The Central Bank has run to Ministry of Finance seeking approval of shs 484 billion as recapitalization to cover deficits and loses accumulated since 2013.
The Ministry of Finance has also run to parliament requesting for approval of shs 620 billion for planned recapitalization of the Central Bank and other five banks which require shs 136 billion.
Ministry of Finance Accountant General Lawrence Ssemakula told a parliamentary committee chaired by Rubanda East MP Henry Musasizi (NRM) that the Central Bank had indicated to the Ministry that it had suffered deficits since June 2013 and that the money was needed to avert an impending crisis.
“They [BoU] have indicated that they have been impaired from June 2013. So as per the BoU Act, we have no option but to allocate the money in our budget since their operations are in deficits,” Mr Ssemakula said.
When MPs asked whether the ministry had done due diligence on the request by the Central Bank managers, Mr Ssemakula said the deficits are captured in the Auditor General’s reports.
Hard Questions
All eyes are now on Parliament of Uganda whether the legislators will ask hard questions related to the crisis at Bank of Uganda and its previous shenanigans in which the regulator fraudulently disposed off 7 commercial banks.
The fraud in sale of these banks was first captured in Auditor General’s report and thereafter the investigative committee of Parliament- COSASE which came up with harsh recommendations which are yet to be implemented at Bank of Uganda.
The MPs must take into account that in a period between October 2016 and January 2017, Bank of Uganda seized the fastest growing commercial bank in Uganda which had formed 48 branches across the country, Crane Bank Limited.
The claim was Crane Bank had nosedived into gross insolvency. At the time of selling it off it to DFCU bank, BoU claimed it injected shs 478 billion to recapitalize Crane Bank but in vain.
It thus negotiated with DFCU, a process that was queried by Auditor General and sold Sudhir Ruparelia’s bank at shs 200 billion.
It is therefore startling for BoU to accept to make a loss of 278 billion having sold Crane Bank at 200 billion after injecting in 478 billion.
The legislators on the budget committee should bear in mind that the Auditor General failed to trace shs 270 billion as part of 478 billion which BoU claimed was Crane Bank’s recapitalization.
Efforts to have BoU account for 270 billion remained futile.
The MPs also must consider the COSASE reports whose findings expose the regulator as wanting and its top officials held liable for causing a mess in 7 defunct banks that cost taxpayer’s money.
For example, COSASE found out that BoU hired external legal firms at a cost of shs 3 billion but there was no contractual agreements neither would the legal firms account for this money.
In simple terms the legal firms did nothing but were paid.
So Parliament of Uganda will be hurting the economy by continuing to pump money in an institution that doesn’t provide accountability.
Parliament must exhaust COSASE which was compiled using taxpayer’s cash, its finding considered and recommendations implemented on restructuring both the management and regulatory regime at the central bank.
The people who are behind the mistakes that led to the need for recapitalisation, cannot be the same people to manage the recapitalised central bank.
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