REVEALED: Auditor General pins BoU on misused Ugx 478b meant for Crane Bank Revival

By Our Business Correspondent

  • A report sanctioned by the Auditor General (John Muwanga) has faulted Uganda’s bank regulator, Bank Of Uganda for squandering tax payers’ money.
  • BoU ran the affairs of Crane Bank for three months (October 2016-January 2017) before they sold it to dfcu at Shs200b.
  • “I observed that BOU did not have a documented process of injection of funds to support CBL operations during the statutory management,” the report reads in part.


The Auditor General has poked holes into the process leading up to the sale of Crane Bank and faulted the Central Bank for squandering billions of taxpayers’ money in questionable expenditure purportedly to support the commercial bank’s operations during the time it was under statutory management.

 A leaked report by the Auditor General, Mr John Muwanga, submitted to Parliament last week, indicates that during the period Crane Bank was under statutory management after being taken over by Bank of Uganda, more than Shs12 billion was spent by BoU on lawyers and consultancy fees without following the procedures or any indication that the money was meant to revive the bank.

The following are full details concerning the sale of Crane bank.

First and foremost, one would need to know how and why crane bank is no more today. One should note that on the 16thAugust 2016, the central bank signed an MOU with Crane bank in order to address the capital inadequacy that was in the banking institution. Crane bank was directed to recapitalize with UGx 172Bn by the end of October 2016. Crane bank paid around 27bn in 3 installments between August 23rd 2016 and 13 October 2016 .  3,000,000 USD was credited on Crane bank settlement account in BOU and 5,000,000 USD was also credited on Crane Bank Dollar account. These funds were recognized as equity “Shareholders contribution towards capital” in Crane bank compilation of inventory of assets, liabilities and equity as at 20th October 2016.

Following a number of events that had happened, the central bank sought advice from its lawyers MMAKS Advocates regarding the takeover of Crane bank. Finally, Crane bank was put under receivership of BOU and later its assets transferred to DFCU.

During the process of receivership and transfer of Assets to DFCU, a lot of weird things happened and below are some of them that were highlighted in the auditor general’s report.

  1. The central bank did not have specific guidelines or regulations in regard to selecting the right buyers of the former crane bank assets. There were no procedures followed.
  2. The report shows that DFCU was selected to buy and take over Crane bank assets but the question of how DFCU emerged the overall winner in buying these assets is not answered by the central bank. It shows that the bidding process was for formality and that both DFCU and the central bank had a non-transparent process.
  3. There was no valuation of assets and liabilities that was carried out before the bank was taken over. The central bank had value that assets, document the process and finally these assets in a manner that would result into high yields so as to minimize losses to crane bank its creditors and shareholders. Here, the central bank did not abide by the Financial Intelligence Authority (FIA) rules. They just conducted the whole process mechanically.
  4. Bank of Uganda failed to provide sufficient details on loans and advances that were transferred to DFCU and their values. This implies that officials from BOU, transaction advisors and buyers could have had a fraud collusion.
  5. The report further pins the central bank for having sold the Crane bank bad book at a discount of 200 billion Uganda Shillings yet it was valued at 570.38 Billion. One wonders why this was done if there was no conniving between the Bank of Uganda officials and the buyers (DFCU). In fact this act caused financial loss to the tax payers, Crane Bank, its creditors and shareholders.  It is not even known or proved if this bad book was sold to DFCU as the central bank claims as there is no any documentation.
  6. The report also highlights the central bank officials as liars since the memo purporting to explain the transfer of the bad book to DFCU was written 6 months after the takeover. It shows that when the central bank officials out of panic wrote the MEMO after the Crane bank shareholders had raised a query about it.  This whole process explains that BOU was trying to justify the transfer of this bad book.  We are reliably informed that when the central bank took over Crane bank, the capital deficit was increased by over 310 Billion. The central bank is therefore responsible for this deficit increase.
  7. The giving itself purchase terms (DFCU) and its preferential treatment by bank of Uganda in the whole process of acquiring Crane bank assets indicates fraud, collusion and corruption among the central bank officials, advisors and buyers. In this whole process, DFCU got the inventory report before it was given to the statutory manager. Another query is how DFCU competed the bid process and submitted it before the inventory report was completed by PWc.
  8. It is evident that the central bank spent a lot of time preparing for the sale of crane bank assets instead of doing what it was supposed to do. This shows that it had interest in the whole process. The report clearly highlights that BOU spent the months of November, December and January organizing the sale of assets for Crane bank yet the institution was in statutory management not receivership by then.  This act shows the incompetency and abuse of office and direct disregard of the law.
  9. The central bank who in this regard is referred to as that statutory manager did not compile a balance sheet showing profits and losses as required by FIA. There are no accounts for the period crane bank was under statutory management. The funds that were injected into crane bank were not accounted for. The central bank thus made a financial loss to the Government of Uganda, Crane bank, its creditors and shareholders.
  10. The way all incidents happen indicated that the central bank’s intention was not to help save and revive crane bank but rather have it collapse. The inventory report shows that at the time of takeover, the deficit was only 130 Billion the bank had bad book of 570 Billion collateralized loans. These figures show that Crane bank had a chance of being saved.

Bank of Uganda did not provide a plan or assessment detailing efforts to revive the financial institution into compliance. All they were working on was the sale of its assets.

  1. The central bank cannot justify as to why it had to inject 478.8 Billion Uganda Shillings into crane bank for liquidity support. There is no evidence and documentation that this amount of money was needed. It gave a room for fraud, corruption and abuse of office. The whole process caused a financial loss of the tax payers’ money. This would have been a plan hatched by some bank officials to embezzle tax payers’ money because they is even no report showing that the injected in money was used for the right purpose.
  2. Last but not least, DFCU took over shareholder cash money amounting to USD 8 Million and is using shareholder money to pay its debts to BOU. This USD 8 Million was deposited into crane bank to solve the financial crisis that had hit the financial institution. This money was considered as shareholders contribution towards capital. This is total prejudice of shareholders.

As we continue, we shall be showing you all the blunders that the central bank together with its officials made during the sale of these various banks.

Keep posted for more.


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