By Kagenyi Lukka
Mark Twain, an American writer, humorist, entrepreneur, publisher, and lecturer opined that,’ a lie can travel half way around the world while the truth is putting on its shoes’. By this quotation, lies don’t last for long as they will be unearthed.
In Proverbs 12:8, the writer tell us that the truthful lip shall be established forever, but a lying tongue is but for a moment. Hence, a sum, lies can’t carry the day.
The latest special audit report of the bank of Uganda on defunct banks from 1993 to 2017 dated 27th August 2018 is the latest heavy slap in the face of Bank of Uganda after a series of circumlocutory lies about crane bank that have been peddled by three pillars at the helm of the Central bank.
The defunct banks are; Teefe Bank (1993), International Credit Bank Ltd (1998), Greenland Bank (1999), The Co-operative Bank (1999), National Bank of Commerce (2012), Global Trust Bank (2014) and the sale of Crane Bank Ltd (CBL) to dfcu (2016).
The special audit report by the auditor general, Mr John Muwanga also renders credence to the concerns of shareholders led by Tycoon Dr Sudhir Ruparelia, and other interested citizens who were chagrined by the saga that led to the mutilation of Crane bank Limited (CBL),a hitherto excellent indigenous commercial bank.
It reveals that Bank of Uganda sold the formerly glorious cbl to dfcu bank of preferential terms that attracted a second hand cloth price of Uganda shillings 200 billion. Bank of Uganda either negligently and or intentionally failed to charge dfcu interest on this transaction, causing the tax payer a loss of UGX39.5 billion, a report into the sale of the Bank by the Auditor General points out.
First, the special audit report shows that Bank of Uganda acted in absence of regulations, guidelines and policies in the sale of Cbl. The absence of such standards means that the management team conducted this transaction as they pleased-as per their discretion.
For instance, Mr Muwanga notes that,’ in the absence of guidelines and negotiation minutes, I could not determine how BoU selected the best evaluated bidder and how the terms of the P&A were determined’.
It should also be recalled that as per the special board meeting of 27th January 207, bank of Uganda received interest from 13 financial institutions that wanted to buy cbl. However only two submitted bids but dfcu was given the leeway to buy cbl without negotiation minutes leading to the Purchase & Assumption agreement (P&A). Here questions such as how did they arrive at dfcu as the best buyer, what interest did BoU bosses have in this deal can’t go unanswered.
Muwanga questions the Shillings 200 billion price.
According to the memo issued by Justine Bagyenda dated 31st July 2017, Cbl’s gross loans were Uganda shillings 1.15 trillion out of which 570.3 billion was in bad loans. ‘This bad book was transferred to DFCU to provide a resource for repayment of loans of UGX200bn and bridge the shareholder’s deficit of UGX439.72bn at the date of the takeover. I could not establish how the consideration of Shs200bn was derived from a bad book of Shs570.38bn’
Buyer (dfcu) determined the price to pay for cbl
This is one of the rarest scenarios where the buyer determines the price of what he/she is buying. Under normal circumstances, the seller sets the price and then, the buyer pays the same or a middle ground is reached below which the seller will be at a loss.
But the crane bank episode introduced this new concept. Mr John Muwanga noted that In a meeting with the BoU’s outgoing executive director of supervision held on June 13, 2018, at BoU offices, the directors admitted that the BoU did not carry out a valuation of the CBL assets and liabilities but relied on inventory report and the due diligence undertaken by dfcu to arrive at P&A agreement.
This discovery doesn’t only portray BoU officials as potential beneficiaries on this reckless transaction but equally poses greater questions about soundness in management, morality and competence.
Finally at the center of this raw deal where the taxpayer has already lost Shs478.8b disguised by the central bank as liquidity support and other interventions are the three top officials of the central bank at time.
Will justice ever be done to crane bank shareholders?
Kagenyi Lukka is a current affairs analyst and the next MP,Ikiiki