10 February 2018

Uganda: Major Changes at Uganda Central Bank Linked to Crane Bank Collapse

On Wednesday, Uganda central bank Governor Emmanuel Tumusiime-Mutebile announced major changes within the top structures of the bank.

He retired Justine Bagyenda, the long serving executive director in charge of supervision, five months before her retirement, and reshuffled 24 members of staff.

A statement from Bank of Uganda (BoU) said Ms Bagyenda -- who was replaced by Tumubweine Twinemanzi -- was retired early to allow her to process her handover. BoU communications director Christine Alupo said the changes would take immediate effect.

The changes cap a turbulent year when the central bank faced the deepest scrutiny of its operations, especially following the collapse of Crane Bank. It is the biggest private indigenous bank. Bank of Uganda took over Crane Bank in October 2016, before selling it to DFCU Bank in January 2017.

Some observers have linked the changes at BoU with the Crane Bank saga.

Ms Bagyenda was at the centre of the storm that followed the takeover and subsequent sale of Crane Bank. After a forensic audit, BoU sued proprietor Sudhir Ruperalia for Ush1 trillion ($283.2 million) and ordered a return of 48 prime properties, which he allegedly siphoned from Crane Bank illegally.

Mr Ruperalia defended himself, claiming that Ms Bagyenda never raised concern about fraud or abuse of office with him or the other board members. This is despite BoU allegedly having a 2014 forensic report from PricewaterhouseCoopers, which showed funds were being siphoned from Crane Bank.

"Following the draft PWC report dated November 14, 2014, BoU conducted an onsite inspection and the director supervision at the central bank, Ms Bagyenda, held a meeting with the board of Crane Bank and did not raise any of the issues alleged in the draft PWC report," said Mr Ruperalia's defence.

Players in the financial sector have welcomed the reshuffle at the central bank, saying it was long overdue.

"These changes were necessary, as the area of commercial bank supervision hasn't been changed in over 10 to years," said Gordon Setiba, a chartered insurer.

Stephen Kaboyo, a manager at a sovereign assets management firm said the reshuffle will inject new thinking, reduce complacency among staff members and improve efficiency at an institution that has in the last been beleaguered by public scandals.

BoU procured the services of top private firms for a four-year period at a cost of Ush17.2 billion ($1.6 million). The central bank was accused of getting these services to make money for the private firms. BoU had earlier been involved in a scandal over the purchase of its golden jubilee pens at a cost of Ush350,000 ($95) each.

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