The controversial sale of Crane Bank of its competitor dfcu Bank early last year by Bank of Uganda (BOU) caused outcry within the banking industry as well as the general public, something government has followed and now BOU is to face an investigation which is expected to dig out the rot in the central bank’s regulatory operations.
The Auditor General (AG) John Muwanga has for purposes of transparency listed five audit firms from which he will pick to carry out the investigations that should pin BOU Governor Emmanuel Tumusiime-Mutebile and sacked director for supervision Justine Bagyenda. The five firms shortlisted are KPMG, Pricewaterhouse Coopers (PwC), Deloitte and Touch and Tomson and Company.
However, it should be noted that KPMG and Pricewaterhouse Coopers worked with Crane Bank as its auditors. Whether it gives them advantage or disadvantage will be known when the best bidder is selected to do the job that is likely to change regulatory operations at the central bank but also bring to surface the overlooked issues as BOU sold Crane Bank to dfcu at Shs200 billion against held assets worth Shs1.3b, leave alone the loans Crane Bank was in the process of recovering. Worth noting also is that BOU used a forensic report done by PwC on Crane Bank as a basis to file a case in a commercial court division, claiming one of the major shareholders Sudhir Ruparelia and Meera Investments has duped the bank of about Shs400 billion.
The case is court, pending hearing. Meanwhile, Abdu Katuntu (Bugweri Constituency), the Chairperson of Parliament’s Committee on Commissions Statutory Authorities and State Enterprises (COSASE) has welcomed the move to shortlist the firms but also expressed that any auditor must do a professional job in case they win the bid. According to MP Katuntu, parliament wants the AG to audit the management and sale of defunct commercial banks in the country.
Parliament also wants an investigation into disputed agreements BOU signed with dfcu Bank and issues such as supervision, guidelines and policies. Reports say President Yoweri Museveni is keen on knowing what exactly happened as BOU sold Crane Bank. He is also not happy with the operations at the central bank, sources say. Days ago he held a meeting with Mutebile and Irene Mulyagonja, the Inspector General of Government (IGG). It followed a dispute on staff changes at BOU. The IGG had received complaints from the affected staff. Former owners of Crane Bank accuse BOU management of selling their bank without their approval.
They argue they were kept out of negotiations, which they say contravenes provisions of the Financial Institutions Act which governs the local banking industry. Having acquired Crane Bank, dfcu has been earning profits as reported for the two halves of 2017. The first half saw dfcu make profit of Shs114 billion; this was far higher than the profit it made in second as reported late last month.
