In what is perhaps Bank of Uganda’s first response to parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) report that implicated the central Bank and several of its high ranking officials for negligently seizing, closing and selling seven (7) defunct banks, Dr Louis Kasekende, BoU’s Deputy Governor has spoken defiantly against the recommendations of the committee.
Speaking at a Bank of Uganda organised Town Hall Meeting in Jinja Town on April 17, 2019, Kasekende, who is one of the officials several MPs have pointed accusing fingers at, downplayed recommendations by the committee to introduce strict procedural guidelines for BoU within which to resolve troubled banks.
“I wish to urge some level of caution to those advocating for bureaucratic and static procedural guidelines in the resolution of financial institutions,” he said adding that “such procedural guidelines should recognise the dynamic nature of banking crises; allow flexibility and the need to not curtail the ability of the regulator to proactively respond to an evolving state of a failing institution.”
Both the Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) and the Auditor General, implicated BoU for severally sections of the Financial Institutions Act, (FIA) 2004 regarding resolution of troubled banks and recommended that the central bank stick to the provisions of the law.
Some of the loopholes identified, included selling off bank assets without valuation and relevant asset inventories, failure to keep records of transactions and initiating the selling processes outside the stipulated timelines.
COSASE recommended that Central Bank officials responsible for the illegal actions be held criminally liable for the irregularities.
Kasekende is one of the officials named by the MPs.
Evidence in a separate Federal Bureau of Investigations (FBI) also showed that Kasekende and another unnamed BoU official, believed to be Justine Bagyenda were involved in secret and illegal plans to sell off Crane Bank, one of the affected banks, to Chinese businessmen, at least 5 months before BoU took it over.
Kasekende’s defiance is a stark contrast to BoU Governor, Prof Emmanuel Tumusiime Mutebile’s apologetic stance in which he publicly acknowledged to COSASE, that BoU had erred on several instances and promised sweeping changes at BoU.
A remorseful Mutebile told COSASE that the probe had “highlighted the shortfalls within our processes, policies and practices” and was “a learning process not only for the Management but also for the staff who followed the proceedings closely.”
“I am confident that resulting from this process, we will review ourselves, the Bank’s processes and policies in order to strengthen our capacity to perform the functions of the Central Bank,” he said in his closing remarks on Thursday, December 2018.
Mutebile further said that pending the recommendations of COSASE, it was incumbent upon the central bank to “put in place measures that translate into a stronger institution and visibly boost the confidence of the public in the central Bank.”
He also said that the central bank would continue further changes internally, to build on the staff changes implemented in February, 2018 as a way to manage some of the challenges identified by COSASE.
“Further changes and remedial action will be done in due course in order to restore the Bank’s image,” he promised.
According to insider sources at BoU, there is a sharp rift between Mutebile and his deputy, both of whom sit on the board and are presidential appointees- a rift so deep that at one time caused BoU staff in the alleged ‘Kasekende camp’ to petition the IGG against Mutebile.
The sources also intimated that Kasekende was heavily opposed to the February 2018 changes that among others saw Justine Bagyenda, shown the exit, months before her official retirement in June 2018.
It now remains to be seen how Mutebile and Kasekende will implement some of the promised changes yet they stand on opposite sides of the coin.