The former Bank of Uganda executive director for banking supervision, Ms Justine Bagyenda, cleared the closure of three commercial banks without valuation reports detailing their financial status, bank officials told a parliamentary probe committee yesterday.
The act against International Credit Bank (ICB), Cooperative Bank and Greenland Bank, according to testimonies at yesterday’s session, breached provisions of the Financial Institutions Statute.
Without valuation reports, lawmakers on Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) questioned what Ms Bagyenda relied on to convince BoU board that the banks were an untenable financial position and ripe for closure.
Ms Bagyenda insisted that BoU hired M/S Bageine, a private firm, to conduct the valuation of the banks’ assets and liabilities but she tabled no report, leaving MPs clueless on how BoU closed the banks.
“It is a long time ago and from the last week, my head has been turning around. That is why I first wanted to read. I wanted to refresh my mind so that I can give an informed answer. I have a document from the executive director (Banking) Supervision, who was me then, to the Governor (BoU). I have seen that valuation reports were made by M/S Bageine. That report should be there in the bank,” Ms Bagyenda said.
Her appearance yesterday, the first since she flew out of the country on November 22, coincided with the lapse of an ultimatum that legislators gave and upon which they said they would issue arrest warrants for the former BoU official.
A September 25, 2007 letter signed by Ms Bagyenda titled, ‘Update on Implementation of closed banks exit strategy’, a copy of which the parliamentary committee possesses, shows that the central bank conducted what it called “desktop valuation.”
This prompted the institution to revise the loan portfolio from $10m (Shs37b) to $5m (Shs18.5b).
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