By Mubiru Ivan
Bank of Uganda officials have failed to explain how the assets and liabilities that were transferred from Crane Bank to dfcu Bank were calculated and if the method used was in line with the law.
“There was no valuation as required by the law. There is a compilation of assets and when you look at this inventory, it is about a compilation of assets, it is not valuation alone. It’s all about documentation. How did you arrive at all those?” Abdu Katuntu, Chairman Parliamentary Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) inquired from the officials last week.
The committee revealed that BoU only relied on an inventory report and not an assets and liabilities report, as required by the Financial Institutions Act, when it closed and sold Crane Bank.
In defence, Katimbo Mugwanya, who was the Central Bank’s statutory manager for Crane Bank, said “BoU has got a valuation method called Prudential Standard for valuing loans in all commercial banks. This valuation standard uses time-based values. If a loan is given today and the money is not used in 30 days, there is an objective way of valuing the value of that loan,”
The committee which is investigating top Central Bank officials over their role in the alleged irregular closure and sale of seven commercial banks between 1993 and 2017 is relying on a 2017 forensic report by the Auditor General (AG) John Muwanga.
In his report, the AG said the Purchase of Assets and Assumption of Liabilities (P&A) deal BoU officials signed with dfcu on January 25, 2017 for the purchase of Crane Bank didn’t follow the right procedures.
“I was not provided with the negotiation minutes leading to the P&A agreement. In the absence of the minutes, I could not determine how BoU selected the best evaluated bidder and how the terms in P& A were determined,” the report adds.
When it came to the valuation of assets and liabilities of Crane Bank before the dfcu takeover of the bank at Sh200 billion, the AG said, “On April 10, 2018, I requested for P&A agreement, including details of the assets and liabilities transferred after taking into account the requisite valuation. I noted that BoU did not carry out a valuation of the assets and liabilities of CBL. In the absence of the valuation, I could not establish how the terms for the transfer of assets and liabilities in the P&A were determined.”
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