The Parliamentary Committee on Commissions, Statutory Authorities and State Enterprises was stunned when they realised that Bank of Uganda disclosed the financial statement of then troubled Global Trust Bank to DFCU bank before selling it to the latter quickly.
The same committee learnt that former Central Bank Executive Director for Commercial Banks Supervision Justine Bagyenda, single handedly and dubiously signed an agreement to sell Global Trust Bank in 2014.
Following the act, Bagyenda violated section 40 of the Bank of Uganda Act which prohibits the regulator (Central bank) from revealing the financial records of any member bank to another.
While appearing before COSASE which is investigating the sale of seven banks since 1998 by the Central Bank, Bagyenda was quizzed on the move and what informed her decision.
“Did you have any form of consent from Global Trust Bank whose information you were disclosing?” Busiro East MP, Medard Lubega Sseggona posed.
“Ms Bagyenda, why did you disclose affairs of a financial institution with another bank or strangers in contravention with the bank of Uganda act,”COSASE Chairman Abdu Katuntu asked.
The committee also reiterated they needed to know in what capacity Bgayenda was acting to sign off the agreement, since the law gives such authority to only the Governor, his Deputy or the Bank Secretary acting on behalf of both to authorise the sale of a troubled bank.
Bagyenda, however argued that the decision she made was a collective one, involving the Governor and the Board.
“This decision was collective and it involved management, Governor, Deputy Governor and the board. BoU individuals do not make decisions.
In July 2014, Bank of Uganda revoked the licence of Global Trust Bank Uganda in exercise of its powers as a liquidator.
Bank of Uganda governor Tumusiime Mutebile while in a press briefing the same afternoon confirmed that Global Trust Bank had failed to become commercially viable, accumulating losses up to shs 60bn.
Hours later, Global Trust Bank was sold to DFCU. Members of COSASE were left puzzled as to why the sale was rushed.
However, Bagyenda insisted she has never taken decision to sell or close a bank unless sanctioned by the legal department office.
Her former boss, Mutebile however differed; “I doubt that is the case but I want to know from the Board Affairs if such a matter was discussed in the board meeting.”
BoU Secretary Susan Wasagali, referring to minutes of the board for the period of January to December 2014 confirmed that the Board was never involved in the agreement to sale Global Trust Bank.
“I have with me the minutes of the board for January 2014 to December 2014 and this particular issue of the agreement was never discussed,” she said.
A confidential special audit report of the Auditor General (AG) has revealed weaknesses in the management of Central Bank and questioned the Governor and his team for the hitches in the closure of at least seven commercial banks.
In his new report to Parliament, the Auditor General, Mr John Muwanga, queried BoU officials on the flaws in the closure of Teefe Bank (1993), International Credit Bank Ltd (1998), Greenland Bank (1999), The Co-operative Bank (1999), National Bank of Commerce (2012), Global Trust Bank (2014) and the sale of Crane Bank Ltd (CBL) to dfcu (2016).