BOU Officials Fail to Produce Documents Backing Sale of GTBank to DFCU

The Parliamentary committee on Commissions, Statutory Authorities and State Enterprise (COSASE) has tasked Bank of Uganda (BOU) led by the Governor, Emmanuel Tumusiime Mutebile and the Deputy Governor, Louis Kasekende to produce documents that were used during the sale of Global Trust Bank (GTB) to DFCU Bank.

The officials together with the former BOU Executive Director Bank Supervision, Justine Bagyenda had appeared before the committee to respond to queries that were raised by the Auditor General on the closure of the seven defunct banks.

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 GTBU,” the Auditor General noted in the report.

“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 report added.

The report indicated that during the interaction with BOU management, they indicated 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.

It was found out that Global Trust Bank was sold on the same day it was closed citing an irregularity in the process.

It was upon this basis that the committee chairperson, Abdul Katuntu requested for documentation that was used during the sale of the bank.

In response, the Executive Director Bank Supervision, Twinemanzi Tumubweine noted that, “We don’t have and didn’t have at that time the guidelines and procedures regarding procurement of bidders for P & A.”

Katuntu thus asked the officials to explain what really happened and how the process was handled in the absence of the guiding procedures.

It was then that Bagyenda who was then the Executive Director was invited to explain how the process was undertaken.

Bagyenda noted that the Financial Institutions Act (FIA) was the guiding principle that was used then, though Katuntu insisted that she presents supporting documentation.

“Do you have any documentation regarding this process, because we want to examine the documents and then look at what they provide,” Kantuntu noted.

Bagyenda noted that indeed a report was made and presented before the Board of Directors and the findings shared with the Board of Directors of Global Trust Bank.

Katuntu dismissed Bagyenda’s submission noting that it was irrelevant to the Auditor General’s queries which sought for documents used during the selection of the purchase such as negotiation minutes and not how GTB was closed.

“Give me time to check, it is long I can not remember,” Bagyenda said.

Kantuntu ruled to allow Bagyenda together with officials of Bank of Uganda that were part of the process to revisit the necessary documents and report back to the committee on Thursday.