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Sudhir Exposes BoU, Says Was Pushed to Buy Mbabazi’s Bank through a Night Phone Call

The Vice Chairperson of the defunct Crane Bank, Dr. Sudhir Ruparelia has demanded that the Central Bank returns the closed bank’s bad loan book which he said is valued at Shs570 billion.

Bank of Uganda (BoU) closed Crane bank in November 2016 and sold it to DFCU on grounds that it was undercapitalized. 

Sudhir said that the impression from BoU that DFCU bank paid for the bad loan book at Shs200 billion is false.

“BoU is holding our bad loan book illegally, they need to return it to us,” said Sudhir, who, together with other Crane Bank shareholders was appearing before the committee on Commissions, Statutory Authorities and State Enterprises (COSASE) on 06 February, 2019.

He also demanded that BoU returns US$ 23.5 million that was raised by Crane Bank shareholders.

“BoU has no basis to keep that money,” said Sudhir.

Sudhir further asked for a market valuation of assets and liabilities sold to DFCU as well as a valuation of the goodwill that DFCU benefited from taking over Crane bank’s branches.

The Crane Bank Chairperson, Joseph Briribonwa accused BoU of premeditating the closure and sale of Crane Bank. He said that whilst the bank was faced with a liquidity crisis that was caused by the economic downturn in 2014/2015, shareholders raised capital amounting to US$ 8 million which funds were with-held by BoU.

“BoU frustrated all the efforts of Crane Bank to sort out its liquidity crisis and instead sold it to the preferred bank,” said Biribonwa. 

Biribonwa added that BoU rejected Crane Bank’s loan application and later on gave an interest free loan to DFCU.

“BoU never had a plan to revive Crane Bank and made a decision to sell the bank. BoU handled the take over of Crane Bank in an illegal manner,” said Biribonwa.

Meanwhile, Crane Bank shareholders told COSASE that they were forced to take over assets of National Bank of Commerce (NBC), which was closed in September 2012 on grounds that its activities were detrimental to the interests of depositors.

Former Crane Bank lawyer, Alex Rezida said that he received a telephone call from the former Executive Director, Supervision in BoU, Justine Bagyenda with instructions to take over NBC.

“Crane Bank was given only three days to integrate the NBC deposits into their system,” said Rezida.

When asked by MPs why Crane Bank directors did not question the directive, Rezida said they were not in position to oppose directives from Senior BoU officials who were answerable to no one.

Committee Chairperson, Hon Abdul Katuntu expressed disappointment with the manner in which BoU closed banks.

“How can the Central Bank conduct business in a casual manner? I would not expect this from a financial institution,” said Katuntu.

Hon. Medard Ssegona (FDC, Busiro County East) inquired if Crane Bank Directors reported the actions of Bagyenda to the Governor, Emmanuel Tumusiime.

“Your narration seemed to portray Bagyenda as a demigod; were her actions ever brought to the attention of the Governor,” wondered Ssegona.

COSASE has been considering the Auditor General’s Report on the closure of seven Banks by Bank of Uganda. The committee will have an exit meeting with BOU on Friday, 08 February, 2019 and thereafter and is expected to present its report to the House on 22 February, 2019.

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