Bank of Uganda paid Lawyers Shs9b to draft a Crane Bank ‘Sale agreement’.

  • BoU officials led by Governor Tumusiime-Mutebile (2nd right), deputy Governor Louis Kasekende (centre) and Executive Director-Supervision at BoU Tumubweine Twinemanzi at Cosase at Parliament PHOTO BY ALEX ESAGALA

By Our Reporter

DailyNewsUG |Parliament|External lawyers from MMAKS Advocates, were paid $2.7m (about Shs9.8b) by Bank of Uganda (BoU) to draft and negotiate the terms of reference of the Purchase of Assets and Assumption of Liabilities Agreement that the central bank relied on to take over Crane Bank, a parliamentary inquiry has found out.

MPs on the Committee on Commissions, Statutory Authorities and State Enterprises ( Cosase) investigating the controversial closure of banks discovered that MMAKS Advocates inked a deal with the central bank where the lawyers would be entitled to 5 per cent of the money that would be recovered from Crane Bank. However, a copy of the agreement dated January 25, 2017 was drafted by the office of the legal affairs of BoU.

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Lawyers speak
Documents presented by Mr Timothy Masembe, a managing partner at MMAKS Advocates, indicate that out of the $54.7m (about Shs199.6b) cash consideration that was recovered from Crane Bank, lawyers from MMAKS took home $2.7m [Shs9.8b] as legal fees for drafting the agreement that paved way for the takeover.

“For context as to the extent of the discount given in the matter based on our long standing relationship with BoU, under the Advocates Regulations [Remuneration and taxation of costs] the applicable rate for preparation of a contract on conditions of sale is 5 per cent,” Mr Masembe told MPs.

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Mr Masembe indicated that based only on the $54.7m (Shs199.6b) cash consideration, (5 per cent) would amount to legal fees in excess of $ 2.7m [Shs9.8b] if taxed on an Advocate-client dispute.

The Parliamentary Committee has also obtained documents from Bank of Uganda (BoU) which contain details showing private lawyers are demanding more than Shs25b for legal services. It is, however, not yet clear whether the Shs9.8b is part of the Shs25b.

The MPs obtained tax invoices/debit note to BoU Legal Counsel containing, among other things, the 18 per cent Value Added Tax (VAT) charge, professional fees, and other detailed expenses covering photocopying of documents, drafting letters and perusing documents, legal counsel and representation in court, telephone costs and lawyers’ transport to court.

Although professional legal fees are billed in accordance with the Advocates (Remuneration) regulations, Cosase is seeking details on the hiring and payment of more than Shs25b to legal firms, MMAKS Advocates, Bowman’s Uganda, Cohen and Collins Solicitors and Notaries and Sebalu & Lule Advocates.

Regarding footage that is before the Committee showing him driving into BoU premises on a Sunday, February 3, Mr Masembe responded that he was at the central bank at the invitation of Ms Margaret Kasule, BoU’s legal counsel, for a meeting regarding a court ruling. A meeting that was also attended by Ms Justine Bagyenda, who was the executive director for commercial banks supervision.

MMAKS Advocates were also separately paid $217 (Shs 792,104) per hour for 432 hours to act as transaction advisers for the disputed takeover of Crane Bank with the deals inked without any supporting minutes.

Yesterday, Cosase quizzed BoU officials over why payments to the lawyers were in dollars against standing orders by the Finance ministry.

The payments
Mbarara Municipality MP Michael Tusiime said the payments by BoU offended a directive by the secretary to the Treasury Keith Muhakanizi barring payments in foreign currency to local suppliers except for those who already had running contracts then.

Ms Bagyenda said questions regarding the payment of the money to MMAKS should be dealt with by the Governor Tumusiime – Mutebile because he is the accounting officer of the central bank.

With no definitive response regarding the payments to MMAKS Advocates, the lawyers will today file written submissions to the Committee detailing the scope of work they handled to justify the expenditures.

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