Transactions to sell the National Bank of Commerce to Crane bank were done on phone, a parliamentary investigation into sell of commercial banks has heard.
On Monday, the Committee on Commissions, Statutory Authorities and State Enterprises probing the sale of seven banks between 1988 and 2016 was told that there were no documents showing transactions that culminated into the sale of the National Bank of Commerce in 2012.
The Bank of Uganda governor, Tumusiime Mutebile told COSASE that he was not involved in the transactions to sell the bank because of fear of conflict as he was among the shareholders in the bank.
“I declared my interest because I was related to shareholders of the bank. In my time as governor, I don’t remember making any decision in regards the sale of National Bank of Commerce,”Mutebile told the parliamentary committee chaired by Bugweri MP Abdu Katuntu.
An earlier report by the Auditor General indicated that the bank was sold to Crane bank on the same day it was closed under mysterious circumstances.
Sale via phone call
The parliamentary committee also heard that the sale of the bank was handled by the former Bank of Uganda Executive Director in charge of Bank Supervision, Justine Bagyenda via a phone call.
The committee also heard that Bagyenda made a phone call to the then Cranes Bank Managing Director A.R,Kalan informing him of the availability of the bank.
“Mr.chairman I did these negotiations by phone,”Bagyenda responded to queries from the committee members in regards the sale of National Bank of Commerce.
Benedict Ssekabira, the Bank of Uganda Director in charge of financial markets confirmed the transaction to sell the bank was made by her then supervisor, Bagyenda on phone.
“The phone calls made to the different banks about a possibility of them acquiring an institution did not state which bank it was,”Ssekabira said.
Last week, the committee heard that Justine Bagyenda, side stepped the board and sold Global Trust Bank (GTB) to DFCU Bank in 2014.
Susan Kanyemibwa, the Secretary Board Affairs at BoU, told the committee headed by Abdu Katuntu that Bagyenda signed a Memorandum of Understanding (MoU) with DFCU in 2014 to sell GTB yet the BoU board had never discussed the matter nor been consulted.
She presented before the committee minutes of the board meetings between January and December 2014 indicating that the matter was never discussed.
Evidence before the committee indicates that BoU closed GTB on 25th July and sold it to DFCU 15 days after.
However, in defence, Bagyenda told the MPs that when taking a decision on troubled institutions like GTB, it is the bank senior management comprising the Governor, Deputy Governor and director banks supervision that meet and take decisions without taking minutes.
“When an institution is a troubled institution like GTB, there are confidential discussions between the Governor, Deputy Governor and EDS which are not minuted,” Bagyenda said.
But the MPs said the MoU with DFCU violated Section 40(3) of the BoU Act.
The Act says that the bank shall not publish, disclose any information regarding the affairs of a financial institution unless the consent of the institution has been obtained.
Bagyenda failed to table documents showing how DFCU was selected as the buyer for GTB.
“For you to have signed this confidential agreement that includes DFCU as a potential acquirer, I think you disclosed the financial standing of the bank they wanted to acquire. This business of Ms Bagyenda committing a bank is not only irregular but illegal. She disclosed confidential information of a bank to a competitor whom she eventually sells the bank to,” Katuntu said.