Appearing before COSASE on Monday, Benedict Ssekabira, the Director Financial Markets and Development at BoU told the Committee that the Central Bank  was forced to close NBC after the bank failed to resolve challenges regarding its shortage of capital as well as disputes among shareholders.

“The same process we used for GTB was also deployed in NBC. We had meetings with shareholders but capital couldn’t come and disputes couldn’t be solved. Process of finding an acquirer was deployed in confidentiality and was conducted on phone,” Ssekabira said.

When asked to clarify on the matter, Ssekabira  said that it was only Crane Bank that was willing to buy NBC Bank after the other banks shied away from the purchase, saying it was only Crane Bank strong enough to swallow NBC.

Ssekabira also said that the Non-Disclosure Agreement between Crane Bank and Bank of Uganda was signed on 7th September 2012, two weeks before the Central Bank intervened to take over NBC.

COSASE Chairperson, Abdu Katuntu wondered how the Central Bank would indulge in hawking NBC even before it had taken it over as a  statutory manager, liquidator and receiver.

However, Ssekabira protested the use of the word hawking, saying the phone calls made never stated the names of the troubled institution, but the information was only passed onto institutions that were willing to buy off the troubled banks.

It should be noted that in the Special Audit report whose findings are being probed, Auditor General faulted Bank of Uganda for failing to provide negotiation minutes of the NBC Purchase of Assets and Assumption of Liabilities Agreement (P&A) for verification.

When asked how outgoing dfcu bank Managing Director, Juma Kisaame came to attend a meeting to discuss the sale of Global Trust bank, Bagyenda revealed she invited him through a phone call, a statement that attracted shock from the Committee.

Katuntu wondered how a full Executive Director Supervision would invite a prospective buyer, casually on phone.

During today’s meeting, Committee members asked the Deputy Governor, Dr. Louis Kasekende how he came to sign the Purchase of Assets and Assumption of Liabilities Agreement leading to the sale of NBC Bank without the necessary documentation.

In response, Kasekende denied ever signing the P&A agreement saying he was out of the country and delegated his powers to Justine Bagyenda, the former Executive Director for Supervision.

He however admitted his mistake since the office of the Deputy Governor is constitutional whose powers can’t be delegated.

The revelation infuriated MPs “One of these days, your officers are going to hijack your own powers. To have an officer other than the Governor and Deputy Governor to actually sale a bank is illegal,” Katuntu said, adding:

“You need to look at those issues seriously, guard the powers jealously; there should be nothing casual about selling a bank. The Governor should be able to fly back and take care of these things.”

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