Uganda: BoU cracks whip on Tropical Bank, orders firing of MD

Kampala. Bank of Uganda (BoU) has cracked the whip on Tropical Bank and ordered the sacking of the bank’s managing director, Mr Sameh Mahmud Krekshi.

Mr Krekshi, according to a letter by Mr Gerald Sendaula, the chairperson of the Board of Directors of the bank, was accused of overdrawing his account.

The letter, a copy of which Saturday Monitor has seen, is dated September 27.

“This, therefore, serves to notify you of Bank of Uganda’s directive contained in their letter EDS.122.100 dated September 27, 2018 to immediately terminate you from the services of Tropical Bank Ltd.

You are henceforth requested to immediately hand over office and all the bank’s property in your possession or under your control to the executive director, Mr Dennis Kaketo,” Mr Sendaula’s letter to Mr Krekshi reads in part.

We could not readily establish the amount by which Mr Krekshi had overdrawn his personal account and the letter remained silent on the matter.

Next course of action
Asked whether Mr Krekshi will be criminally liable for causing a financial loss to the Bank, Mr Ssendaula said there was no criminal offense apart from failing to live by the “discipline of the institution”

Mr Ssendaula indicated in the termination letter, however, that Mr Krekshi will be paid his benefits after deducting the amount by which his personal account, which is held in the same bank, was overdrawn.

The termination letter is copied to Finance minister Matia Kasaija, BoU Governor Emmanual Tumusiime-Mutebile, BoU Supervision executive director, and the board chairperson and general manager of Libyan Foreign Bank.

The Libyan Foreign Bank is the majority shareholder in Tropical Bank Ltd.
Mr Ssendaula said in the letter that Mr Krekshi failed to comply with the Central Bank’s advice to rectify the overdrawn position of his personal account.

The BoU supervisors had detected that Mr Krekshi’s account had been overdrawn during an on-site examination of Tropical Bank for the year 2017.

“The Central Bank recently conducted a follow up examination and established that the anomaly was never rectified as the overdrawn position was only regularised as recently as September 12, 2018, three months after the same was highlighted to the board of directors,” Mr Ssendaula says in the letter.

When contacted yesterday, Mr Ssendaula said Mr Krekshi breached the rules and regulations of the bank and the board could not leave him in office after his acts were condemned by the Central Bank.

“I cannot reveal how much money was involved but what I can confirm is that he has already paid back though we could not defy BoU directive by retaining him. I have since appointed Mr Denis Mugagga Kakeeto as acting MD,” Mr Ssendaula said.

Mr Ssendaula said the money was paid back to Tropical Bank by the Libyan Foreign Bank where he was also on payroll.

“They Libyan Foreign Bank paid off the money and they are taking him back and the process of recruiting a new officer is on and we have up to December 31 to have that position field,” he said.

Mr Ssendaula said, the Tropical Bank’s articles of association provide that, the Libyan Foreign Bank as the majority shareholders will nominate a candidate of their choice for the post of Managing Director who will then be vetted by the board before being appointed.

BoU troubles
The Central Bank is currently under fire from different angles for what some see as failure to supervise the defunct Crane Bank, which for years was seen as the biggest indigenous bank and won various accolades as it grew by leaps and bound.

Crane Bank, however, would in 2016 be taken over by BoU and later sold to dfcu Bank for what an audit by PricewaterhouseCoopers concluded was massive fraud and other banking malpractices.

BoU officials have since been accused of colluding with officials and directors of Crane Bank to abet the malpractices and a number of inquiries have since taken off to determine what happened.

It is not clear to what extent BoU’s directive in the Tropical Bank case was influenced by the queries it is facing over Crane Bank, especially since the supervision directorate in the bank has been reorganised following the retirement in July of Ms Justine Bagyenda, the former executive director commercial banks supervision.

Before Ms Bagyenda retired, she had fallen out with BoU Governor Tumusiime-Mutebile, who ordered her to hand over the supervision docket months before the date of her retirement.

Not the first case
This is not the first time the Central Bank is cracking a whip on Tropical Bank. BoU in March 2016 kicked the Libyan government out of control of Tropical Bank in enforcement of a United Nations Security Council Resolution announced a month earlier calling nations to freeze assets of the Libyan government and its associated entities in foreign countries.

BoU maintained then that Tropical Bank would continue operating normally despite the sanction on the Libyan government, stating that Tropical Bank was in a sound financial condition.

Uganda’s government froze $375 million (about Shs1.4 trillion) worth of Libyan-owned assets to comply with the UN action.

By Daily Monitor

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