Parliament — Former Bank of Uganda (BoU) director of commercial banks supervision Ms Justine Bagyenda, launched the deal to close National Bank of Commerce (NBC) and sell it to Crane Bank by simply placing a phone call.
The phone call was not backed by documentation, Parliament's on Commissions, Statutory Authorities and State Enterprises heard Monday.
Mr Benedict Ssekabira, BoU's Director for Financial Markets Coordination, said the central bank took the decision to close NBC in 2012 on grounds that it lacked enough capital to keep afloat and was also being undermined by disputes between minority and majority shareholders.
BoU officials also admitted that no minutes were recorded from the meeting that resolved to close NBC and sell it to Crane Bank, illustrating what MPs called a "casual way of handling critical business" at the central bank.
BoU Governor Emmanuel Tumusiime-Mutebile, Prime Minister Ruhakana Rugunda, Former Prime Minister Amama Mbabazi and city businessman Amos Nzeyi were among the major shareholders that were wrangling with minority shareholders; fights that bogged down the bank, triggered cumulative bad loans and starved it of capital base.
Mr Mutebile on Monday told the committee that he disqualified himself from any processes leading to the closure of NBC because of conflict of interest and that his deputy Louis Kasekende was fully charge of the closure of NBC.
But the MPs were stunned when Mr Ssekabira revealed that Ms Bagyenda called unnamed officials at Crane Bank and tabled a deal to sell NBC.
Mr Ssekabira revealed that Ms Bagyenda defence was that other banks were "shy" about acquiring NBC; leaving the central bank with no option but to sell it to Crane Bank.
"When that decision was taken, the process to acquire an acquirer who would give comfort to depositors to easily access their money was deployed in confidence. That process was conducted on phone. All the other banks were shy, it is only Crane Bank that was strong enough to swallow NBC. Crane Bank was strong and willing to transact on this and we proceeded to write a confidential agreement," Mr Ssekabira said.
Cosase Chairman Abdu Katuntu accused Mr Ssekabira and Ms Bagyenda of "hawking" NBC and selling it without any documentation.
"Before you took over as a liquidator, you were hawking this bank. For you to start making phone calls and calling people saying there is a bank here, will you buy it? That is nothing other than hawking. If you had a document and say this is how we communicated, then I would believe you, "Mr Katuntu said.
Ms Bagyenda also failed to answer questions regarding the circumstances under which land worth Shs400b was transferred from NBC to Crane Bank at Shs300b, a transaction that was questioned by the Auditor General John Muwanga.
"A review of the Inventory report revealed that the net book value of the leasehold land as at 27/9/2012 was Shs 646.000 worth a leasehold improvement worth Shs 1,529,537,000. That the land was transferred at less than improved value of land by 80 percent,"the audit report reads.
MPs questioned why secured performing loans at 30 percent and at land 25 percent, and how the discounts were calculated but Ms Bagyenda promised to calculate the method and table responses tomorrow (Tuesday).