Derrick Nsereko, a Ugandan citizen has expressed intentions to sue the Central Bank for failing to oversee Crane Bank before selling it to DFCU Bank.
In October last year the Governor Bank Of Uganda (BoU) Emmanuel Mutebile notified the nation that BoU had taken over the management of Crane Bank since it posed a systematic risk to the banking sector in the country because it was undercapitalised.
Crane Bank belonged to the affluent businessman Dr Sudhir Ruparelia.
In January, the Central Bank placed Crane Bank under receivership and subsequently transferred its assets and liabilities to DFCU Bank. It was now official Crane Bank had been sold.
In his letter through his legal officers Kashilingi, Rugaba and Associates, Nsereko states that, “Crane Bank’s incorporation in 1995 supervised and regulated the financial institution pursuant to the Central Bank’s statutory mandate as set out in Sections of the Financial Institutions Act 2004 and other enabling legislation.”
He added that BoU has since 1995 regularly given Crane Bank a clean financial bill of health and reassured the general public of CBL’s sound financial standing.
“It will be recalled that sometime in 2016, the Governor of the Central Bank stated that Crane Bank had a clean financial bill of health. It now transpires that this was not entirely true,” he said.
“These events clearly demonstrate that the Central Bank has either failed in exercising its statutory mandate in supervising the management and affairs of CBL or the officers of the Central Bank colluded with the management of CBL in doctoring reports of sound financial health of CBL.”
“As a result of the Central Bank’s failings, neglect of duty or intransigence, CBL was largely owned by one individual contrary to the provisions of the FIA, had several fraudulent remittances undetected by the Central Bank, did not remit colossal amounts of money to the National Social Security Fund thereby depriving workers of their retirement benefits inter alia,” Nsereko noted.
Bank of Uganda Communications Director Christine Alupo maintained the institution’s position of not commenting on a matter before court.
Bank of Uganda recently took Sudhir to the Commercial Court on allegations of causing fraud at the bank estimated at $92m.
Sudhir is yet to file a response to the accusations leveled against him but his lawyers have vowed to put up a strong defence.
In his petition sent to the Central Bank governor, Tumusiime Mutebile and also copied to the Director Bank Supervision Justine Bagyenda, Nsereko said he “intends, within three working days from the date hereof, to institute a suit against the central bank, seeking declaratory orders on failure to supervise CBL, collusion, corruption and fraud in the issuance of clean financial health bills in respect of CBL and other relief.”
