BoU officials thrown out of COSASE for lack of documents supporting their claims

Bank of Uganda officials were on Monday kicked out Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises [COSASE] over appearing without supporting documents to their presentation.

The officials led by Governor Emmanuel Tumusiime Mutebile appeared before the probe to respond to accusations made against BoU in the closure of seven commercial banks. The COSASE probe follows an Auditor General’s report that pointed to possible corruption and collusion.

First on the agenda was the issue of Global Trust Bank that was closed in 2014 due to persistent losses amounting to Shs60 billion. BoU argued that the losses posed a risk to depositor funds and interests.

The Central Bank’s Executive Director for Commercial Bank Supervision Tumubweine Twinemanzi disputed an earlier presentation to COSASE by Global Trust Bank directors who said their business model had not been designed for quick profits.

GTB had also told MPs that they had responded to all demands of BoU to inject additional capital into their business, including $10m between January 2013 and May 2014.

Abdu Katuntu the COSASE Chairperson tasked BoU officials to respond to claims raised by GTB and wondered why BoU didn’t give the bank time to prosper since the prevailing situation wasn’t unique to the bank.

“You told them to inject money, they mobilised and put in. Why should somebody put in $10m knowing very well that this business will not break even. They said they knew the market and were persevering and looking for more resources and injecting in the bank knowing that in future they would break even. And when you told them their future was hopeless, they said, why should we inject money in a business which is hopeless,“ Katuntu said.

Twinemanzi argued that the GTB losses were increasing every quarter. He cited a letter written by the shareholders in which they were complaining of repeated capital calls.

Twinemanzi was tasked to produce the letter and he said he had submitted it to the committee, which Katuntu disputed.

After several MPs pointed out more weaknesses in Twine’s presentation, Katuntu adjourned the meeting to Tuesday.

The BoU officials were also asked to present reports and financial statements of Greenland Bank, International Credit Bank and Cooperative Bank as of 2016.

Katuntu also tasked the BoU officials to prove whether or not Nile River Acquisition Company that purchased the loan portfolios of the three banks still exists.