The State witness in the loss of pension in Uganda fears to come to court. The Judge is not happy about it:

Prison warders escort former Public Service permanent secretary Jimmy

Prison warders escort former Public Service permanent secretary Jimmy Lwamafa (R) and former Principal Accountant Christopher Obey (L) to the Anti-Corruption Court for a hearing of their case recently. PHOTO BY DOMINIC BUKENYA

By BETTY NDAGIRE


Posted  Tuesday, December 22   2015 

Kampala, UGANDA:

The Anti-Corruption Court Judge Lawrence Gidudu yesterday expressed dissatisfaction over the State’s failure to present a witness to testify against key suspects in the Shs88 billion pension scam.

The suspects include former permanent secretary in the ministry of Public Service Jimmy Lwamafa, former Principal Accountant Christopher Obey, and former director research and development Stephen Kiwanuka Kunsa.

Hearing of their case was set to proceed with submission by the acting Permanent Secretary in the Ministry of Public Service, Ms Adah Kabarokole Muwanga, but she failed to show up before court on grounds that she was unwell.

This is the second time she failed to show up.

This second instance annoyed Justice Gidudu who proposed they deal with her (Muwanga’s) testimony, saying her absence was a sign that she might never appear.

However, the prosecutor, Ms Ms Barbra Kawuma, pleaded with court to avail her another chance to be heard, arguing that Ms Muwanga’s evidence is crucial for their case and being a civil servant, she has obligation to show up to testify and court should be granted another chance.

Postponement

Consequently, the judge allowed prosecution until January 8, 2016, and threatened to reconsider releasing the suspects on bail.

Justice Gidudu explained that in criminal law, when suspects are on remand, their trial should be speeded and that if the prosecution is continuously dragging its feet, then he will be obliged to release the suspects on bail.

Currently, prosecution is left with six witnesses who should testify before the end of February 2016, for court to rule on whether, the suspects have a case to answer.

The suspects have been on remand since August this year and two different judges have on two different occasions, denied to release the suspects on bail, agreeing with the prosecution that once out of jail, they will jeopardise investigations like they did in the initial pension case of Shs165 billion that was dismissed.

The trio is accused of fraudulently budgeting for over Shs88 billion of civil servants’ pension contribution to National Social Security Fund (NSSF) well knowing that civil servants don’t contribute to NSSF.


bndagire@ug.

nationmdia.com

Court issues demand notice against Minister Banye-

Nzaki

 
 
By ROBERT MUHEREZA


Posted  Sunday, February 22  2015 

 

At Kabale, Western Province, Uganda.

 

The Kabale Chief Magistrate’s Court has issued a demand notice against the State Minister for Economic monitoring, Mr Henry Banyenzaki, over alleged failure to pay Shs360,000 to Kabale businessman Johnson Ndyabanawe.

Mr Ndyabanawe told the court Mr Banyenzaki hired his two lorries to carry people from different villages in Rubanda west constituency and drop them at Muko sub-county playground where President Museveni was addressing them on January 15. He also said Mr Banyenzaki paid him only Shs840,000 leaving a balance of Shs360,000 which he has failed to pay despite several reminders.

The demand notice dated February 12, issued by the head of small claims procedure at Kabale Chief Magistrate’s Court, Mr Darius Kamugisha, requires Mr Banyenzaki to settle the debt within 14 days and failure to comply, the complainant shall obtain decree for the same amount of money claimed together with expenses permitted by court.

But Mr Banyenzaki, on Friday said the claim is false and threatened to deal with the complainant for tainting his name.

“The claims are false and aimed at tainting my reputation. That man must be mad because I have never contracted him. I have not received the demand notice as of now but I am ready to challenge it,” Mr Banyenzaki said.

In Uganda, the Governor of the Bank of Uganda has come out to explain how Shs 478bn in Crane Bank takeover was properly spent: 

18 September, 2018

Written by The Observer Team

Governor Tumusiime Mutebile

The long time Governor of the Bank of Uganda, Mr Tumusiime Mutebile

 

Bank of Uganda has responded to the Daily Monitor story headlined "How BOU blew Shs 478 billion in the Crane Bank takeover". Bank of Uganda took over the management of Crane Bank in October 2016 before the bank was sold to a rival bank, DFCU in January 2017. 
 
Governor, Emmanuel Tumusiime Mutebile in a press statement issued today says the blowing of Shs 478 billion story is "seriously misleading." According to Mutebile, claims that Bank of Uganda (BOU) spent Shs 478.8 billion from an undisclosed account in the Central Bank under the cover of liquidity support is erroneous. 

"First, the BOU did not take Shs 478 billion from an "undisclosed account". The BOU provided a loan to Crane Bank and this money came from the BOU's own resources. The BOU is a Central Bank and like any other Central Bank it can create financial assets and liabilities. In this case the BOU created a financial asset (the loan to Crane Bank) which was matched by an equivalent liability (an increase in the money supply)." the statement reads. 

 

"Secondly, the claim that the BOU spent Shs 478 billion "under the cover of liquidity support" implies that the money was actually used for something else besides liquidity support. In fact, the vast majority of this money - Shs 466 billion - actually was liquidity support. Crane Bank had been losing liquidity for months prior to its takeover by the BOU. 

This was because a large share of its loan portfolio was not being serviced by the borrowers and because customers were losing confidence in the bank and withdrawing their deposits. Between the end of June 2016 and the end of September 2016, Crane Bank's deposits fell by Shs 148 billion."

 
Mutebile says as Crane Bank's liquidity drained away, the bank requested liquidity support from the BOU, before the bank was taken over by BOU.
 
He added that at this point, BOU had two possible courses of action; either to provide liquidity support to Crane Bank or not.
 
"If the BOU had chosen the latter course of action, Crane Bank would have been unable to honour its liabilities. It would not have been able to pay depositors who wanted to withdraw their money from the bank or repay the money it had borrowed from other banks in Uganda through the interbank market."

 

"In effect Crane Bank would have collapsed. Because Crane Bank was such a large bank, its collapse would have risked chaos in the financial system, possibly causing contagion to other banks and bank runs by depositors. That would have caused a huge amount of economic damage. No responsible Central Bank could allow this to happen. Apart from the Shs 466 billon of liquidity support to Crane Bank, the BOU also spent Shs 12 billion in resolving Crane Bank." 

 

According to the governor, these were expenses that were necessary to ensure that the assets and liabilities of Crane Bank could be transferred to another bank, thereby allowing Crane Bank's customers to continue having access to normal banking services."

 
The Shs 478 billion was a cost of ensuring that Crane Bank did not collapse in a disorderly manner, threatening chaos in the banking system and the wider economy and ensuring that its customers retained access to their deposits and to banking services, Mutebile said. 

 

In any case, BOU, Mutebile says is recovering the Shs 200 billion of the Shs 478 billion through the sale of assets and purchase of assumption transaction which transferred assets and liabilities of Crane Bank to DFCU Bank.

 
The rest of the money (about Shs 278 billion), according to Mutebile will be recovered from Crane Bank's shareholders, who BOU says were responsible for the bank's huge losses. 

Nb

For the simple Uganda citizen on the street of Kampala, this Bank Governor has agreed that 478 billion shillings was spent properly to rescue Crane Bank so that DFCU can take it over. That is Bank of Uganda provided the bankrupt Crane Bank with a financial soft landing. And this money will be recovered gradually from Crane Bank's  available Assets and then deposited back into the disclosed account(national consolidated fund) of the Bank of Uganda.

 

 

 

 

 

 The Audit General's commercial banks report puts blame on Bank of Uganda mismanagement for the  major financial closure of 7 banks:

 

Banking sector stabilising non-performing loans reduce

The building that used to house the defunct Crane Bank which was brought down by, among other factors, high levels of non-performing loans (NPLs). FILE PHOTO 

By Yasiin Mugerwa

 

UGANDA, Kampala, A confidential special audit report of the Auditor General (AG) has revealed weaknesses in the management of Central Bank and questioned the Governor and his team for the hitches in the closure of at least seven commercial banks. 
In his new report to Parliament, the Auditor General, Mr John Muwanga, queried BoU officials on the flaws in the closure of Teefe Bank (1993), International Credit Bank Ltd (1998), Greenland Bank (1999), The Co-operative Bank (1999), National Bank of Commerce (2012), Global Trust Bank (2014) and the sale of Crane Bank Ltd (CBL) to dfcu (2016). 
“I observed that there were no guidelines/regulations or policies in place to guide the identification of the purchases of the defunct banks. There were also no guidelines to determine the procedures to be adopted by Central Bank in the sale/ transfer of assets and liabilities of the defunct banks to the identified purchaser,” the AG report reads. 
The AG has also poked holes in the Purchase of Assets and Assumption of Liabilities (P&A) deal BoU officials signed with Dfcu on January 25, 2017 for the purchase of Crane Bank Limited, formerly owned by tycoon Sudhir Ruparelia and others. 
“I was not provided with the negotiation minutes leading to the P&A agreement. In the absence of the minutes, I could not determine how BoU selected the best evaluated bidder and how the terms in P& A were determined,” the report adds.

Irregularity
On the valuation of assets and liabilities of CBL before the dfcu took over the bank in a Shs200b deal, the AG complained to Parliament: “On April 10, 2018, I requested for P&A agreement, including details of the assets and liabilities transferred after taking into account the requisite valuation. I noted that BoU did not carry out a valuation of the assets and liabilities of CBL. In the absence of the valuation, I could not establish how the terms for the transfer of assets and liabilities in the P&A were determined.” 
In a meeting with the BoU’s outgoing executive director of supervision held on June 13, 2018, at BoU offices, the directors admitted that the BoU did not carry out a valuation of the CBL assets and liabilities but relied on inventory report and the due diligence undertaken by dfcu to arrive at P&A agreement. 
“I also noted that the P&A did not have complete details of assets and liabilities transferred to dfcu with their corresponding values; I was therefore, unable to establish the status of assets and liabilities transferred to dfcu.” 
The AG, however, says BoU officials gave him a soft copy of details of assets and liabilities although the information lacked details of loans and advances transferred to dfcu and evidence of valuation of assets before sale hence it was insufficient to respond to his observation.
The 94-page special audit report was yesterday laid in Parliament and the Speaker forwarded it to the Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) for scrutiny. 
At an appropriate time, BoU officials and other stakeholders/witnesses will be summoned to the committee to answer queries raised by the AG before a committee report is sent to parliament for debate.
Mr Mutebile and his team have also been questioned on the expenditure of more than Shs478.8b they say was for liquidity support and other interventions in CBL after they took over the management on October 20 2016. 
The AG enquired into the source of the money BoU injected in CBL and wondered how Mr Mutebile’s team arrived at Shs478.8b. 
For compiling the inventory report, forensic review and investigations, IT support and hiring of external lawyers, BoU officials spent Shs12.2b. 
This money is part of the Shs478.8b they say was injected in CBL. The AG, according to sources, has requested Cosase to investigate the expenditure of these funds. 
Although the AG wondered how the taxpayers’ money will be recovered, in the exit meeting with AG officials held on June 22, 2018, Mr Mutebile’s team explained that the money in question was sourced from within BoU budget and that it will be recovered from the CBL shareholders. 
However, CBL shareholders have accused BoU officials of writing off loans with collateral and other supporting documents.

Other defunct banks
In the report, the AG says BoU sold assets of ICB, Greenland, Cooperative, GTB and NBC worth Shs164b at a discount of 80 per cent, yielding only Shs32b. 
In the case of ICB, Greenland and Cooperative Bank, the total loan portfolio sold at Shs135b included secured loans of Shs34.5b which had valid legal, or equitable mortgage on the real property and were supported with legal documentation but were sold to Nile River Acquisition Company at a discount of 93 per cent.

Outstanding liabilities
It was also noted that the liabilities amounting to Shs503.7b were still outstanding at the time of writing the report (August 2018) from a total liability of Shs1.6 trillion held at closure. 
For instance, the process of settling liabilities for ICB, Cooperative Bank and Greenland Bank has taken more than 17 years. The AG noted that this has affected the winding up process of these banks. 
The AG preliminary report to Parliament also indicated that at least Shs23b from the sale of only Global Trust Bank (GTB) remained unaccounted for, 25 land titles missing, and customer loans inherited from closed banks were sold at an undervalued rate. GTB was closed in July 2014.

Background

The audit into the defunct banks was prompted by petitions from Crane Bank shareholders and Central Bank employees. They petitioned Cosase chaired by Mr Abdul Katuntu and demanded investigation into undisclosed BoU/dfcu deal and other issues in the closure of other banks.
Two whistle-blowers also petitioned Parliament and the IGG on the same matter, calling for an independent audit into the agreement BoU signed with dfcu Bank. In one of the petitions, the former Crane Bank shareholders allege that they were excluded in the negotiations of the bank’s sale contrary to provisions of the Financial Institutions Act. They also argued that the agreement did not state the value of liabilities or assets taken over by dfcu. In exercise of its powers under Section 87(3), 88(1)(a) & (b) of the Financial Institutions Act 2004, BoU took over CBL because it was insolvent. 
The bank and Mr Sudhir are in court over the controversial sale of CBL to dfcu and recovery of about Shs397b BoU says went missing from CBL before liquidation. 
Although MPs led by Budadiri West MP Nandala Mafabi wanted to table a motion to investigate BoU/CBL saga, Deputy Speaker Jacob Oulanyah had ruled that any such inquiry would be stayed until all related cases have been disposed of in court. 
Quoting Mr Oulanyah’s letter, BoU Deputy Governor Louis Kasekende also on April 19 wrote to the Attorney General protesting the audit into the liquidation process of Crane Bank, saying the matter was in court. 
The Solicitor General wrote back on May 2 telling BoU not to cooperate with either the Auditor General or Parliament regarding the investigation into the sale of Crane Bank. He said any such inquiry would be subjudice.
But On May 10, the Speaker of Parliament, Ms Rebecca Kadaga, wrote to the Auditor General, Mr John Muwanga, and asked him to ignore the Attorney General’s guidance on sub-judice rule. Ms Kadaga instructed Mr Muwanga to proceed with the audit as previously instructed by Mr Katuntu.

 

 

 

 

 

President Museveni has been criticised for wasting tax payers money on unproductive farming programmes:

December 5, 2016

Written by Sadab Kitatta Kaaya

MP Mathias Mpuuga

President Museveni on Friday found himself in the middle of a political ambush in Masaka, when the municipality MP Mathias Mpuuga dragged him into a heated exchange over the government’s anti-poverty programmes.

Before an audience that turned up for the commissioning of the newly-constructed Shs13 billion market at Nyendo in Masaka Municipality, Mpuuga openly criticised NRM’s flagship project, Operation Wealth Creation (OWC), which he said was unlikely to get people out of poverty.

“As a leader, I don’t understand it when I see OWC trucks bringing orange seedlings to Masaka. You can’t fight poverty in Masaka by promoting the growing of lime and tangerine. Traditionally, we plant such on the boundaries of our gardens for the children to eat,” Mpuuga said.

The country was divided into 10 agricultural production zones during the 2008/09 financial after government developed the Prosperity for All (Bonna bagaggawale) framework.

The zoning was intended to provide information and guidance for agricultural investment to local governments and individual farmers, but Mpuuga said NRM vulgarised the programme.

“I was planning to notify the Speaker of Parliament about a petition against this [OWC] project... About 10 years ago, Uganda was divided into agricultural production zones but I don’t remember seeing Masaka in the zones for growing citrus fruits,” the opposition MP said.

The agricultural production zones were re-confirmed in the National Agricultural Policy, developed in July 2011. However, according to Mpuuga, the plan misallocated resources to Masaka which was a coffee and banana growing area.

“When you came in the 1980s you didn’t find orange stores in Masaka. This place is a known coffee and banana-growing area. The money you waste on OWC should instead be spent on helping farmers to fight the [banana] wilt disease that is eating up their plantations,” he said.

Mpuuga’s blunt speech excited the crowd. Some people in the largely NRM gathering clapped and cheered on the MP who went as far as reminding the president about the activities of his NRA guerrillas that looted Masaka cooperative Union.

“In 1986, Masaka’s economy was flourishing because of the cooperative societies. It is surprising, Mr President, that while you have compensated the other cooperative societies, Masaka Cooperative Union, which was the biggest contributor to your [rebel] activities because it gave you cash and cars, has been left out,” Mpuuga said.

DEBT BURDEN

While earlier speakers sung praises to Museveni for the construction of the market that will accommodate 2500 vendors, Mpuuga’s message was different.

The Democratic Party (DP) politician told the vendors that instead of singing the president’s praises, they should look at it as an addition to the country’s debt burden.

“While it is true that this is a government programme, we borrowed this money through Parliament and all of us, including our grandchildren, will have to pay back this money. It is not his [Museveni] personal donation,” he said.

Mpuuga’s persistent challenge to Museveni caused discomfort among the presidential protocol staff that had earlier wanted to strike the MP off the list of speakers at the function. In the past, State House would exclude Mpuuga and ask the district Woman MP to speak in the slot allocated to the area legislator.

However, this time round, this trick became difficult to deploy since all the Masaka MPs, except the Vice President Edward Kiwanuka Ssekandi, belong to DP.

Mpuuga and the State House team were involved in an exchange in which he told them that while they had the capacity to deny him an opportunity to speak, he had the ability to disorganise the event. It took the intervention of Local Government minister Tom Butime for Mpuuga to get the go-ahead to speak at the event.

After the re-admission of his speech, Butime then engaged Mpuuga asking him not to embarrass the president. Organisers had in mind Mpuuga’s role in the Walk-to-work protests that followed the 2011 elections, and being that this was the first time Museveni and Mpuuga were appearing at a public event in the Municipality, a stingy attack on the was expected.

MUSEVENI REBUTTAL

True to their fears, Mpuuga succeeded in diverting Museveni from his prepared speech. The president instead spent most of his time rebutting the opposition MP’s statements.

“It seems that this boy [Mpuuga] is out of touch with reality, but it is good that he has made [his] lies in my presence and therefore I have chance to respond,” Museveni said.

“He [Mpuuga] is only good at making fun of and ridiculing operation wealth creation. He doesn’t know that in some parts of Masaka like in Kyannamukaaka, pineapples do well. He only stops on the tarmac,” Museveni added.

The president defended his four-acre-model of farming, which he said is the best approach to household poverty. At some point, Museveni admitted that Mpuuga whom he frequently called a boy, had got some facts right. However, the president claimed that Mpuuga’s politics had been spoilt by the political ideology that DP follows.

“I was also in the DP, and our DP was strong and powerful under Ben Kiwanuka not this current weak DP under [Norbert] Mao where this boy and [Bukoto East MP Florence] Namayanja spend most of the time criticising me,” Museveni said.  

 

As fights erupt over president’s city tours

President Museveni’s recent cash-laden charm offensive on a Kampala city hitherto hostile to him could amount to pouring money down the drain, if the latest revelation is anything to go by.

An investigation by The Observer has established that the savings and credit cooperative (Sacco) at Mulago Kubbiri that Museveni gave Shs 100 million and eight car washing pumps on September 6 is not formally registered.

When contacted for comment, the chairman-elect of the ‘Mulago car washers Sacco’, Henry Ssegujja, conceded that the organisation did not exist before the president’s visit to the area.

“We formed it the day before the president came,” he said.

Segujja added that by the close of business last Friday, nearly 10 days since the president’s visited, they had not registered the Sacco. He said they are a little confused about Sacco registration procedures.


President Museveni hands over a Shs 100m dummy cheque to Mulago car washers

“We don’t know whether we will register it,” he said.“Those who register are confusing us. Someone from the city council [KCCA] told us they are the right people who register, but then someone from Kawanda also came here and said they are the ones who register Saccos. We don’t know who will help us.”

To receive the money, a Sacco must be registered. Officially, Saccos are registered by the city division councils and the ministry of trade’s cooperatives desk is notified.

FIGHT OVER CASH

But even before they formalise their existence, the recipients have started fighting among themselves over the money. The money is meant to go to Sacco members in form of soft loans.

Some of the car washers interviewed on Friday said their chairman has suddenly got new friends, including some big people. They said they were afraid their chairman could be hoodwinked and the money swindled.

Richard Kiberu, a car washer, said when the president visited the area, they saw “new faces of people they have never seen washing cars” receive the dummy cheque.

“This money thing is going to cause us problems; wherever we go, now people tell us ‘you people of Mulago received pumps and money’ but we haven’t received anything,” Kiberu said.

Zilbah Kamusiime, who leads Wandegeya Trust jet car wash but did not receive the pump, said the people who got it had been selected secretly and “others did not know the president was even coming”.

Some car washers are also up in arms over the pumps. From Mulago roundabout in Wandegeya to Kubbiri, next to Pastor Samuel Kakande’s church, there are about 10 washing bays. And whereas four of them told The Observer they had received the pumps, there was no pump in use or display when this reporter visited the area on Thursday.

Meddie Ssebunya of Fire Fire washing bay said they received the pump. When we asked to see it, he said “since it is new, we have kept it so that people don’t spoil it.”

The chairman of Mulago Business Centre washing bay, a one Ambrose, said they had received the pumps, although he declined to show them to us. A few metres away at Kayembe washing bay, car washers there said they were not invited for the president’s visit and they did not get the washing pumps.


Museveni (with hat) handing over a jet pump to car washers of Mulago washing bay ‘Sacco’

The Kayembe washing bay chairman, Ali Ssekadde, said: “The president should scrutinise people who reach him to ask for help and establish whether the people he gave things truly get them.”

TRUST ISSUES

Over the last couple of weeks, the president has toured parts of Kampala, giving out Shs 100m to each Sacco –car washers, garage owners and carpenters, among others.

The Observer reported last week that in three weeks, President Museveni has given out more than Shs 600m in cash and over Shs 1bn in tools to win over hearts and minds in Kampala. The president’s undeclared objective is to loosen the opposition’s grip on the capital given his poor showing in the during the last elections.

Museveni has insisted on delivering his gifts and pledges personally since in the past, government officials have misappropriated them. These revelations are likely to punch holes in Museveni’s mode of operation, with the president likely to fall victim to unscrupulous characters in the city.

Both the minister for Kampala, Beti Kamya, who has toured Kampala with the president, and her deputy Benny Namugwanya Bugembe were unavailable for comment when contacted on Saturday.

Incidentally, the president is not moving with the KCCA executive director Jennifer Musisi as he endears himself to city dwellers. After the February 2016 polls, Museveni accused Musisi of losing him supporters in Kampala due to her high-handed handling of city dwellers.

However, Lord Mayor Erias Lukwago told The Observer on Saturday that the fact that some of the Saccos that Museveni is giving money are unregistered did not come as a surprise to him.

Lukwago explained that the city authority had channels like the Community Driven Development(CDD)fund and the youth livelihood programme, which could have been used to deliver the money after thorough scrutiny of the recipients.

“If the money is to develop the people of Kampala, let us use the right channels,” Lukwago said.  “This system was circumvented using avenues outside the law. We were not contacted in the selection of the beneficiaries of that money.”

amwesigwa@observer.ug

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