Crane Bank Sale: Parliament Tasks AG To Produce Forensic Audit Report On BoU, DFCU Dealings!

Crane Bank Sale: Parliament Tasks AG To Produce Forensic Audit Report On BoU, DFCU Dealings!

By our reporter

Like soccer fans will tell you; It’s not over till it’s over! It might be over that Crane Bank, an investment that took ages for the shareholders to build was ‘donated’ to DFCU Bank in a blink of an eye,but it may not be over yet till it’s over!  This is because the Auditor General is now weighing in with a ‘noose’.

The Auditor General (AG) John Muwanga has been instructed to return to Bank of Uganda (BoU) to do a broad forensic audit into the operations of the bank and demand accountability of Shs200b, which was injected into the defunct Crane Bank Ltd before it was ‘sold’ off to DFCU Bank.

Government used taxpayers’ money to rescue Crane Bank from collapse but the initiative was a fiasco, nevertheless. The decision to rescue Crane Bank, hitherto owned by property mogul Dr.Sudhir Ruparelia, came after Cabinet warned that the collapse of one of the largest private commercial banks in the country could injure the entire financial sector.

The Auditor General’s expanded audit into BoU was prompted by petitions from former Crane Bank and central bank employees regarding Shs200b allegedly sunk into the defunct commercial bank.

Prof.Mutebile Tasked to Account for UGX 600B!

Although the petitioners singled out Shs200b, Jinja Municipality East MP Paul Mwiru, who chaired Parliament’s Public Accounts Committee in the last Parliament told SpyUganda that the central bank Governor, Prof. Emmanuel Tumusiime Mutebile, and his team “must account for Shs600b and not Shs200b.”

The former PAC vice chairperson said before the release of money to Crane Bank “under the guise of capitalization”, Parliament had already capitalized BoU with Shs400b. Mr Mwiru said “all these monies remain unaccounted for.”

Referring to two separate petitions from former Crane Bank shareholders and unidentified BoU staff, MPs on Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) have asked the Auditor General to audit the central bank afresh. The MPs further asked Mr Muwanga to scrutinize the disputed agreement signed with DFCU Bank during the sale of Crane Bank.

Petitions
In the petitions, the whistleblowers wrote to Cosase Chairman Abdul Katuntu, demanding accountability of Shs200b given to Mr Mutebile in 2016 to manage the affairs of Crane Bank.

The aggrieved Crane Bank shareholders called for a full inquiry into the alleged mismanagement of Crane Bank under BoU control.
The Crane Bank shareholders particularly told Cosase that the sale agreement did not state the value of assets and liabilities given to DFCU Bank. Some MPs have claimed Crane Bank was sold to DFCU Bank at ‘a giveaway price’ of Shs200b. The shareholders have also complained about unfair terms.

Crane Bank’s Majority share holder Dr.Sudhir Ruparelia (L) and Governor BoU Prof.Emanuel Mutebile. In the back ground is defunct Crane Bank Ltd that has turned tables at BoU

Some of the MPs on Cosase and sources close to the Auditor General’s office said that the details of the two petitions were given to Mr Muwanga last week. They said the new expanded audit into BoU operations will form the basis of Parliament’s inquiry into the central bank’s dealings, including the sale of Crane Bank to DFCU Bank.

The spokesperson for the Auditor General’s office, Ms Gloria Namugera, confirmed the forensic investigation into BoU and said the audit process 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,” Ms Namugera said.

Since Section 161(2) of the Constitution vests the authority and responsibility of running the bank with its board of directors, other MPs led by the shadow attorney general, Mr Wilfred Niwagaba, have also petitioned Parliament, asking Cosase to summon Mr Mutebile and other board members to account for the impugned funds. The MPs want Mr Mutebile to explain what they have called ‘ambiguities’ in the DFCU Bank deal with BoU.

“From what I have read and heard from sources within BoU, the central bank dealings with DFCU and other transactions should as a matter of fact be forensically audited in respect of all banks it has liquidated and the funds received from taxpayers under the cover of capitalization,” Mr Niwagaba said, referring to one of the petitions he received from Cosase member.

In January last year, DFCU Bank acquired Crane Bank assets and some liabilities. This transaction, according to DFCU officials, presented numerous opportunities in line with the bank’s growth aspirations.

For instance, in its 2017 half year results, the bank revealed an after-tax profit surge of Shs114b, compared to Shs23b over the same period in 2016. Last week, the bank again reported a net profit of Shs127b as of December 31, 2017, up from Shs46b registered in 2016.

In regard to the DFCU profits, a source in the Auditor General’s office said that MPs had asked Mr Muwanga to audit the agreement between BoU and DFCU Bank after Crane Bank shareholders alleged that it indicated their bank’s assets worth Shs1.3 trillion were given to DFCU for just Shs200b. This particular matter is, however, part of the case pending determination.

In September last year, Mr Katuntu asked the Auditor General to look into the cost of Crane Bank liquidation, assets management, hiring of external lawyers, liabilities and the status of all the banks closed by the central bank. However, in the expanded audit, Mr Muwanga will look into the financial operations and accountability of funds, among other issues.

“We received the petition and asked the Auditor General to go back to Bank of Uganda and look into all these expenditures, including the agreement signed between BoU and DFCU Bank before the takeover of Crane Bank,” Mr Katuntu said.

“We are mindful of the court processes and our investigations do not intend to touch the merits and demerits of the matters before court. Ours is purely accountability of public funds and for that matter, we have asked the Auditor General to furnish us a report on specific BoU transactions. When we get the report, we will see what to do with it,” he added.

About two weeks ago, the Inspector general of Government (IGG), Justice Irene Mulyagonja, wrote to the BoU board to halt approval of the new staff changes until she completes investigation into the reshuffle Mr Mutebile made in February. Some affected BoU staff had petitioned the IGG to investigate the new staff changes on account that they were unfair.

However, Mr Mutebile wrote back to the IGG a charged rebuttal, reminding her that the intended investigation was misguided and if undertaken, it would be disastrous for the entire economy.

The hostile exchange prompted President Museveni to invite the duo for a meeting at State House last week to defuse the simmering hostility that was threatening to explode.

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