The parliamentary committee on commissions, statutory authorities and state enterprises (COSASE) has said the Constitution should be reviewed to stop the central bank governor from holding the position of chairperson of its board of directors.
Currently, the governor and deputy governor are the chairperson and vice-chairperson of the Bank of Uganda (BOU) board of directors.
“It is the recommendation of this committee, therefore, that Article 161 (4) be reviewed to separate the offices of the leadership of the board and top management of BOU,”
COSASE said in its report presented to Parliament by the committee chairperson, Abdu Katuntu, yesterday.
“Separation of these two positions is generally regarded as good practice, as it can help to achieve an appropriate balance of power, increase accountability and improve the board’s capacity in decision-making, independent of management.”
“The committee recommends that the Secretary to the Treasury or their representative (not be below the rank of commissioner), as it is in other jurisdictions, should be a nonvoting member of the board. This will be a good safeguard against any likely compromising of the BOU independence guaranteed under Article 162 (2) of the Constitution,” the report added.
The COSASE report follows a protracted probe into circumstances under which the central bank closed Teefe Trust Bank (1993), International Credit Bank (1998), Greenland Bank (1999), Co-operative Bank (1999), National Bank of Commerce (2012), Global Trust Bank (2014) and Crane Bank in 2016.
Due to the fusion of the leadership at the central bank, the committee observed that the board did not adequately supervise BOU management in the process of liquidating the said banking institutions which had a significant bearing on the financial sector.
“Indeed, their (BOU) failure is exemplified in the fact that up to the time of writing this report they have never demanded final reports on the liquidated financial institutions,” the report reads.
The probe report contends that such loopholes in the supervision and management of BOU, “complicate the process of winding up banks, including resolving claims and some securities in possession of the central bank.”
COSASE also recommended that
“All BOU officials who failed to properly execute their duties in accordance with the law should be held responsible for their commissions and or omissions”.
The committee further recommended investigations by the Police and the Auditor General, particularly in the funds incurred by BOU in the liquidation of the banks. Though faulting the manner in which BOU handled liquidation of the banks, the committee notably avoided naming particular BOU officials for sanctions.
However, during the proceedings of the committee, the director financial markets development co-ordination (BOU), Ben Sekabira, who BOU directly charged with liquidation of banks such as Greenland Bank and the former BOU executive director for banking supervision, Justine Bagyenda, were put on the spot for the said shoddy liquidation processes.
The committee wants the
“Fraudulent business activities” being conducted by M/s SIL Investments on behalf of a non-existent Nile River to immediately cease and the Inspector General of Police to seize all land titles in possession of Kakembo Katende of JN Kirkland and M/s SIL Investments arising from their management of the loan portfolio sold by BOU.
The MPs also want Uganda Revenue Authority to take interest in the tax activates of M/s Nile River Acquisition and its associates. On completion of the reading the report which took nearly two hours, Katuntu received a thunderous applause. Gilbert Olanya (Kilak South County MP) also handed him a glass of water to quench his thirst following the lengthy presentation.
After presenting the report, Katuntu announced that he was ready to hand over the office on Monday at 10.00am to Kawempe South MP Mubarak Munyagwa. Kadaga said:
“The report touches many aspects of the economy. It covers many policy issues. Let us internalize it and begin debate on Tuesday (February 26)”. She adjourned the House at 8:00pm