Auditor General probing Bank of Uganda over Crane Bank sale

Following instructions from Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (Cosase), the office of the Auditor General is carrying out a broad forensic audit into the operations of Bank of Uganda and is demanding accountability for Shs200 billion taxpayers’ money that was injected into Crane Bank before it was sold to Dfcu Bank.

The decision to inject the money into Crane Bank was reached after cabinet warned that its collapse could torpedo the entire financial sector.

Auditor General John Muwanga’s expanded audited into BoU was as a result of petitions from former Crane Bank and central bank employees.

Daily Monitor reported that although the petitioners mentioned Shs200 billion, Jinja Municipality East MP Paul Mwiru who was the Vice Chairman of the Public Accounts Committee in the last Parliament, BoU officials must account for Shs600 billion not 200 billion.

“Before the release of Shs200 billion to Crane Bank under the guise of capitalization, Parliament had already capitalized BoU with Shs400 billion,” Mwiru is quoted.

Matooke Republic understands Muwanga was also instructed by Cosase to scrutinize the Crane Bank sales agreement that was signed in January 2017 between BoU and Dfcu Bank.  Former Crane Bank shareholders including tycoon Sudhir Ruparelia are seeking legal redress because of the way the bank was sold, without putting their interests into consideration, contrary to Financial Intelligence Authority regulations.

Cosase, chaired by Bugweri County MP Abdu Katuntu is in possession of a Crane Bank shareholders’ document disputing the sale and summing up the sales agreement as fraudulent and it has also been passed to the Auditor General’s office, which will carry out the forensic audit.

The Auditor General’s office has confirmed that the forensic audit into BoU is ongoing.

“All those issues will be captured in our report to Parliament. The audit will be within the confines of the law. The National Audit Act is very clear on the mandate of the Auditor General. We will analyze the new issues and see how to incorporate them in the expanded audit into bank of Uganda,” AG’s office spokesperson Gloria Namugera was quoted by a local daily.

Already, Dfcu Bank’s fortunes have been turned around after the Crane Bank purchase. Last week, the largely foreign owned bank with British, Norwegian and Dutch government investment bodies as major shareholders reported as Shs127 billion net profit as of December 2017, up from just Shs46 billion in 2016.

Part of the issues Cosase wants the auditor general to look into is the cost of Crane Bank liquidation, assets management, hiring of external lawyers, liabilities and also the status of all the banks closed by the central bank.

The Crane Bank sale smelt of dubious dealings  and as auditor general Muwanga gets his microscope to audit the central bank, governor Emmanuel Tumusiime Mutebile has already thrown former Executive Director Supervision Justine Bagyenda under the bus, with her sacking creating an internal row that even sucked in the IGG’s office.

It was President Museveni that called officials to order to stop the public fighting as it was injuring the reputation of the central bank.

As we await the auditor general’s findings, it already clear that not everything is in order within the central bank.