Uganda: MPs Punch Holes in Abdu Katuntu's Cosase Report

27 February 2019

Legislators on Tuesday ganged up to punch holes in the much awaited MP Abdu Katuntu-led report compiled by the parliamentary committee on Commissions, Statutory Authorities and State Enterprises (Cosase), describing it as wanting and a waste of time.

Cosase is one of the four accountability committees of parliament mandated to examine the audited accounts by the auditor general detailing the appropriation of government funds to different commissions, authorities and enterprises.

The Cosase investigations which started last year were prompted by a 2017 forensic audit report by the auditor general, John Muwanga, which pointed out irregular operations in the central bank and the controversial closure and sale of the seven commercial banks between 1993 and 2016.

The affected banks include Teefe Trust bank, International Credit bank Ltd, Greenland bank, Uganda Cooperative bank, National Bank of Commerce, Global Trust bank and Crane bank Ltd.

In its report issued last week on Thursday, Cosase observed that the central bank committed a number of irregularities in the closure of the banks including the absence of inventory reports, minutes, lapse in the security that could have led to the theft of vital documents, sale of assets at a discount and lack of liquidation reports among others.

But despite unmasking the irregularities, the committee came short of naming those responsible for the irregularities but goes ahead to recommend that those culpable should be held to account. As debate on the report ensued on Tuesday, legislators across the political divide questioned why the report fell short of singling out the culprits - with some calling for separate investigations into the report writing process.

The state minister for Health for General Duties, Sarah Opendi noted that although the report points out severe irregularities in the closure of the defunct banks like the absence of inventory reports, the recommendations are not biting enough.

"I find the recommendation by the committee, that Bank of Uganda should strictly follow the Financial Institution's Act in future sales. Really?! You come up with such a recommendation when banks were being sold without clear inventories? People should be held responsible. We cannot sit here as parliament and simply adopt such a report, madam speaker without naming personalities in this report. And if we were in a developed country, madam speaker, people would have resigned. But this is Uganda where corruption seems to be the order of the day. We cannot approve the report when the officials who caused a financial loss are still free," she said.

Opendi also questioned why Cosase didn't it find it important to name those responsible for the mismanagement of the loan portfolios of the defunct banks especially the directors of companies that bought the loans.

Cosase established that loan portfolios of International Credit Bank (ICB), Greenland bank and Cooperative bank worth Shs 135 billion were sold off to Nile River Acquisition Company at 93% discount, which the committee said was incredibly outrageous.

"Really madam speaker?! And the report, the committee did not tell us who the directors of this Nile River Acquisition Company. Madam speaker, if the directors are mentioned, but still, for you to say Bank of Uganda directors failed to properly execute their duties and should behave responsible, who are these people? Should we now as parliament now sit and find out who these people are? Why didn't the committee name them? Madam speaker, I find this report lacking, the IGG is mandated to investigate any act of omission that may have occurred. I want to recommend further investigations and we should refer this report to inspectorate of government so that they can investigate and report to this House." minister Opendi added.

Ngora County MP, David Abala agreed with Opendi saying all implicated officials must be named and punished.

"There people who are responsible for the closure of these banks and must be named. I want the chairman to name these members so that the whole world gets to know that so and so played a role in the closure of ABC because they have already brought more problems in this country... A big bank like the central bank, madam speaker, for them, unfortunately went against the law in this country. They did not, can you imagine, keep records of what was happening in that bank completely. These are people who have PhDs and in my view they are people who should not be where they are. They should be on their way to Luzira [prison]." said Abala.

Ajuri County MP, Hamson Obua volunteered to name the officials who featured prominently during the investigations as some of the people responsible for the irregularities since the Cosase had found it to be such a big task. He cited the former executive director supervision Justine Bagyenda, the director financial markets development coordination Benedict Sekabira, the legal counsel Margaret Kasule and deputy governor Louis Kasekende.

"If names are not mentioned, these people featured prominently from day one to the last day and some of them appeared from day one to the last day. We're talking of Bank of Uganda - the central bank of Uganda; the epitome of banking in this country. Madam speaker, there is a problem with the board and management. They are fused, I think the minister responsible must introduce an amendment here and we separate the board from management. Even private lawyers who are directors of commercial banks must not be brought on board to act for and on behalf of Bank of Uganda. There is conflict of interest." said Obua.

Loy Katali, the Jinja Woman MP supported Obua on the proposal to separate roles of the central bank board and the executive, saying that the current arrangement doesn't encourage accountability.

"The problem at Bank of Uganda is with the Constitution Article 1614, which says, that the governor and the deputy should be the chair and vice of the board. In this era of corporate governance, which executive of an institution checks the board? Who oversees who? Can Mutebile oversee Mutebile? That is where all the problems come in. The first bank was closed, the second bank was closed but Mutebile who was at the top, couldn't ask Mutebile the manager what the problem is." said Katali.

Kasambya County MP, Mbwatekamwa Gaffa demanded that the Bank of Uganda board members be dismissed immediately and other officials like governor Emmanuel Tumusiime-Mutebile and his deputy, Louis Kasekende be sacked for the irregularities in the closure of the defunct banks.

"I find it very important to fire people like Kasekende, the Justines, the Mutebile, Sekabira, Kasule should be handed over maybe to the CID officers to investigate the matter immediately. And Rt Hon speaker, the board of Bank of Uganda shouldn't even be spared, the board should also be fired immediately and maybe CID can takeover for further investigations. And lastly, I find it very important that the shareholders should be refunded their money." said Mbwatekamwa.

Godfrey Watenga Nabutanyi, the Lutseshe County MP said there is need for parliament to investigate the Cosase report writing process, arguing that what appears in the report is different from what transpired during the probe.

"Madam speaker I was following the meetings of the committee with the culprits of Bank of Uganda. But when you compare how the committee members behaved and interacted with members of Bank of Uganda in the meetings, and I will compare with what is in the report, you can see that in the meetings they were more harsh and I saw them pointing fingers at individuals but in the report they are shy. So, really Hon members, we have to find out what happened in between the meetings and the report. The public is looking at this August House because this is a very big mess. A solution should be found from the House otherwise, we are in problems." Nabutanyi said.

Nakaseke South MP Paulsen Luttamaguzi Ssemakula wondered why the committee proceedings that were being followed by many Ugandans in the media through live video coverage were bitter while the recommendations had lots of sugar coatings.

"When it came to recommendations, they started sugarcoating things. Did that committee really have lawyers? I would want to see accountants held accountable and recommendations on specific individuals. I, therefore, take Cosase recommendations as null and void," Luttamaguzi said.

Soroti MP Kenneth Esiangu Eitunganane expressed dismay at the unclear mention of the names of the culprits in the report, proposing that the State House's Anti-corruption unit led by Lt Col Edith Nakalema should have immediately swung into action and have properties of those culpable confiscated.

"If Bank of Uganda can abet corruption in this manner and it's the overall supervisor of all financial institutions in this country, what are we left with? ... .the names of the core, why is it that they are not coming out clearly? For the first time at least, let us have the properties of these people confiscated and money recovered and put back in the consolidated fund," Eitunganane said.

Masaka Municipality MP, Mathias Mpuuga appealed to his colleagues to discuss the report with calm, saying they are glossing over serious commissions and omissions by being emotional.

"About October 2016, Bank of Uganda engaged PriceWaterCoopers to scrutinize Crane bank. It actually indicts individuals in Crane bank for gross fraud, the board is indicted for committing fraud, flouting anti-money laundering laws. The biggest shareholder, Dr Sudhir [Ruparelia] was indicted for concealing his shareholding, to insider dealing. I don't see these issues coming through. I don't want us to be emotional and lose sight of the glaring... you see, you can catch a thief but it doesn't take away culpability of stealing." Mpuuga said.

Speaker Rebecca Kadaga said parliament was to debate the report for two days before making resolutions and streamlining the recommendations made by Cosase. She summoned the prime minister Ruhakana Rugunda to appear before parliament on Wednesday so that the resolutions of parliament are taken care of.

Kadaga fought so hard to have Katuntu continue chairing the Cosase probe into the closure of the banks even when his tenure had come to an end. Kadaga then argued that the Forum for Democratic Change (FDC) that had made the leadership changes to parliamentary committees, "was jealous of Katuntu's work and achievements" in probing Bank of Uganda.

She questioned the motive of FDC in changing the leadership of Cosase when it was in the middle of the investigation which was beneficial for the whole country. Given the brouhaha created over the Cosase leadership and the probe, a lot was expected from Katuntu and his report, but he seems to have fallen short of expectations.

Katuntu defends report

Katuntu said it was important for the House to understand that the committee was working under the terms of reference given by the speaker Kadaga.

"We reviewed over 1000 documents and we had only four days to have a report written and produced. We did our best under very difficult circumstances," Katuntu said.

According to Katuntu, the committee had had a serious debate whether to name culprits or not.

"We didn't intend to hide the names but we kept asking ourselves whether the report would pass the legal test putting in mind the case between Attorney General Vs Fox Odoi.

He said the report was not a judgment since the committee wasn't a court of law.

"This is a probe meaning- bringing facts on table, this isn't a court of law where we are going to write and convict people," Katuntu said.

Debate on the report continues today (Wednesday) and recommendations will be subjected to deliberations one by one and eventually adopted.

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