Conflict of interest cited in Global Trust Bank sale

Kampala, Uganda | THE INDEPENDENT | Parliament’s committee on Commissions, Statutory Authorities and State Enterprises (COSASE) has cited possibility of conflict of interest in the sale of Global Trust Bank to DFCU.

The committee in Friday continued its investigation into a decision by Bank of Uganda (BoU) to sale the Bank to DFCU under unclear circumstances.

Global Trust Bank’s license was revoked in July 2014 allegedly due to poor performance which, according to the Central Bank, resulted from under-capitalization and corporate governance weaknesses.

BoU says that Global Trust Bank, which had built a network of 23 branches at the time of its closure, had accumulated losses to a tune of 60 billion Shillings. The Bank which was valued at 75 billion Shillings was then handed over to DFCU Bank.

But Auditor General John Muwanga noted that there were no guidelines and regulations to guide the identification of the entity that assumed the assets and liabilities of Global Trust Bank.

Efforts by COSASE to get a full list of negotiators of the DFCU deal were unsuccessful.

Former Bank of Uganda (BoU) Executive Director Supervision Justine Bagyenda said that she could not remember the names of people with whom she negotiated the deal apart from Ben Ssekabira, the BOU Director Financial Markets Development Coordination.
Ssekabira also told that COSASE Chairperson Abdu Katuntu that he cannot remember names of other people apart from Bagyenda who chaired meetings where minutes could not be drafted.

Katuntu did not have kind words for the manner in which DFCU Bank was chosen to buy GTB.

Mbarara Municipality MP Michael Tusiime raised concerns saying that according to the list of shareholders of DFCU Bank availed by the Central Bank to the committee, Bank of Uganda holds shares in the commercial bank under the Bank of Uganda Staff Retirement Benefit Scheme and Bank of Uganda Staff Pensions Fund held shares in DFCU.

The legislators questioned whether there is a possibility that this relationship could have informed Central Bank’s decision to sell Global Trust Bank to DFCU Bank in which it had interest.

Katuntu inquired whether the two mentioned schemes exist and whether BOU is an investor in DFCU.

The Central Bank Executive Director Supervision, Twinemanzi Tumubweine confirmed the existence of the two schemes but said he would not know whether BoU invests in DFCU.

The Acting Executive Director Administration who is the Director Pension Scheme in the Central Bank Bakashaba Ruhanga re-affirmed that the BoU has a staff retirement benefit scheme which has shares in DFCU Bank.

He said that the schemes hold investments in DFCU Bank. This confirmation upset Katuntu who cited an issue of conflict of interest by the Central Bank.

Bakashaba Ruhanga went ahead to explain Bank of Uganda’s schemes in DFCU and how they are run.

Katuntu said that the current questions surrounding Bank of Uganda’s sale of Global Trust Bank to DFCU under unclear circumstances could be linked to the Central Bank’s interest in DFCU Bank.

Katuntu said that his committee will form an opinion about the matter.

The committee also learnt from MP Michael Tusiime that one of the Board Directors of Bank of Uganda Dr William Kalema was also at the same time serving as Board Chairman of DFCU Bank.

Katuntu asked whether it is correct for a Board member of the Central Bank to be also Board member of a Commercial Bank.

Central Bank Board Secretary, Susan Kanyemibwa said that according to Central Bank Board Charter, it bars Board of Directors to be Directors of a regulated entity.

Katuntu ruled that his committee was to interrogate the matter further when Dr Kalema appears and gives an explanation.

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Uganda Radio Network