The Speaker of Parliament, Rt Hon. Rebecca Alitwala Kadaga has implored the executive arm of government to expedite bills to reform several aspects governing the banking industry and the running of Bank of Uganda, as recommended by Parliament’s committee on Commissions, Statutory Authorities and State Enterprises (COSASE).
In an exclusive interview with CEO East Africa Magazine, Rt Hon Kadaga said that Parliament had done its job of investigation and making recommendations and it was now up to the executive to introduce the necessary amendments to the existing laws.
“Most of the recommendations/resolutions passed are advisory, so the Executive has the obligation to implement them. For instance the probe on Bank of Uganda, most of the recommendations require amendments to the current Act (s). The Executive has to expedite this process for most of these recommendations to be put into action,” Kadaga told this reporter.
Kadaga’s comments come on the heels of a recent statement by the Inspector General of Government (IGG), Mrs Irene Mulyagonja Kakooza, that her office would not investigate the named officials in the COSASE probe, as Parliament had not explicitly asked her office to do so.
Kadaga, also expressed dissatisfaction and frustration at the executive’s speed in responding to Parliament’s recommendations especially in dealing with accountability issues.
“I think there is a gap because if we investigate and make recommendations, we cannot direct them (IGG); it is the government to say we are going to do A,B,C and D, that is why I was saying that they (executive) are supposed to come back in six months to say that on recommendation this, we have sacked so and so and on this recommendation, we are prosecuting so and so; on this one we have got a conviction and they have not done that,” she said.
“Parliament cannot be prosecutors and also the judge, so that is where the limitation is; it is very frustrating for us,” she said.
Amend Financial Institutions and Bank of Uganda Acts
The COSASE probe into the irregular closures of seven (7) defunct banks made a number of significant recommendations covering the management of troubled financial institutions as well as governance at Bank of Uganda.
Over and above recommending that the named BoU officials be held liable for their respective negligent acts, COSASE also recommended that article 161 (4), that provides that the Governor and deputy Governor shall be Chairperson and Vice Chairperson of the BoU Board respectively, be amended.
“Good corporate governance principles would require that the position of Chairperson and vice Chairperson of the Board is separated from the position of Chief Executive Officer and his Deputy,” said the COSASE MPs, arguing that this was necessary to “protect objectivity of the Board and its independence from management.”
“Separation of these two positions is generally regarded as good practice, as it can help to achieve an appropriate balance of power, increase accountability and improve the Board’s capacity for decision making independent of management. It is the recommendation of this committee therefore, that article 161 (4) be reviewed to separate the offices of the leadership of the Board and top management of BoU,” read the COSASE report.
The MPs also recommended for a specific amendment of the Financial Institutions Act, 2004 to “make a specific provision for the timelines of undertaking all the activities related to and connected with resolution of financial institutions.”
Relatedly, they also said that the BoU board, “in consultation with the Minister of Finance, Planning and Economic Development should by statutory instrument, in not more than six months issue procedures and guidelines under FIA, 2004 on the resolution of financial institutions in distress.”
They also recommended that the role of resolving of financial institutions in distress be moved from the BoU supervision department, to another department.
“It is recommended that the mandate of resolving financial institutions in distress be independent of the bank supervision function. This would mitigate the risk of conflict of interest,” observed and recommended the MPs.
“We are waiting for action from the executive,” Kadaga said.