Statutory Manager Denies Writing Key Reports For The Sale Of Crane Bank

Statutory Manager Denies Writing Key Reports For The Sale Of Crane Bank an accessible web community

By Our Reporter

The Bank of Uganda (BoU) official who was appointed the statutory manager of Crane Bank Limited (CBL) has told Parliament’s Committee on Commissions Statutory Authorities and State Enterprises (COSASE) that he did not write a handover report or evaluation report before the CBL was sold to its rival dfcu Bank by BoU at Shs200 billion in January 2017.

Mr. Edward Katimbo Mugwanya, made the revelation on Tuesday as MPs asked the BoU official to come with the handover report tomorrow, evaluation report, list of depositors and other documents related to the sale of CBL. BoU sold off CBL on account of being significantly undercapitalised to the tune of negative Shs239 billion in core capital.

By saying he did not write a handover report, MPs were left puzzled about what Mugwanya did, since according to FIA, he was supposed to; trace and preserve all the property and assets of the institution, recover debts and other sums of money due and owing to the institution, evaluate the capital structure and management of the institution and recommend to the Central Bank any restructuring or re-organization which he or she considers necessary.

He was also supposed to enter into contracts in the ordinary course of the business of the institution, including rising of funds by borrowing, issue a new balance sheet and profit and loss accounts; and perform any other duties that may be assigned to him or her by the Central Bank.

The report on the compilation of inventory of assets, liabilities and equity as at 20th October 2016 indicated that CBL had total assets of Shs1.,19 trillion and total liabilities of Shs1.32 trillion and a negative total equity and reserves of about Shs131 billion at the start of the statutory management period.

According to the Auditor General (AG), BoU claims that during statutory management, it injected liquidity support of Shs466, 5 billion in CBL.

“The Statutory Manager was therefore, expected to prepare a new balance sheet and profit and loss report on events of the statutory management period from 20th October 2016 to 20th January 2017 when CBL was put under Receivership,” says the AG in his report.

“Instead the Statutory manager (Mugwanya) only prepared CBL annual report and financial statements for the year ended 31’t December 2016. BoU would later engage KPMG to audit the financial statements,” the report adds.

According to the AG, The annual report and financial statements for the year ended 31st December 2016 provided were neither signed by BoU nor the Auditors. “Furthermore BoU did not provide financial statements for the period 1st January to 25th January 2017 when the P& A was completed. I could not establish the details and values of assets and liabilities transferred to Dfcu,” he says.

The AG quotes the BoU memo from Justine Bagyenda, the former executive director of supervision to Governor Prof. Emmanuel Tumusiime-Mutebile, ref. EDS 122,10G dated July 31, 2017. The memo said the bad book of CBL at the time of takeover was Shs570.38 billion out of the gross loans of Shs1, 159 billion.

“This bad book was transferred to DFCU to provide a resource for repayment of loans of Shs200 billion and bridge the shareholder’s deficit of Shs439.72 billion at the date of takeover. “I could not establish how the consideration of Shs200 billion was derived from the bad book of Shs570.38 billion,” he said in the report that MPs are using to raise some queries that needed responses from BoU.

I was also not provided with the schedule of loans and the corresponding collateral transferred to Dfcu, therefore I was not able to establish the values and categories of loans transferred (performing loans, non-performing loans and fully provisioned/written off loans (bad book),” says Muwanga in his report.

The issue of capitalisation is a sticking matter in BoU takeover of Crane Bank. People are allegedly to have sat and crafted a bizzre plan to defraud taxpayers. The plan was to declare Crane Bank working capital insufficient and draw cash under the guise of capitalisation. According to the shareholders of CBL, this was broad day theft and those involved must pay. They say this has nothing do to with ongoing case. an accessible web community an accessible web community

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