Parliament has asked government to compensate the former employees, shareholders and owners of the seven commercial banks closed by the Central Bank since 1993.
Parliament said the former employees, shareholders and owners should be compensated within a period of 90 days. The House however rejected compensation for owners involved in fraudulent activities that led to the collapse of the banks.
Parliament was Thursday considering and approving recommendations out of the Report of the Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) on the closure of seven banks: Teefe Trust, Co-operative, ICB, Greenland, Global Trust Bank and NBC Banks.
Hon. Cecilia Ogwal (FDC, Dokolo district) said that there was need for the government to hastily compensate the former shareholders and workers of the banks because they were gravely affected by the closure.
“Some of these people have grown old and others have died waiting for all this time to be compensated for the losses they incurred as stakeholders in these financial entities when they were shut down,” Ogwal said.
The Speaker said that the Committee had also neglected to mention the employees of the closed banks who abruptly lost their jobs when the banks
“These people were unexpectedly left jobless without any source of income and they therefore suffered as much as the shareholders and creditors of the closed banks so they should be compensated within the suggested 90 days,” she said.
The Chairperson of COSASE, Hon. Abdu Katuntu said liabilities amounting to Ushs503.76 million were still outstanding as at the time of writing the report out of a total of Ushs1.6 billion held at closure of the banks and recommended they should be paid off.
Among other recommendations from COSASE and Parliament are that the positions of the Chairperson and Vice Chairperson of the Board of Governors be separated from that of the CEO and Deputy CEO of the Bank as a good practice of governance to avoid conflict of interest.
They also said that the Bank of Uganda Act must be amended since it is obsolete and not aligned with the Uganda Constitution of 1995 within 90 days and failure to amend the law within 90 days gives opportunity to Private Members to move a Bill amending the law.
Some of the resolutions:
The committee concludes that the transaction between BOU and M/s
Octavian Advisors Plc and her agents lacked transparency and the officers involved should be held responsible for commissions and omissions which resulted in not marshalling the greatest amount from the assets of the distressed financial institutions.
The individual officers who handled the transactions should be held personally responsible.
The fraudulent business activities being conducted by M/s SIL Investments on behalf of a non-existent M/s NRAC should immediately cease and-
(a) The Inspector General of police is 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 Investments arising from their management of tire loan portfolio sold to M/s NRAC by Bank of Uganda.
(b) M/ s 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.
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.
The BOU Board, in consultation with the Minister of Finance, planning and Economic Development should, by Statutory Instrument in not more than six months, issue procedures and guidelines under the FIA on the resolution of financial institutions in distress.
The FIA, 2004 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 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.
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.