HOW KATUNTU PROBE HAS EXPOSED BOU AND CLEARED ERNEST & YOUNG

By Wafula Malik

When Auditor General John Muwanga’s report (instigated by Parliament) on closure of banks first became public, questions of bias where raised against Ernest & Young, the audit firm AG John Muwanga contracted to do the actual audit of Bank of Uganda. Critics said the findings, largely indicting BoU, were expected because E&Y officials had always had an axe to grind with people at BoU especially Justine Bagyenda who, as Director Supervision, had years earlier scrapped them off the list of pre-qualified service providers for the central bank. This, to such critics, gave rise to conflict of interest against E&Y. An impression was created that a storm was merely being created out of a tea cup. But the proceedings at Katuntu’s probe have revealed that the problem at BoU is after all deeper than previously thought. Impunity and intrigue among top officials that was always dismissed as mere media speculation is now all out for all to see. Trouble started during the COSASE 20^th November session when MPs targeted Director Financial Markets Development Benedict Sekabira and began asking about comprehensive reports regarding closure of the 7 banks the circumstances of whose closure continue to be scrutinized. Sekabira explained that no such reports existed for instance on Kato’s International Credit Bank (ICB) and Cooperative Bank that were handled by KPMG as the liquidator on BoU’s behalf. On Greenland, which Sekabira told MPs was a very complicated matter, the BoU official told legislators that liquidation was handled by Delloite Touche and still there was no comprehensive report. Statement of affairs is all the Katuntu committee was initially given on each of the closed banks. Katuntu insisted that Sekabira names the department at BoU that handles such things and the officials concerned. Sekabira then cracked and said the reports had been done and handed over to the Governor Emmanuel Mutebile. Sekabira explained he was constrained to know whether the reports reached the governor or not because in the BoU hierarchy, he is way far below the big man and can’t deal with him directly because the BoU protocol bars him. Saying as the appointed BoU liquidator, he was always reporting directly to someone way below the governor, Sekabira said he was justified not to be in the know regarding certain things. Katuntu then accused Sekabira of contradicting himself and in the process confusing MPs. He insisted that Sekabira clearly accounts for the discrepancies in the asset movement schedule remarkably dropping from Shs117bn to mere Shs19bn.

INTRIGUE EXPOSED;

Mutebile, who has always been linked to leadership of a BoU camp hostile to that of Louis Kasekende/Bagyenda camp to which Sekabira is understood to belong, got the Katuntu permission to interject. He demanded that Sekabira explains what he meant being way below him as governor and also tell the committee the person through whom he was sending reports to the governor. He insisted that Katuntu compels Sekabira to disclose that person. This was like giving him a rope to hang himself and with the inescapable pressure from the MPs, Sekabira named Apollo Obbo, Margaret Matovu and Bagyenda as some of the officials that operated between him and governor. It was at this point that the Katuntu committee resolved to summon Bagyenda, a thing that observers saw as triumph for the Mutebile camp whose members even celebrated Bagyenda knifing by Mutebile during the 8^th February reshuffle that saw at least 50 BoU officials shuffled like never before. She finally appeared and was clearly guarded and cautious in many of her answers. The MPs insisted she must answer regarding the missing reports on bank closures. Bagyenda fearlessly reminded MPs she is no longer an employee of BoU, which diminishes their power and authority over her since she is no longer a public official. She said she had given all she had in her possession to her successor Twinemanzi Tumubweine, a renowned Mutebile camp member, who fearlessly rebutted Bagyenda’s assertions. In what seemed another triumph for the Mutebile camp, Twinemanzi told MPs Bagyenda handed over many documents to him but none of them related to the specific information MPs were asking for. Bagyenda shot back veiledly accusing Twinemanzi of not adequately reading the things she handed over to him. She insisted he must read every file and won’t fail to find the documents in question. Katuntu weighed in enumerating the different items Bagyenda handed over and the list clearly omitted the specific documents MPs wanted. That on Greenland bank, she handed over the bank legal report and nothing more. He accused Bagyenda of indifferently insisting on documents that are merely peripherally related to the exact core files the MPs want her to produce. He specifically said they want her to produce documentation on sale of assets and transaction audit interim.

The MPs unanimously insisted that Bagyenda was responsible and the required documents be submitted at the next sitting. Bagyenda, whose guts have surprised many pundits, travelled and wasn’t in the subsequent session. MPs got a letter explaining and justifying her sudden absence from the country. Katuntu adjourned and wished to meet Bagyenda at the next sitting and that didn’t happen leaving him no option but to plot what many fear will her very humiliating arrest. Her absence prompted MPs to inquire into the 10^th February CCTV footage at BoU which has since been reviewed indicating Bagyenda, her driver and bodyguard carried away documents from BoU two days after Mutebile knifed her. Mutebile had decreed a search at her house but that flopped after information leaked to her prior. Search couldn’t be conducted because powerful Bagyenda travelled and was out of country for 4 days subsequent to the planned search date. Bagyenda subsequently defended herself saying these are personal documents and files she had over the years kept in the BoU offices and had to now be carried away since she had ceased to be a BoU employee after Mutebile pushed her out insisting she had come of age. The Katuntu probe has also brought to the public domain the indifference with which BoU officials frustrated AG John Muwanga when carrying out his audit exercise that paved way for the current COSASE probe. Muwanga wrote many letters including the one of 23^rd March to Mutebile asking for documents in vain. On 4^th April, Muwanga wrote again summoning BoU officials to his Audit House offices but was still ignored. Yet what the Katuntu committee has so far looked into is merely a tip of the iceberg considering the many areas the AG highlighted. The issues that are yet to trouble BoU officials include the missing record on the closure of Teefe Bank, failure to avail the MPs and AG with records regarding assets transfer for banks like Global Trust Bank, Mbabazi’s NBC and Sudhir’s Crane Bank. Equally missing are documents on sale of Greenland bank assets, Kato’s International Credit Bank and Cooperative Bank. There are also questions lingering around the question of improper assets sale and improper recovery of security assets on nonperforming loans. On Teefe, Muwanga was furious BoU never furnished him with records like the inventory report, loan schedules and statements of affairs. Katuntu has since written to Mutebile insisting all these documents have to be produced before COSASE, making concerned BoU officials’ position even more precarious. BoU says the Banking Act under which Teefe was closed didn’t require preparation of very comprehensive liquidator reports after closure of any bank. The MPs have insisted they want comprehensive reports that notwithstanding. Some MPs are intrigued by reports that the liquidator never sold any property or assets belonging to Cooperative Bank up to this day. Some pundits like Oneg Obel have since questioned COSASE’ competence to tackle a complex exercise like this one at hand. Other analysts say the job should be taken from the MPs in favor of hiring experts from say the Bank of England to properly investigate BoU.  Some have insisted on the culpability of the BoU officials on grounds that it’s inexcusable not to have in place an inventory of assets belonging to the closed banks like Teefe Trust bank because the Financial Institutions Statute 1993 under which it was closed imposed a requirement to make an inventory. All things said and done, the Oneg Obels are nervous that the COSASE probe could leave central bank officials intimidated and cause them not to independently do their mandate which will be disaster for the economy. Oneg Obel has publicly advised Mutebile to either shun the committee or sometimes refuse to answer some questions in order to protect the integrity and independence of the central bank. Katuntu says the law permits them to do all this scrutiny on BoU and that the prior involvement of the AG is indicative of how well-intentioned Parliament is regarding this closed banks’ inquiry.