Bagyenda’s Mou With DFCU Violated Section 40(3) Of The Bou Act-COSASE MPs

Bagyenda’s Mou With DFCU Violated Section 40(3) Of The Bou Act-COSASE MPs

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By Andrew Irumba

The embattled former director for commercial banks supervision, Ms Justine Bagyenda, bypassed the Bank of Uganda (BoU) Board to sell Global Trust Bank (GTB) to DFCU Bank in 2014.

The revelation was made on Thursday by BoU officials during the parliamentary inquiry into the controversial sale of seven commercial banks by the Central Bank. The inquiry is being handled by the Committee on Commissions, Statutory Authorities and State Enterprises (COSASE).

Ms Susan Kanyemibwa, the Secretary Board Affairs at BoU, told the committee headed by Hon.Abdu Katuntu (Bugweri County MP) that Mrs. Bagyenda signed a Memorandum of Understanding (MoU) with DFCU in 2014 to sell GTB yet the BoU board had never discussed the matter nor been consulted.

Governor Bank of Uganda Tumusiime Mutebile right and the deputy governor Louis Kasekende appear before Cosase recently.

Kanyemibwa presented before the committee minutes of the board meetings between January and December 2014 indicating that the matter was never discussed. Evidence before the committee indicates that BoU closed GTB on 25th July and sold it to DFCU just after 15 days.

However, in her defence, Bagyenda told the MPs that when taking a decision on troubled institutions like GTB, it is the bank senior management comprising the Governor, Deputy Governor and director banks supervision that meet and take decisions without taking minutes.

“When an institution is a troubled institution like GTB, there are confidential discussions between the Governor, Deputy Governor and EDS which are not minuted,” Bagyenda said.

However, the MPs overruled Ms Bagyenda, saying the MoU with DFCU violated Section 40(3) of the BoU Act that stipulates that the bank shall not publish, disclose any information regarding the affairs of a financial institution unless the consent of the institution has been obtained.

Ms Bagyenda also failed to table procurement guidelines showing why BoU selected DFCU as the buyer for DFCU.

“For you to have signed this confidential agreement that includes DFCU as a potential acquirer, I think you disclosed the financial standing of the bank they wanted to acquire. This business of Ms Bagyenda committing a bank is not only irregular but illegal. She disclosed confidential information of a bank to a competitor whom she eventually sold the bank to,” Katuntu said.

The BoU Legal Counsel, Ms Margaret Kaggwa, also amused the Committee when she revealed that Mrs Bagyenda illegally entered the central bank into an MoU with DFCU as her signing contravened the BoU Act.

The central bank officials led by the Governor Emmanuel Tumusiime Mutebile and his Deputy Dr. Louis Kasekende are before parliament’s COSASE to respond to findings of the Auditor General’s report on controversial closure of seven Banks including Teefe Bank (1993), International Credit Bank Ltd (1998), Greenland Bank (1999), The Co-operative Bank (1999), National Bank of Commerce (2012), Global Trust Bank (2014) and the controversial sale of Crane Bank Ltd (CBL) to dfcu Bank (2017) at a paltry Shs200bn.

COSASE Chairperson who doubles as Bugweri County MP Abdul Katuntu said the probe which had already attracted public attention would be handled professionally and that the committee would discuss the closure of banks in a sequence following the year of closure.

He also warned that the committee would ‘leave no stone un-turned’.

The sitting continues this morning.

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