Kampala, Uganda — What would you say if you saw President Yoweri Museveni and embattled Bank of Uganda Governor Tumusiime Mutebile in a meeting at this time? What if that meeting, which in fact happened last week, stretched over two consecutive days?
Would you believe sources at State house who are familiar with the issue but are not authorised to comment on it confirming that Museveni in fact met Mutebile twice on two separate days last week at State House but insisting that the meeting had nothing to do with controversy at the crisis-plagued central bank?
"They met over other things," one source told The Independent, "and it is normal for the Governor to meet the president anytime."
But these are not normal times at the central bank and speculation has mounted that Museveni is now ready to move to fix things at the central bank.
Around the same time, on Nov.05, a group of people dumped piglets at Bank of Uganda premises draped in placards with the pictures of Mutebile and Juma Kisaame, the managing director of DFCU bank which BoU hand-picked to acquire assets of the defunct Crane Bank.
The take-over and sale to DFCU of Crane Bank assets has since become toxic and drawn public criticism, with suits and countersuits in the courts.
The raging bad reputation even casts suspicion on the recent announcement that Juma Kisaame, the managing director of DFCU bank which BoU hand-picked to acquire assets of the defunct Crane Bank, is quitting.
Kisaame's quitting has been interpreted by some as a bid to jump ship.
It follows a decision by CDC Group, a UK-based development finance institution, in June to dispose of some of its shareholding in DFCU bank.
The CDC was second biggest shareholder of DFCU at the time of BoU-DFCU deal over Crane Bank. It was, therefore, a beneficiary of the sharp rise in assets of DFCU which, some analysts say DFCU acquired for a song. The CDC decision to sell its shares when DFCU was going through a great run also blighted claims made that the bank's prospects were bright.
And given the crisis surrounding BoU, the dumping of piglets was seen as a form of protest against the BoU leadership over their handling of the financial sector.
In the past, piglets painted in yellow colour--the colour of the ruling party NRM--and tagged with names of certain legislators, have been dumped at parliament to protest against unpopular actions and decisions by legislators belonging to the ruling party.
For some, the dumping of pigs at BoU is seen as the lowest moment over the last two years it has been in the headlines over one controversy after another. For others, the pigs could have been the handiwork of those fighting BoU officials.
Golden parachute for Mutebile
Whatever the case, in the eyes of the public, the move has been seen as another in a series of attacks against the reputation of the BoU leadership. It is against this background that reports emerged President Museveni had encouraged Mutebile to step down.
One line suggests that Museveni is exploring ways of giving a golden parachute to Mutebile; a once highly respected central bank who might not have time left to redeem his image at the floundering central bank. Museveni, it is said, might ask 69-year old Mutebile who in 2016 started his fourth five year term as Bank of Uganda boss to step down before expiry of his term.
Timing of the Museveni - Mutebile meeting is behind the speculation. The meeting happened following reports that one of the BoU board members had suggested that both Mutebile and his deputy Louis Kasekende be removed from their positions. It is alleged that some members of the BoU board of directors made the suggestion to a committee appointed by President Museveni in March to quietly investigate affairs at the central bank.
The special committee led by Bugweri County MP Abdu Katuntu comprises of IGG Mulyagonja, some other members of COSASE who include Katuntu's deputy Anita Among, Mbarara Municipality MP Michael Tusiime, and some BoU board members.
The committee completed its report last month and handed it to Museveni. This investigation had taken the pressure off both BoU and Museveni given that it was being carried out behind closed doors.
In their draft report, insiders say, the Katuntu committee recommended that; among others, some senior officials at the bank be relieved of their jobs. It is not clear whether Kasekende and Mutebile are among these officials.
But Katuntu is also the head of the parliamentary committee on Commissions, Statutory Authorities and State Enterprises (COSASE) which has since switched gears to investigate Mutebile's running of the central bank. The COSASE intervention followed a petition by aggrieved BoU staff following squabbles over staff changes Mutebile made on Feb.08.
On March 27, 2017, for instance, while meeting officials from BoU, some legislators and IGG Mulyagonja at State House Nakasero, Museveni told them to keep BoU issues out of the press-a pointer that he was getting concerned about the implications of the bad press surrounding the bank.
At the time, Mulyagonja had appeared on radio and was quoted severally in newspapers criticising Mutebile for frustrating her efforts to investigate claims by whistleblower that Mutebile's February 2017 reshuffle was among others driven by tribalism.
Now COSASE is focusing on BoU's closure of seven banks. In its first sittings on the issue, the committee kicked Mutebile, Kasekende, and their team out of parliament after they appeared without some critical documents.
Apart from this, the Inspector General of Government (IGG) is now also looking into the source of wealth of top BoU officials amidst allegations of corruption, insider trading, and abuse of office.
The Independent has already reported how one of Museveni's influential handlers met Mutebile's deputy Kasekende and asked him and his boss to retire.
In the debate on how to reform BoU, calls for the two top officials to leave BoU have gained more traction as more controversies have rocked the central bank. Proponents of this view claim that the reputation of the two men has taken a hit and any sensible reform of the bank can only happen after they have left.
Observers also cite a power struggle between the two men, which they say has divided the bank into two camps rendering it vulnerable and incapable of performing its duties normally.
However, for others, the President needs to keep the two men on the job and work with them to solve the current challenges facing the bank.
Those behind this line of thinking say firing the two pillars of the central bank, who have a combined work experience of over 50 years between them of managing Uganda's financial sector, will distablise the bank and send a dangerous signal about Uganda's economy at the time it appears to be struggling.
Firing either of them is also not a light move given their political constituencies.
Kasekende is a catholic and a Muganda with close links to the powerful Mengo establishment. If Museveni were to fire him, he would need a replacement with the same base. And Museveni is very sensitive to these things. When he fired former Vice President Gilbert Bukenya, he replaced him with another Muganda catholic, Edward Kiwanuka Sekandi.
As for Mutebile, President Museveni also tends to be loyal to his loyal servants and would not want to fire Mutebile who has served him at the highest levels since he took power and is credited for laying a foundation for Uganda's economy while his assistant at State House, Secretary to the Treasury at the Ministry of Finance and Governor BoU since 2001.
As a result of all this, others say the president just needs to wait them out. At 69 and 60 respectively, Mutebile and Kasekende are already in retirement age.
Most importantly, Kasekende's contract expires in 2020 and Mutebile's, in 2021. The President can keep them on the job and wait for their contracts to expire and not renew them. This, many hope, will also buy officials investing BoU enough time to conclude their investigation and make recommendations that the new managers of BoU can start from.
Plunging new managers into the BoU mess would make it next to impossible for them to salvage the bank's reputation, some insiders claim. Indeed, some of the problems Mutebile and Kasekende are facing happened before Mutebile joined the bank.
Three of the eight banks closed by BoU that parliament is investigating were closed and sold before Mutebile joined BoU.
These also happen to be the most controversial sales. They are; Teefe Bank (1993), International Credit Bank Ltd (1998), Greenland Bank (1999) and Co-operative Bank (1999).
Mutebile joined BoU in 2001 and as such, banks closed under his watch are; National Bank of Commerce (2012), Global Trust Bank (2014) and Crane Bank (2016).
Blaming BoU's weak board
Away from this, some experts say, Mutebile and Kasekende are not the only problem at BoU. They point out that current investigations by the IGG and the latest investigation in parliament over the closed banks are likely to be expose junior officers of the BoU as the real culprits.
Part of the problem BoU has had is that its board of directors is not the strongest, insiders say. Failure for the board to play its oversight role partly explains why the central bank finds itself in this mess.
Mutebile and Kasekende sit on that board as chairman and deputy chairman, and Bank Secretary, Susan Kanyemibwa, is the Board Secretary. Dr. William Kalema, James Kahooza, Judy Obitre-Gama, Keith Muhakanizi, and Josephine Okui Ossiya, are the other board members.
"This board is incapable of providing oversight to the bank," said an official who is deeply knowledgeable about the inner workings of BoU, "They have also been sucked into the in-fighting."
Indeed, some board members do not see eye-to-eye with Mutebile ever since he made the Feb.8 reshuffle.
The official added that while in the past Mutebile was a strong central banker, when his health deteriorated, it weakened him and rendered him incapable of keeping tabs on critical goings-on at BoU.
"Over the years," the official noted, "BoU has done very well on monetary policy. The challenge has been managing the financial sector."
Indeed, the biggest challenges BoU is currently facing have to do with failure to manage the financial sector.
And this problem is also a historical one. The 1999 judicial commission of inquiry into the closure of commercial banks blamed the collapse of the International Credit Bank (ICB), Greenland Bank Ltd (GBL) and Co-operative Bank on their owners and poor supervision by the central bank.
"The primary responsibility for the failures of ICB, GBL and Co-operative Bank lay with the owners and managers," the commission comprised of Justices James Ogoola (chairman), David Porter, and Japheth Katto noted, "All of them (three failed banks) were afflicted with the one-man management syndrome of autocratic corporate governance - exemplified by Thomas Katto (ICB), Sulaiman Kiggundu (GBL) and USAID (Coop Bank)."
The report added that there was no separation between senior management and the board of directors in ICB or GBL, and that management took little account of depositors' interests.
"The Board of ICB consisted of four members of the Katto family, including a six year-old child. GBL had two boards of directors but neither had a say in the running of the bank, run by the managing director alone through a tiny coterie of inner-circle of sycophants," the report reads in part.
According to Prof. Phares Mutibwa's book, 'Bank of Uganda (1966-2016); a Historical Perspective', throughout the 1990s Uganda witnessed bank failures because the Financial Institutions Statute 1993, gave BoU limited powers.
But even when BoU's powers were boosted under the Financial Institutions Act (2004) and the FI (Amendments) Act of 2016, old problems remained as the collapse of the National Bank of Commerce (2012), Global Trust Bank (2014) and Crane Bank (2016), later showed.
BoU has since showed that tycoon Sudhir Ruparelia was also running Crane Bank in a similar fashion as the owners of ICB and GBL.
When it took Sudhir to court on July 03, 2016, BoU claimed that Sudhir concealed his 100% ownership of Crane Bank by introducing fake shareholders including his wife and three adult children, one Kasiklal Kantaria of a phantom company called White sapphire, one Jitendra Sanghani, and businessman Godfrey Kirumira.
The basis of these allegations was reportedly a forensic audit by Price Waterhouse Coopers, commissioned by the Central Bank.
Junior staff at BoU say they always raised red flags about the way Crane Bank was being run but these were always shunted aside.
Critics say that most of the mess in Crane Bank gained immunity due to collusion, corruption, insider trading and fraud that went undetected or was covered up.
But BoU's biggest problem is over the manner in which it has always sold these banks. The Auditor General (AG) investigated the sale of these banks and found that BoU had undervalued assets of some of the defunct banks. In other cases, critical documents related to the sale had since disappeared.
All this trouble was resurrected by the takeover and sale of Crane Bank to DFCU. BoU controversially sold the bank to DFCU at Shs200 billion not cash. Sudhir says that his bank was valued at over one trillion shillings and is currently locked in a fight with BoU.
Initially, BoU officials appeared to have the upper hand in this fight as they sought to slap Sudhir with criminal charges. Some insiders are still pushing for this action.
But the turning point for Sudhir emerged when Justice David Wangutusi, kicked off the case the two key BoU lawyers Timothy Masembe Kanyerezi of MMAKS Advocates and David Mpanga of AF Mpanga/Bowmans on grounds of conflict of interest.
Sudhir had asked that the two are removed from the case because they represented Crane Bank until October 20, 2016, when BOU took over its management and thus the law firms shared confidential information with the central bank, which they were now using against him.
Tired of the endless fight between Sudhir and BoU, President Museveni had directed that the two settle out of court. However, officials at BoU are divided over this. While Mutebile had agreed to settle with Sudhir, his deputy Kasekende is convinced that Sudhir has no case and that BoU would trounce him in court.
As a result, efforts to settle have always been frustrated; keeping the fight between Sudhir and BoU raging. Museveni does not like that. He says he is increasingly tiring of this ping-pong that continues to erode BoU's integrity.
However, the COSASE investigation in parliament will be before cameras and open to the entire public. How parliament handles that public glare and the sensitive information that might be unearthed and how President Museveni responds, might provide the concrete evidence about the President's intentions on BoU, Kasekende, and Mutebile. Until then, questions will remain about what Museveni and Mutebile talk about when they meet.