Bank of Uganda should account for Ugx 478.8 billion injected in crane bank

Kasekende, Bagyenda and Mutebile

By Kagenyi Lukka

Central bank officials were either direct or indirect beneficiaries of UgX 478.8 billion that was  injected in crane bank limited during the time it was under receivership between October 2016 and January 2017 before it was “sold” to dfcu bank.

The excuse given by Bank of Uganda to takeover crane bank which was formerly owned by business tycoon, Sudhir Ruparelia, was that, it was too insolvent, and had fallen below the 50% legal requirement.

During this period, Katimbo Mugwanya was appointed by Bank of Uganda to act as the statutory manager of formerly Uganda’s third largest commercial bank, Crane bank.

It is under Katimbo’s tenure, Bank of Uganda officials covertly hatched a plan to bail out cbl.

Victoria University

They were not using their own money, but rather the tax payer’s money without any outline to revive crane bank.

“In the exit meeting held on 22nd June 2018 at OAG,BOU management explained that as a lender of last resort, the funds were sourced from within BOU to in order to provide quality support and maintain financial stability”, Notes the AG on page 57 of the report on special audit of defunct banks.

Having injected in this money, the multibillion dollar question is whether there was any justification for injecting 478.8 billion of the tax payer into cbl?

The absence of the process under which funds were injected to cbl, accountability questions can’t go unanswered.

As observed by the auditor general on page 56 of the audit report,”In assessing the above, I was unable to examine cbl operations during statutory management to determine that the funds injected reflected the shortfall at this time.”

Furthermore, the auditor general noted that BOU didn’t have a documented process of injection of funds to support cbl operations during statutory management.

The absence of documentation demonstrating that this money was needed could have caused financial loss to the tax payer, cbl, creditors and shareholders. It was also an opportunity fraud, corruption and abuse of office.

Mysterious expenditures

Mr John Muwanga in his report to Parliament notes that he was unable to justify the expenditures in question, including the liquidity support to Crane Bank worth Shs466.2 billion.

The balance of Shs12.2 billion went to external lawyers, two auditing firms, terminal benefits and other interventions.

According to the confidential report, to conduct a forensic audit into Crane Bank operations and compile an inventory of assets and liabilities, PricewaterhouseCoopers (doing business as PwC) was paid Shs1.3billion.

The confidential report, however, notes that there were no to details on how this company and other service providers were appointed by BoU and for that reason, did not evaluate the value for money.

KPMG, a common feature in the crane bank saga, was paid Shs428.8m for provision of IT technical support and help BoU officials manage CBL’s IT system. And because “BoU IT team did not have competent and experienced resource with requisite expertise in Crane Bank’s core Banking system (T24)”, KPMG was again paid Shs190.5m to teach BoU staff how to use the IT system.

This is just a tip of the iceberg of the shoddy deals in the crane bank saga.

The Governor Professor, Mutebile, his deputy Louis Kasekende and the statutory manager, Katimbo Mugawanya have to account.

Kagenyi Lukka is a current affairs analyst and the next Ikiiki Mp



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