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Uganda: BoU’s Shs270b injected in Crane Bank can’t be traced

Kampala. The Auditor General has, in a confidential report to the Speaker of Parliament, Ms Rebecca Kadaga, said the Shs272.6b which Bank of Uganda injected in Crane Bank to save it from collapsing cannot be traced.

The queried sum is part of Shs478b Bank of Uganda officials claim to have injected into Crane Bank as liquidity support and other costs before selling it to dfcu Bank at Shs200b.

The central bank took over Crane Bank on October 20, 2016, for three months and later sold it without proper valuation. Parliament is investigating the closure of Crane Bank and six other commercial banks.

According to BoU Governor Emmanuel Tumusiime- Mutebile, Crane Bank was under-capitalised and its precarious financial status posed systemic risk to the entire banking sector.

In the February 2019 “Special Audit Report on the Shs478b injected into Crane Bank Limited by Bank of Uganda”, the AG found that BoU officials approved and remitted $53.16m (more than Shs195b) to Crane Bank by Telegraphic Transfers (TTs).

The money was allegedly requested by undisclosed Crane Bank customers and was later released through the bank’s Nostro Account 3582025085001 after BoU officials sent instructions to Citi Bank in New York.

“I traced the accounts in the CBL in the TT requests to CBL Nostro account statement and confirmed that the amounts in the requests tallied with the transfers from the Nostro Account.

However, I was not able to confirm the final recipients of the respective transfers from the CBL Nostro account as the account didn’t indicate the beneficiary account names, account numbers and beneficiary bank,” the AG report states in part.

The MPs on the House Committee on Commissions Statutory Authorities and State Enterprises (Cosase), who are investigating closure of seven commercial banks want BoU officials to account for the public funds.

A nostro account is an account that a bank holds in a foreign currency in another bank. Such accounts are frequently used to facilitate foreign exchange and trade transactions.

The Auditor General, Mr John Muwanga, has also queried an additional Shs77.5b that BoU officials claim they transferred to 46 Crane Bank branches across the country.

“I was not able to confirm that the funds [recorded in cash accounts] were withdrawn by bona fide account holders at the respective branches because the daily teller transaction reports provided didn’t indicate the customer account numbers and customer names,” the AG states in his report.

Although Ms Charity Mugumya, the BoU head of communications, said she was “out of office until next week,” the BoU officials led by the deputy governor, Dr Louis Kasekende, told the AG that Crane Bank upgraded the banking software from the Bank Master Core system to T24 system, bringing out the “mismatch” in information.

“Linking the two systems by dfcu Bank has been a tedious process that might require more time,” the BoU response to the audit query read in part.

BoU has requested dfcu to embark on the process even as the investigating MPs led by Cosase chairman Abdul Katuntu begin to scrutinise the AG’s latest findings on the expenditure of Shs478b.

The AG, however, did not access all the information about the customer account details to confirm the distribution of the money due to the principle of banking confidentiality.

The AG also states that audited Crane Bank annual accounts for the period starting January 1, 2016 to January 25, 2017 could not be traced, thus complicating the situation further.

Issue

In trying to establish whether the money to Crane Bank for liquidity support was not abused, the AG said he was unable to rely on the draft financial statements provided by BoU statutory manager.

The missing details of the recipients of the money came to the fore after Cosase, which is investigating alleged irregularities in the closure of seven commercial banks, ordered for a special audit into the accountability of Shs478b.

By Daily Monitor

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