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Amama Mbabazi Defunct Bank Officials Decry BoU Treachery, Demand shs 295b Compensation

Former Prime Minister Amama Mbabazi was one of the top shareholders National Bank of Commerce (NCB) have pinned Bank of Uganda (BoU) for ‘unlawfully’ selling their investment.

Appearing before the Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) today, the committee interacted with shareholders of one of the defunct banks- National Bank of Commerce (NBC) who demanded the re-opening of their Bank because “it was illegally sold by the Central Bank.” Among the shareholders are Amama Mbabazi, tycoon Amos Nzeyi and Prime Minister Ruhakana Rugunda.

NBC was formed in 1991 and was majorly owned by businessman Amos Nzeyi, former premier Amama Mbabazi and current Prime Minister Dr Ruhakana Rugunda.

A small percentage of the shares were owned by former Finance minister Dr Ezra Suruma, Gen Jim Muhwezi and retired Supreme Court judge George Wilson Kanyeihamba, among others. NBC suffered a serious setback when Bank of Uganda summarily and illegally closed it on 27th September 2012.

While interacting with the committee, Mathew Rukikaire, the current chairperson Board of Directors, NBC said that the manner in which the Central Bank closed NBC was in total violation of the law and it was neither transparent nor fair.

It should be noted that on September 27, 2012, BoU Deputy Governor, Louis Kasekende with immediate effect took over the management of NBC and sold it to Crane Bank (now defunct) because “Bank of Uganda has determined that the continuation of NBC’s activities is detrimental to the interests of its depositors.”

However, NCB shareholders insist that the reasons given by the Central Bank for closure for their Bank contradict the reigning status of the Bank at the time of its closure.

‘The manner in which it was closed was in total violation of the law, it was neither transparent nor fair.” They said.

In a public notice issued by deputy BoU Governor, Dr. Louis Kasekende, it was claimed that the takeover, winding up and immediate sale of NBC to Crane Bank was done to protect the interest of depositors and maintain the stability of the financial sector.

This was far from the truth. The bank employed over 300 Ugandans, supported many businesses operated by both women and youth groups and also contributed more than 10 billion shillings in direct taxes between 2000 and 2002, according to Mathew Rukikaire, one of the former owners of National Bank of Commerce.

Rukikaire said that at the time of closure, NCB was undergoing a huge transformation where $1.7m was injected into state of the art headquarters, $1.2m for acquiring new software system, acquired new ATM and that the Bank was fully operational.

“We were then ordered by a court to raise Shs7bn as required by Bank of Uganda and indeed, during the AGM, we agree to comply with court order and raise money within 4days. New board was elected and approved by Bank of Uganda. However, Ms Bagyenda [former BoU director in charge of Supervision] directed that Shs7Bn be invested in Treasury bonds. This frustrated new board’s effort to effectively use the capital to generate income for NBC,” Rukikaire said.

He added, “Bank of Uganda claimed that the capital of the Bank was being eroded and subsequently, a penalty of Shs2m was slapped on us by Bagyenda for non-compliance with Bank of Uganda’s directives. It is clear that senior staff of BoU were determined to fail NBC and kick it out because even when we complied with their directives, they still closed us less than 3 months later.”

Rukikaire further accused BoU of contradicting with its own NBC Monitoring report of September 11th 2012 that showed that the Bank was in a healthy state.  

“This drastic action also contradicted NBC Monitoring report that was issued by BoU 15days before closure which showed that NBC had total assets of Shs21bn,” he said.

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