I’ll handover Cosase chair on Monday, says Katuntu

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COSASE chair Hon Abdu Katuntu

The Chairperson of Parliament’s Commissions, Statutory Authorities and State Enterprises (COSASE) committee Hon Abdu Katuntu says he will hand over the chair to his successor on Monday.

Katuntu made the revelation on Thursday while releasing the committee report on the closed commercial banks to parliament.

The report faults Bank of Uganda for not availing the Auditor General an inventory report for Teefe Trust Bank contrary to Section 32 (3) of the Financial Institutions Statute, 1993.

The report says the closure of National Bank of Commerce, its takeover and sale was impracticable and so was the process for the sale of Crane Bank.

The committee therefore observes, as it earlier did with other defunct banks, that there was no compliance with the requirement of Section 89(3) of the Financial Institutions Act, 2004, Katuntu told the house.

Whereas the resolution of financial institutions in distress has been under the Bank of Uganda supervision department, it is recommended that the mandate of resolving financial institutions in distress be independent of the bank supervision function.

He said the Central Bank should strengthen the supervision function to ensure that it is able to adequately supervise financial institutions in real time.

“This may require investment in human resource and systems, technological or otherwise. Bank of Uganda management conceded the absence of operating guidelines on resolution of financial institutions in distress.”

He said BoU did not keep the asset movement ledgers & all records relating to the liquidation of the three financial institutions in distress i.e. ICB, Greenland, Co-operative Banks (whose liquidation started under the FIS, 1993 and continued under the FIA, 2004).

This offended the provisions of section 106 (1) of the FIA, 2004. “All officers who flouted the law as herein above indicated should take personal responsibility.”

He said in the case of ICB, Greenland Bank and Co-operative Bank, the total loan portfolio sold of shs135 billion included secured loans of shs34.5 billion which had valid legal or equitable mortgage on the real property and were supported with legal documentation but were sold, to M/s Nile River Acquisition Company at 93 per cent discount.

“The inevitable conclusion therefore, is that BoU did not know the exact assets and liabilities it was disposing of.”

Whereas the outstanding liability owed to BoU by Crane Bank was Shs478 billion, dfcu group only assumed liability to the extent of Shs200 billion whose value was to be recovered from the bad book.

“This, in the committee’s considered opinion resulted in a financial disadvantage to both BoU and Crane Bank.”

The committee finds that BoU’s failure to observe principles of financial prudence & in the course breaching their statutory duties provided under the FIA thereby financially disadvantaging Crane Bank it should make good the loss occasioned to the commercially fair extent of the value of the Bad Book.

“All BoU officials who failed to properly execute their duties in accordance with the law should be held responsible for their commissions and/or omissions.”

Handover

“A lot has been said about people not wanting to leave office,” Katuntu told the house.

He added: “I can state that i have no intention of holding into office and am ready to hand over on Monday at 10.00am.”

His successor Hon. Munyagwa Mubarak was designated as new COSASE chair on January 22, 2019.

The Kawempe South legislator was designated by FDC to replace Abdu Katuntu on January 13.

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