In Summary

Budadiri West MP Nandala Mafabi has a pending motion in Parliament calling for the setting up of a Select Committee to investigate the operations of Bank of Uganda. The motion was deferred to allow court to dispose of a number of cases involving BoU and Crane Bank.

What does your call to investigate the operations of Bank of Uganda intend to achieve?
We had a motion which really had passed until the [deputy] Speaker [Jacob Oulanyah] postponed debate. I can tell you that BoU is in a total mess.
There is a clique of mafias inside there who are messing up the banking sector; there is a group of corrupt guys inside there. If you are to talk about supervision, it is the worst supervision in the country.
You remember the case of Greenland Bank? They have sold all the properties of Greenland Bank. Farmers’ Bank had Shs94b but the resolution has never come out up to now. But there were assets of the bank which were taken. They have never resolved that matter and who are those?
Those are the same guys in BoU. BoU was supervising Crane Bank for many years and every year they were saying it is the leading bank in Uganda and the number one bank in Uganda.

How then would they come back after five months and say that it has non-preforming loans (NPLs) and close it? Where was BoU for all this time?
That means that either the reports BoU was issuing were wrong or it colluded to steal the bank- which is very possible.
And dfcu in a very short time declared a profit of Shs150b and that is profit from the sale of Crane Bank where they got Shs400b and made a profit of Shs150b.

So we want to find out, what is the role of BoU in all this? What is wrong with BoU? Are there more banks that are likely to collapse because of BoU? What have they done to the banks that they have sold? Like the Farmers Bank, it was for the poor farmers but BoU has not come out to tell us what went wrong.
So you can see that is the reason we want to look at BoU and what they have done as far as the banking sector is concerned.

So basically you are saying that BoU colludes with individuals to sell off banks?
We have a law about NPLs. I may have a crisis to make money this year but the following year I may not have a crisis. These banks give you 30 per cent to 50 per cent of your value, so when you are selling I get an asset.
If you allow the bank to liquidate what it has as assets for non-performing assets, it will recapture the money. Some of us believe Crane Bank should not have gone under.
BoU is now building … foreign banks. The local banking sector does not control any money as most of the money is being controlled by foreigners. But Crane Bank was a local bank, which was good for us. Many people were affected by the closure of Crane Bank. You can talk about Sudhir as the owner but that is a small portion.
So that’s why we believe our motion should be allowed. So some of our colleagues brought the issue that the case is before their committee (Committee on Statutory Authorities and State Enterprises); that is the chairman (Abdu Katuntu) and his deputy (Anita Among). That was wrong. They said the matter was before their committee ye] at that time it was not. Then eventually, they ran to court and said the matter is sub judice.

What exactly are you saying? Do you think some MPs are frustrating the investigation you want to happen?
Yes, they have vested interests. And I think the (deputy) Speaker (Jacob Oulanyah) is also not guiding the House well. He should have been more interested in knowing the effects of the collapse of such a bank on the banking sector.
For us who are in the financial sector we know that a bank collapsing is very dangerous. We should be able to nurture the financial sector to improve and not to close. And so there are many people who have lost jobs and are now sleeping on empty stomachs.

From your initial investigations, what has failed the release of the Resolution reports on BoU? Who is frustrating what?
In BoU there are crooks. They are selling off people’s properties. BoU is one of the worst institutions here. It is taking people’s assets. Like the assets they took from Crane Bank, many of them have been sold at under-proceed values or they have gone back to sell to the people they want.

How do you suggest what you call the mess at BoU can be cleaned up?
First we want a resolution of those banks. There are owners who need to know what they got out of the banks. The minister of Finance should come and tell us. Even to start a Cooperative Bank, we do not need to borrow money or to come here. In our motion, we want a resolution about the closed banks.

We have had a number of banks fail. What does it portend for the economy at large?
Banks are built on reputation. If you have built a reputation in X bank, to build a reputation in another bank takes time. Reputation is built over a period of time.
For example, personally I go to a bank and I say I have come here and I need some money. Even if my account is overdrawn, they will say write a cheque and I do it. They do not need to ask me for security because I am bankable and my flows are seen.
But if you take me to another bank, I will have a crisis. And that is a problem for investors. The banking sector should bring confidence in business and confidence for the investors.

Mafabi’s Take on Key issues

On closure of Crane Bank by Bank of Uganda
BoU was supervising Crane Bank for many years and every year they were saying it is the leading bank in Uganda and the number one bank in Uganda. How then would they come back after five months and say that it has non-preforming loans (NPLs) and close it? Where was BoU for all this time?

On banking sector after closure of Crane Bank
BoU is now building … foreign banks. The local banking sector does not control any money as most of the money is being controlled by foreigners. But Crane Bank was a local bank, which was good for us. Many people were affected by the closure of Crane Bank. You can talk about Sudhir as the owner but that is a small portion.

On some MPs frustrating plans to investigate BoU
The (deputy) Speaker (Jacob Oulanyah) is also not guiding the House well. He should have been more interested to know the effects of the collapse of such a bank on the banking sector.

On implication of failed banks on economy
Banks are built on reputation. If you have built a reputation in X bank, to build a reputation in another bank takes time. Reputation is built over a period of time. The banking sector should bring confidence in business and confidence for the investors.

On motion to probe BoU over closure of banks
Are there more banks that are likely to collapse because of BoU? What have they done to the banks that they have sold? Like the Farmers Bank, it was for the poor farmers but BoU has not come out to tell us what went wrong. So you can see that is the reason we want to look at BoU and what they have done as far as the banking sector is concerned.