Officials of Bank of Uganda (BOU) led by the Governor, Emmanuel Tusiime Mutebile and the Deputy Governor, Louis Kasekende have been questioned by legislators sitting on the Parliament Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) over the irregular sell off of Global Trust Bank (GTB) to DFCU bank.
According to the Auditor General in the special report on the defunct banks, GTB was sold without proper guidelines and procedure.
“I observed that there were no guidelines/regulations or purchase in place to guide the identification of the purchasers of GTB. There were also no guidelines to determine the procedures to be adopted by the Central Bank in the sale of assets and transfer of assets or liabilities of the defunct banks to DFCU,” the Auditor General noted in the report.
The report indicated that during the interaction with BOU management they stated that the process of selecting the buyer commences by identifying and inquiring with potential purchasers in the industry and sharing with them preliminary information on the bank to be closed.
Once the potential buyer expresses credible interest to purchase the bank, the buyer is required to sign a confidentiality agreement in order to obtain further information on the targeted bank to facilitate the sale.
During the interface with legislators on Monday, it was found out that Global Trust Bank was sold on the same day it was closed citing an irregularity in the process.
“According to the report, GTB was closed on 25th, July, 2014 and on the same day Bank of Uganda signed a Purchase of Assets and Assumption of Liabilities Agreement. How was DFCU procured on the same day GTB was closed,” asked Rubaga North MP, Moses Kasibante.
Kasibante noted that it took several years for BOU to dispose of the closed banks.
In response, the then Executive Director for Bank Supervision, Justine Bagyenda noted that the decision was taken after finding out that the bank could not recover from its poor financial status.
“Bank of Uganda does regular examinations on banks. By the time we come to the decision of closing the bank, we have already established the financial position of this bank whether it is going to survive or close,” Bagyenda said.
“In the case of GTB, we had had a history of the financial position of the bank, we had requested the shareholders to inject money, we had seen money coming in and going out. We took a position after meeting with shareholders because there was no assurance that this bank would survive. We started confidentially or secretly looking for buyers,” Bagyenda said.
However, the COSASE committee Chairperson, Abdul Katuntu requested Bagyenda to address herself to the Financial Institutions Act (FIA), Section 94 and 95 that stipulate how the sale should be managed.
It was later found out that GTB was never closed under receivership but rather under Statutory management where BOU revoked the license and ordered its immediate closure and it was handed over to DFCU.
