Cooperative Bank owners demand accountability of assets from BOU

Muwanga (left) and Kalema while appearing before COSASE, a parliamentary

Almost 20 years down the road since Co-operative Bank was closed, shareholders and directors say they have since not had access to the evaluation report on the assets from the central bank. Cooperative Bank which opened in 1964 was closed over three decades later on May 19, 1999 by the Central Bank over continued poor performance and non-compliance with regulatory capital adequacy requirements.

The bank’s former general secretary and shareholder, Ivan Asiimwe accompanied by other stakeholders told the parliamentary committee on commissions, statutory authorities and state enterprises (COSASE) they want their bank reinstated because it was illegally closed by the central bank. Asiimwe said immediately after the closing of the bank in November 1999, the Uganda Co-operative Alliance (UCA) sought redress from Parliament and a resolution was passed for Bank of Uganda (BOU) to reconsider its decision.

He said the central bank, however, has not heeded the call to date. “We want this committee to compel BOU to produce the liquidation report of the bank to the shareholders, assist co-operatives recover their investments and properties worth trillions of shillings that were lost during the liquidation process,” Asiimwe stated.

“In the absence of the liquidation report and other important documents, it is impossible to ascertain the assets, liabilities, member shares as well as the owners of the property that was eventually liquidated,” he added.

To the surprise of the committee members, the former Co-Operative Bank shareholders stated that the Co-operative Bank existed and operated on two licenses. Asiimwe asserted that two separate institutions were licensed to operate with an identical name in the same sector.

The second ‘Co-operative Bank’ was incorporated in November 1997 and operated for about a year and a half before the institution was shut down in May1999. Asiimwe said the new incorporated bank came with its new shareholders and among them was the Auditor General, John Muwanga, who then was working with the Ministry of Finance Planning and Economic Development.

Other new shareholders included Sancho Rugatasimbana, Samuel Magona, William Kalema Fred Nyakana, Anthony Sekweyama, Joseph Nsereko, and Charles Okoth Owori who was the secretary of the bank. They argued that cooperatives were completely left out in the new company. In the original bank, the Uganda Cooperative Alliance had shares worth sh2.5b of the co-operatives, Banyankore Kwetarana Co-operative Union sh220m worth of shares, Kigezi Growers Co-operative Union had sh18m, Kigezi Cooperative Union had sh33m and others.

“We pray the committee causes BOU to tell us which co-operative bank was closed, is it the one of 1964 under the Co-operative Society’s Act or the Co-operative Bank under the Company’s Limited Act?” he asked.

The shareholders told Parliament that all this was done without seeking their views. They also demanded clarification from the Government on how it allowed individuals to register a new company with the name of the co-operative bank that was already in existence. The members on the committee argued that it was illegal to have two companies registered under the same name.

This compelled the committee chairperson Abdu Katuntu (Bugweri County) to summon the said shareholders to explain how all this came about. Charles Okoth Owori, who spoke on behalf of the new shareholders, told the committee that the Co-operative Bank at that time was facing a big capitalization problem and BoU was insisting that the cooperatives raise the necessary capital in order to save the bank. He said the co-operatives did not have the money at that time.

Owori, however, claimed that the new resolution was a milestone where the old shareholders were given 51% of the shares, adding that there should not be a complaint because all the co-operatives were informed.