‘Bagyenda didnt look at the audit report of GTB except that of Crane Bank’

‘Bagyenda didnt look at the audit report of GTB except that of Crane Bank’
Eazzy Banking

Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) has given the former Bank of Uganda (BoU) executive director of supervision, Justine Bagyenda and her former co-workers up to Thursday this week to present negotiation records, inventory reports and minutes of meeting that led to the final decision for closure of Global trust bank Uganda (GTBU).

Appearing before committee chaired by Bugweri county MP, Abdul Katuntu, Bagyenda said she didn’t have a chance to look at the audit report of GTB except that of Crane Bank. “I only had a chance took at the audit report of Crane Bank and then I left Bank of Uganda,” she said.

Bagyenda told the committee members that BoU followed right procedures to the closure of GTB. “We carried out all examinations on the bank, the board of management was weak, financial status was inaccurate therefore we wrote a report and it was presented to the Governor BoU, Prof Tumusiime Mutebile,” she said.

She said that a commercial audit was done and conducted by KPMG before the bank was closed. However, Katuntu asked her to avail inventory reports, negotiation records and minutes of the meetings that approved the closure of the bank.

In her response Bagyenda said: “I can’t remember if we have them, I need to check,” She replied adding that she was not given any chance to talk nor discus them.”

Katuntu responded: “New officers need to know the past activities conducted by BoU. The bank has to have a record. I repeat are records there? ” asked Mr. Katuntu.

Mrs. Bagyenda, however requested to be given more time to cross check with BoU. Her plea was heard was granted up to Thursday this week when the committee is scheduled to resume its work.

In yesterday’s meeting, it was revealed that GTB was closed on July 25, 2014 and had its assets and liabilities transferred to DFCU Bank on the same day under the purchase of assets and assumption of liabilities agreement.

Cosase is probing current BoU top gurus as well as former employees who participated in the closure of seven banks. The MPs are using Auditor General John Muwanga’s report on seven defunct banks which include Global Trust Bank and others like Crane Bank, Teefe Trust Bank, Greenland Bank, National Bank of Commerce, Cooperative Bank and International Credit Bank.

According to Mr. John Muwanga, who probed BoU after parliament ordered that he does so, GTBU was closed on 25th July 2014 due to undercapitalization and Corporate Governance weaknesses among other reasons. BOU took over the management of GTBU in line with Section 88(1) of the Financial Institutions Act 2004. In line with Section 95(1) (b) of the Financial Institutions Act 2004 BOU and DFCU arranged for the purchase of assets and assumption of all or some of the liabilities of GTBU.

On 25th July 2014, BOU and DFCU signed a Purchase of assets and Assumption of liabilities agreement where certain assets were transferred and liabilities assumed by DFCU as per Article 10.2. The remaining assets were to be retained by BOU.

Referring to the transaction, Mr. Muwanga said: “I observed that there were no guidelines /regulations or policies in place to guide the identification of the purchasers of GTBU. There were also no guidelines to determine the procedures to be adopted by the Central Bank in the sale of assets and transfer of assets or liabilities of the defunct banks to DFCU.”

BoU did not also provided to Mr. Muwanga records of the procurement process to ascertain the bid requirements, offers made, list of bidders, evaluation criteria, evaluation report and negotiation minutes leading to the P&A agreement.

“In the absence of guidelines and procurement records, I could not ascertain whether BOU selected and evaluated the bids in line with the evaluation criteria,” he said.

GTBU Uganda becomes the fifth defunct bank on which BoU officials have failed to present all reports regarding the liquidation and sale. Others where BoU have failed to present all reports on are; Teefe Trust Bank, Greenland Bank, International Credit Bank and Cooperative Bank.

Cosase also plans to summon the buyers to answer certain queries since BoU has failed to satisfy them with their uncoordinated explanations on the sale.

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