Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) tabled the report from their probe into Bank of Uganda’s closure of several banks and among other recommendations stated that Crane Bank shareholders should be compensated for the bad loan book that BoU illegally sold to DFCU.
“The committee finds that BoU’s failure to observe principles of financial prudence and in the course breaching their statutory duties provided under the FIA therefore financially disadvantaging CBL, it should make good the loss occasioned to the commercially fair extent of the value of the Bad Book,” part of the 64-page report states.
The probe into the closure and sale of seven commercial banks followed an Auditor General’s report that pointed to corruption and collusion among BoU officials and the beneficiaries of BoU’s actions.
The COSASE report noted that just like the case of National Bank of Commerce and Global Trust Bank, Crane Bank’s bad loan book shouldn’t have been transferred to the purchaser (DFCU).
“Given the fact that the UGX 200bn differed cash consideration was to be paid from the recoveries from the bad book estimated by DFCU in its bid (of 20th December 2016) to be in the region of UGX500bn was fully provisioned by CBL, the only prudential decision would have been to treat the bad book like in the case of GTB and NBC,” the MPs noted in the report.
“Secondly, whereas the outstanding liability owed to BoU by CBL was UGX 478bn, DFCU only assumed liability to the extent of UGX 200bn 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 CBL.
COSASE recommended that 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.
“By conducting the sale in a casual and informal manner, deviating from the basic principles enshrined in FIA and acting in a manner incongruous with the best interests of all concerned, BoU acted high handedly. For example, one wonders how, without minutes and records, the BoU management generated a report that they used to brief the Board,” the report reads.