By DailyNewsUG Business Correspondent,
DAILYNEWS UG |Parliament of Uganda| Members of Parliament (MPS) sitting on the committee of Commissions, Statutory Authorities and State Enterprises (COSASE) have learnt that Bank of Uganda compelled Crane Bank to acquire National Bank of Commerce at its closure.
The revealation was made by the former Vice Chairman and proprietor of Crane Bank, Sudhir Ruparelia as he appeared before the committee to speak about the controversial sale of Crane Bank Ltd as the committee investigates the sale of the seven defunct banks.Sudhir was the largest shareholder of Crane Bank until its closure in October, 2016 having taken over National Bank of Commerce in 2012 to which the former Prime Minister, Amama Mbabazi was a shareholder.
In his submission on Wednesday, Sudhir noted that it was never the intention of Crane Bank to buy off NBC but acted on the orders of the then BOU Executive Director Bank Supervision, Justine Bagyenda.
“Our brothers in arms at NBC have expressed some concerns about CBL in relation to NBC assets. To address these concerns, we would like to clarify that CBL was not interested in acquiring the assets of NBC,” Sudhir told the committee.
He said that CBL did not bid for NBC assets but was rather ‘compelled’ to acquire the assets by the then Executive Director Supervision, Justine Bagyenda.
“She did this over the telephone. She called up the CBL MD, Mr Kalan and informed us that she was directing us to acquire these assets. She wasn’t asking , it was an order,” Sudhir said.
The businessman revealed that Kalan later called up the members of the Board and informed them of the directive after which they signed the Purchase of Assets and Assumption of liabilities Agreement with BOU dated September 27, 2012.
Last year it was revealed that former Bank of Uganda (BoU) director of commercial banks supervision Ms Justine Bagyenda, launched the deal to close National Bank of Commerce (NBC) and sell it to Crane Bank by simply placing a phone call.
The phone call was not backed by documentation, Parliament’s on Commissions, Statutory Authorities and State Enterprises heard then.
Mr Benedict Ssekabira, BoU’s Director for Financial Markets Coordination, said the central bank took the decision to close NBC in 2012 on grounds that it lacked enough capital to keep afloat and was also being undermined by disputes between minority and majority shareholders.
BoU officials also admitted that no minutes were recorded from the meeting that resolved to close NBC and sell it to Crane Bank, illustrating what MPs called a “casual way of handling critical business” at the central bank.
BoU Governor Emmanuel Tumusiime-Mutebile, Prime Minister Ruhakana Rugunda, Former Prime Minister Amama Mbabazi and city businessman Amos Nzeyi were among the major shareholders that were wrangling with minority shareholders; fights that bogged down the bank, triggered cumulative bad loans and starved it of capital base.
Mr Mutebile on Monday told the committee that he disqualified himself from any processes leading to the closure of NBC because of conflict of interest and that his deputy Louis Kasekende was fully charge of the closure of NBC.
But the MPs were stunned when Mr Ssekabira revealed that Ms Bagyenda called unnamed officials at Crane Bank and tabled a deal to sell NBC.
Mr Ssekabira revealed that Ms Bagyenda defence was that other banks were “shy” about acquiring NBC; leaving the central bank with no option but to sell it to Crane Bank.
“When that decision was taken, the process to acquire an acquirer who would give comfort to depositors to easily access their money was deployed in confidence. That process was conducted on phone. All the other banks were shy, it is only Crane Bank that was strong enough to swallow NBC. Crane Bank was strong and willing to transact on this and we proceeded to write a confidential agreement,” Mr Ssekabira said.
Cosase Chairman Abdu Katuntu accused Mr Ssekabira and Ms Bagyenda of “hawking” NBC and selling it without any documentation.
“Before you took over as a liquidator, you were hawking this bank. For you to start making phone calls and calling people saying there is a bank here, will you buy it? That is nothing other than hawking. If you had a document and say this is how we communicated, then I would believe you, “Mr Katuntu said.
Ms Bagyenda also failed to answer questions regarding the circumstances under which land worth Shs400b was transferred from NBC to Crane Bank at Shs300b, a transaction that was questioned by the Auditor General John Muwanga.
“A review of the Inventory report revealed that the net book value of the leasehold land as at 27/9/2012 was Shs 646.000 worth a leasehold improvement worth Shs 1,529,537,000. That the land was transferred at less than improved value of land by 80 percent,”the audit report reads.