House adopts Cosase report, orders Kakembo assets seized

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Speaker Kadaga

Parliament has Thursday adopted the report of the Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) on the special audit report on the closure of commercial banks in Uganda.

Before adjourning to Tuesday March 5, 2019 at 2:00pm., the house first considered the Terms of Reference of COSASE in their just concluded inquiry into the closure of commercial banks by Bank of Uganda.

These are some of the recommendations in the COSASE Report.

The Central Bank should strictly follow the provisions of section 89 (3) of FIA, 2004 and invoke its mandate of appointing auditors ONLY when it is in statutory management.

The BoU Board, in consultation with Minister of Finance, Planning and Economic Development should, by Statutory Instrument in not more than 6 months, issue procedures and guidelines under the FIA on the resolution of financial institutions in distress.

The FIA, 2OO4 should be amended to make specific provision for the timelines of undertaking all the activities related to and connected with resolution of financial institutions.

The mandate of resolving financial institutions in distress be independent of the bank supervision function. This would mitigate the risk of conflict of interest.

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

BoU should never resolve any financial institution without strictly adhering to the provisions of the law wit sections 95 (3) (a) and (b) of the FIA, 2004, section 40 (3) of the Bank of Uganda Act and section 7 of the National Records and Archives Act, 2001.

The individual officers who handled the transactions should be held personally responsible.

The Central Bank should at all times when exercising its mandate as Receiver under the FIA, 2004 , value all assets and liabilities of a received financial institution before any action is taken in accordance with section 95 (1) (a), (b), (c) and (d).

The Central Bank must, at all times, document all processes in management and resolution of financial institutions as by law required.

Maintenance of financial ledgers and records of all financial transactions relating to financial institutions in distress is a requirement which must be adhered to by the Central Bank when exercising its mandate under the FIA.

All officers who flouted the law should take personal responsibility.

The transaction between BoU and Octavian Advisors Plc and her agents lacked transparency, officers involved should be held responsible for commissions and omissions which resulted in not marshalling the greatest amount from the assets of financial institutions.

The IGP is required to immediately, on adoption of this report, seize all the land titles in the possession of Mr. Kakembo Katende of M/s JN Kirkland and Associates and M/s SIL Investment for their management of the loan portfolio sold to M/s NRAC by Bank of Uganda.

SIL Investments and Mr. Kakembo Katende should render an account to the public trustee of all monies received from the time M/s NRAC ceased to exist. The agency of M/s SIL Investments Ltd cannot legally exist upon dissolution of the Principal (M/s NRAC).

The Uganda Revenue Authority should take interest in the tax activities of M/s Nile River Acquisition Company and its agents, M/s JN Kirkland and M/s SIL Investments Ltd, to recover unpaid tax.

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.

All the procurements and negotiations in relation to resolution of financial institutions should be properly documented and records properly secured in compliance with section 95 (3) of the FIA, 2004.

BoU should rectify the error on the Greenland Bank’s Statement of Affairs for proper financial reporting.

BoU should take full responsibility for any probable loss to Greenland Bank.

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