Officials from Bank of Uganda led by the Governor, Emmanuel Tumusiime Mutebile and the former Executive Director, Bank Supervision, Justine Bagyenda have been tasked to explain mechanisms and circumstances under which they sold secured performing loans of the National Bank of Commerce (NBC) at 30 percent discount.
This followed a query carried by the Auditor General in a special audit on the closure of the seven defunct Banks while appearing before the Parliament Committee on Commissions, Statutory Authorities and State Enterprises (COSASE).
According to the Auditor General, Secured Performing Loans at NBC were transferred at Shs 208,439,988 representing 70 percent of the book value of Shs 297,771,411 to Crane Bank Limited (CBL).
During the audit period, BOU management indicated that the transfer price was agreed upon after negotiations with the purchaser however minutes of the negotiations of the Purchase and Assumption (P &A) were not recorded.
“Therefore, I could not determine the justification for transferring assets at a discount,” the Auditor noted.
The Committee members led by Rubaga North MP, Moses Kasibante put Bagyenda to task to explain how such a decision that caused loss to the Bank would be arrived at yet the loans were secured and performing.
“We would like to know from Mrs. Bagyenda who indeed took that decision of selling the secured performing loans at a 30 percent discount,” Kasibante asked.
In response, Bagyenda noted that the decision was made after negotiations with the acquirer, but went ahead to request the committe to accord her more time to look into the loan listings and report back to members on Tuesday.
The legislators insisted that Bagyenda should be in position to explain since the meetings had not minutes. The legislators wondered which documents she intended to revist yet the minutes of the meetings had not been documented.
“Why I want to look at the loan listing is because I need to go back and calculate how we arrived at 30 percent by looking at each loan separately,” Bagyenda responded.
The request by Bagyenda was at last granted by the Committee Chairperson, Abdul Katuntu who also requested her to come prepared with a substantive response on the sale of NBC land titles at 25 percent discount.
According to the addendum to the P&A, Land worth Shs 400m was
transferred to Crane Bank at Shs 300m.