Amina Hersi Moghe, the owner of Oasis mall in Kampala, borrowed up to 39% of Crane bank’s core capital, going against a rule that bars a single borrower from taking up more than 25% of a commercial bank’s capital.
The huge loans amounting to Shs 111bn made her the single largest borrower in the now defunct bank.
A recently released forensic audit report by PricewaterhouseCoopers (PWC) found that at the time of the bank’s takeover by Bank of Uganda in October 2016, Amina had 19 accounts in Crane bank through which the Shs 111bn was borrowed.
The loaned value contravened Bank of Uganda and Financial Institutions Act 2004 rules that discourage a single borrower from taking more than 25 per cent of the bank’s exposure.
According to the PWC report, as at February 1, 2015 the total loans and overdraft limits extended or available to Amina’s accounts stood at Shs 70.4bn.
“This was already 39% of the bank’s total capital of Shs 181bn as per the quarterly report of March 2015,” the report states. Despite not paying back the money, the report noted that Crane bank officials went ahead to issue more loans “to Amina’s companies and in particular facilities totaling to Shs 25.425bn on December 24, 2015.”
The report shows that Amina was associated with the bank through four entities although she is a director in two of these. “Her association with the other two companies is by way of personal guarantees,” the report said, noting that “the securities given by the two [other] companies are also properties owned by Moghe.”
The companies where she is a director are Khadhar Investments Limited and Horyal. The companies associated with her but where she is not a director were Minutan and Aureco.
In addition to the four companies, Amina is associated with two other companies that had accounts at Crane bank: Kingstone Enterprises Ltd and Rabo Enterprises Limited.
The report, which bears the signature of PWC partner Francis Kamulegeya, asks Bank of Uganda to carry out more investigations into Amina’s dealings in Crane bank.
Ordinarily, when one applies for a loan from a bank, they present security so that in case they can’t pay, the bank can sell or take over those properties to recover the money.
PWC found that for Amina, some loans were secured using the same properties – indicating that either there was no due diligence done or that there was some collusion between bank officials and the borrower.
“The observed pattern was that additional loans and overdrafts would be sanctioned on the strength of the existing securities.
This had the effect of diluting the bank’s security position as more loans were obtained,” the report said. For example, plot 17 on William street valued at Shs 5bn and with a forced sale value of Shs 3bn was used as the main security against all three loans extended to Aureco totaling Shs 25.4bn.
The report adds that some loans were advanced on the strength of Amina’s personal guarantee that loans would be paid back.
“We, however, did not see any evidence of the bank carrying out a due diligence to establish the true net worth of Amina and especially, one where they take into account the other liabilities she is likely to have,” the report said.
COMPANIES OPENED TO RECEIVE MONEY
According to the report, one notable trend that showed that something was not right is that some of Amina’s companies that borrowed money had been incorporated days just before they applied for the loans.
One named Minutan was incorporated only six days before disbursement while Aureco had been in existence for only eight days.
“The above observation points to the possibility that the companies were formed for the sole purpose of obtaining loans. This suspicion is further supported by an analysis of the movements in these two accounts as well as the other Amina accounts that had loan exposures,” the PWC report said.
“The accounts, and especially Minutan, seem to be used to mainly pay out loaned amounts with very few material credits observed apart from the transfers from other group accounts,” the report added.
PWC further pointed out that information may have been deliberately concealed from Bank of Uganda inspectors and Crane bank auditors as not all of Amina’s accounts were disclosed as having been associated with her.
“We noted, for instance, that the KPMG management letter for 2015 did not include Aureco as one of the companies associated with Amina. This was at a time when Aureco had borrowed Shs 24.9bn from Crane bank,” the report noted.
“There is evidence that despite the information not being disclosed by Crane Bank Limited, Crane bank officials knew which accounts belonged to Amina despite the varied shareholding and considered the accounts as such.”
The investigators extracted information from computer forensics and found that the head of credit, a one Ramachandran, had listed all of the 19 accounts associated with Amina and analysed their position as at May 17, 2016.
“The above evidence points to a scenario where companies would be formed and registered under proxy directors with the intention of concealing the true exposure to a single client or group,” the investigators concluded.
DESTINATION OF BORROWED MONEY
When the investigators analysed where the money borrowed went, they found that it was usually utilised in a short time – about three months – mainly through transfers to other companies.
For instance, Crane bank sanctioned loans worth Shs 24.9bn in the form of a demand loan ($5m) and two overdrafts – Shs 3bn and $1.5m on December 24, 2015 to Aureco.
The funds were utilised over a period of three months mainly by way of transfers to other banks through accounts belonging to 13 companies.
WHO IS AMINA?
Investigators identified Amina Hersi Moghe as a prominent businesswoman with interests in real estate, commodity trading and agriculture. They wrote that she is associated with the Oasis group of companies, Atiak Sugar and the Laburnam Apartments.
Internet searches show that she is a Kenyan entrepreneur with business interests in Uganda. Last month, the 52-year-old received from government at least Shs 64bn for her sugar factory in northern Uganda.
Last year, she appeared on a list of Kampala’s businesspeople that were seeking a government bailout. PWC concluded that “[BOU] should establish the ultimate destination of the disbursed amounts as there is evidence of elaborate layering transactions that appear to be aimed at concealing the final destination of the funds.”
Rajeev Ruparelia, son of Sudhir Ruparelia, the owner of Crane bank, told us yesterday that the report was inconclusive, indicating it does not give a fair assessment of Crane bank.