BoU on spot over shs56b excess funding on 3 defunct banks

By our reporter

Auditor General John Muwanga is investigating the circumstances under which government through Bank of Uganda (BoU) advanced shs56.109 billion in excess of the required contribution to the Deposit Insurance Fund (DIF) for three defunct banks.

The banks in question are International Credit Bank which was closed in 1998, Co-operative Bank Ltd closed in 1999 as well as Greenland Bank also closed in 1999.

Mr. Muwanga wants BoU management to explain reasons for excess funding and late settlement of the Deposit Protection Fund (DPF) money even after selling off the assets of the closed banks.

According to New Vision, government through BoU was required to intervene with shs35.112 billion but instead paid shs91.221 billion to cover the deficit of both insured and uninsured depositors of the closed banks.

Government’s contribution was to be refunded from the assets recovery account following the sale of the defunct bank’s assets.

It is alleged that the shs56 .109 billion excess payment was made without a Memorandum of Understanding (MoU) of how government was to recover the money from BoU.

Mr. Muwanga’s move comes at a backdrop after Speaker of Parliament Rebecca Alitwala Kadaga asked him to disregard the Attorney General’s contrary advice of sub-judice rule and proceed to audit BoU.

The team which was led by James Bantu, the Director of Forensics was given “strict instructions” to look into the status of various banks at closure, cost of liquidation, assets and liabilities, non-performing assets, non-recoverable assets of Crane Bank as well as other closed banks and the entire disposal chain.