EXCLUSIVE: Tropical Bank’s MD and ED placed under investigation by the Inspectorate of Government, over alleged mismanagement and conflict of interest

The Inspectorate of Government is investigating the Managing Director of Tropical Bank, Mr. Abdulaziz M.A. Mansur and the Ag. Executive Director, Mrs Joweria Mukalazi over what it says is “gross mismanagement and conflict of interest”, CEO East Africa Magazine, can exclusively reveal.

Although majority-owned by the Libyan  Foreign Bank (LFB) which owns 99.35% of the paid-up capital, the government of the Republic of Uganda own 0.65%. It is on this basis that the Inspectorate of Government has been called in to investigate the bank’s senior management by aggrieved staff. 

This follows an apparent appeal by unnamed members of staff of the bank to the IGG to stop an ongoing staff reorganisation that will see some of them re-designated and others forced to resign.

“The Inspectorate of Government (IG) received a complaint, regarding mismanagement and conflict of interest by the Managing Director and Ag. Executive Director, Tropical Bank. The IG, in the interest of justice and fairness, has commenced an investigation into the issues raised and therefore advised that recruitment and processes of resignation of positions and forcing some staff to resign is halted until the conclusion of investigations,” Dr. Patricia Achan Okiria, the Deputy Inspector General of Government has written to the bank. 

“The purpose of this letter is, therefore, to order and direct that any process of re-designation and or forced resignation of staff is halted until the conclusion of our investigations or further directions from this office on the matter,” she concluded.

This development has been confirmed by Munira Ali, the IG’s spokesperson.

“Yes we received a comment, but the responsible officer who is handling the matter is not in office, so I cannot be able to give you the details of what action we are taking,” Ms Munira Ali, told this reporter.  

The investigation comes on the back of another 2022 Bank of Uganda recommendation to the bank’s board that it must take action on the two senior managers.  

A copy of an inspection report that we have seen, arising after the central bank’s on-site examination of Tropical Bank, done earlier in 2022, reads: “The Board must make a decision and follow up regarding the continued stay of the Managing Director and Acting Executive Director at the helm of TBL given their (board’s) lack of confidence in the two executives in the management of the institution, and their continued failure to institute the necessary risk management systems to curb losses, grow business and improve the bank’s financial condition.”

The said recommendations were to have been taken “promptly” and “in any case not later than 31 December 2022” but it appears it is being delayed, partly by an ownership squabble between the government of Uganda and the Libyan Foreign Bank. 

The squabble was also flagged by the BoU’s inspection report. 

“The Board must follow up on the resolution of the dispute between the bank’s shareholders and provide quarterly updates to ensure closure of the bank’s shareholding dispute,” the BoU further directed.

The Central Bank also directed that “Tropical Bank must embark on the process of filling substantively all senior management positions.” 

These BoU recommendations do compound an already existing cold war between the Central Bank and Tropical Bank following an earlier refusal by the Central Bank to approve the appointment of Joweria Mukalazi as Executive Director. 

While Tropical Bank in 2020 appointed Joweria as Executive Director, on 24 December 2020, the Central Bank declined to approve the appointment, prompting Joweria to go to court to overrule the Central Bank. The court granted her a temporary injunction on 04th June 2021 as the case progresses, which is why until today, she is still in acting capacity.

A stunted bank

CEO East Africa is not privy to the full details surrounding the staff accusations of mismanagement and the Central Bank’s findings on the duo’s “continued failure to institute the necessary risk management systems to curb losses, grow business and improve the bank’s financial condition” but a close analysis of the bank’s performance under Mr. Abdulaziz M.A. Mansur and Joweria Mukalazi, shows the bank is performing below at least what it was doing, before their arrival. 

Abdulaziz M.A Mansur arrived in the country, in mid-2019 to take on the role of Managing Director. Prior to his arrival Dennis Mugagga Kakeeto, was the Ag. Managing Director and Executive Director following the summary sacking of Sameh M. Krekshi, the then Managing Director, by the board on orders of the Bank of Uganda.

He brought with him nearly 30 years of experience. He, between 2000-2005 was seconded by the Libya Foreign Bank (LFB) to work as the head of audit at A&T Leasing Company, in Turkey, a subsidiary of A&T Bank, also in Turkey- itself majority owned by the Libyan Foreign Bank- an investment arm of the Libyan Central Bank. 

Between 2005 and November 2010, Abdulaziz moved back to Tripoli, Libya and served as the Deputy Manager, Risk Management and Manager HR at Libya Foreign Bank.  From December 2010 to September 2019, he served as the General Manager and one of the key people in starting up Nuran Bank in Libya, a joint venture between the Libya Foreign Bank and Qatar Holding LLC- the investment arm of the Qatar Investment Authority. 

At the time he arrived, Tropical Bank, out of the 24 banks, was the 18th largest by assets (UGX316.1 billion) and deposits (UGX223.4 billion) and the 15th by lending (UGX180 billion). But by the end of 2022, out of 25 banks, the bank had declined to 22nd in assets (UGX281 billion) and lending (UGX118.9 billion) and 24th in deposits (UGX182 billion). 

Not only has it declined in industry position, the bank has also declined in absolute terms with key fundamentals such as deposits, lending and assets either stunted or in decline. Where there’s been a seeming improvement in profitability, it has been erratic. 

For example, in the three years of Abdulaziz M.A Mansur’s leadership, between 2019 and 2022, the bank’s deposits have declined by a CAGR of -7% from the UGX223.4 billion that he inherited to UGX182 billion at the end of 2022. By comparison, in the the three years to his arrival deposits grew by a total of 34%, from UGX 150.3 billion to UGX223.4 billion⏤a compounded annual growth rate of 14.4%. 

Naturally, with declining deposits, lending, the main source of income for the bank, also had to suffer. In the three years, lending fell by 34.1% from UGX180.4 billion in 2019 to UGX118.9 billion- a compounded annual decline of 13%.  Comparatively, in the three years before his arrival, lending grew by 25.9% from UGX143.3 billion in 2016 to UGX180.4 billion in 2019- a CAGR of 8%.

As a result of falling lending,  total income across the three years fell by a CAGR of -2.1%, from the UGX44.1 billion that he inherited in 2019 to UGX41.4 billion at the end of 2022.

To compensate for the lack of growth on key fundamentals, the bank has been on a severe cost-cutting exercise, with mixed bottomline success. For example, while in 2020 Abdulaziz managed to reverse the loss position from UGX24 billion in  2019 to a profit of UGX3.6 billion, in 2021, the bank relapsed to a loss of UGX12.9 billion. In 2022, the bank made a profit of UGX7.4 billion.

Overall, in the three years, the bank’s balance sheet has taken a beating with assets falling by an average of 4% annually, reducing from the UGX316.1 billion that he inherited to UGX281 billion at the end of 2022. By comparison, in the three years preceding 2019, assets grew by a CAGR of 6%, rising from UGX266.9 billion to UGX316.1 billion. 

We reached out to Mrs. Mukalazi, for a comment on the matter, or if the bank will heed the directives by the IGG, but she declined to give a comment on record. 

“Unfortunately, I won’t be able to give you any comment on the matter,” she told this reporter on the phone.