BOU reveals Teefe Bank still has unconcluded court case preventing full closure

Nile Post News

Nile Post News

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Teefe Trust Bank may have been closed 25 years ago but an unconcluded court case has prevented the Central Bank from fully winding up the institution.

The Central Bank closed Teefe Trust Bank in 1993 over insider lending and accumulation of bad debt to the point that it could not effectively operate.

Bank of Uganda officials led by Governor Emmanuel Tumusiime-Mutebile told the Committee of Commissions, Statutory Authorities State Enterprises (COSASE) that winding up of Teefe Bank has been delayed by the case against the Central Bank.

The officials appeared before the Committee chaired by Bugweri MP Hon. Abdu Katuntu (FDC) on Friday 16 November 2018.

The Director Financial Markets, BOU, Benedict Sekabira said that of all banks that were closed in the 1990’s which included, Greenland Bank, Global Trust, ICB and Uganda Cooperative Bank, Teefe has the biggest creditor.

“The creditor sued Teefe Trust Bank and Bank of Uganda. This case is in the Court of Appeal and it is far from being concluded. That is why Teefe Trust Bank will be handled last,” said Sekabira.

He however revealed that the Central Bank has paid some of the depositors of Teefe following media announcements to that effect.

“The first time, some people came; the second time a few people came. Payments were made in two categories. Amounts of Shs100,000 and below were paid in cash while amounts of above Shs100,000 were paid by cheque,” said Sekabira.

The Committee also discovered that BOU is in possession of 23 land titles of Teefe Trust Bank, and they questioned the legality of the titles.

Katuntu however faulted BOU for delaying to pay the depositors, saying that by the time the money is paid, it could have lost value.

“The more you delay to pay, the more worthless this money is to the claimants.This is why you should resolve this issue as soon as possible,” said Katuntu.

Medard Lubega (DP, Busiro East) noted that it was unreasonable for the Central Bank to call claimants living outside Kampala to receive an amount of money equivalent to their transport costs.

“You are calling an old man from Kyanamukaka and you are telling them to come and pick Shs100,000 from a bank in Kampala. Assuming you called them 20 years ago, what value will they get from this money,” said Lubega.

On 30th January, 2018, and again on 10th April, 2018, the Auditor General requested documentation relating to all closed banks, specifically the inventory reports, loan schedules, customer deposit schedules, statement of affairs and any reports supporting assets and liabilities taken over by BOU.

Two weeks ago, BoU officials started appearing before COSASE to respond to the Auditor General’s Report.

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