How Bagyenda solely sold off GTB to Dfcu

Justine Bagyenda

Justine Bagyenda

Former Bank of Uganda executive director supervision Justine Bagyenda has admitted that she solely signed off the confidential sale agreement of Global Trust bank to Dfcu bank. 

Bagyenda together with other Bank of Uganda (BoU) staff led by governor Emmanuel Tumusiime-Mutebile on Thursday appeared before the parliamentary committee on Commissions, Statutory Authorities and State Enterprises (Cosase) that is investigating the procedure into the closure and sale of seven commercial banks between 1993 and 2016.

Members of the committee learned of a confidential purchase agreement in which BoU entered into with Dfcu on July 10, 2014 before Global Trust bank was eventually closed on July 24, 2014.

This means that the central bank never managed Global Trust bank for a minimum of six months as required by the Financial Institutions Act. Cosase chairperson Abdu Katuntu noted that the confidential purchase agreement disclosing the financial situation of Global Trust bank to Dfcu contrary to the law had been signed by only Bagyenda.

Katuntu together with the vice chairperson Anita Among quizzed Bagyenda on why she had signed the agreement alone and the purpose of disclosure of GTB's financial situation to another bank competitor, Dfcu. Bagyenda said that she had consulted with the governor on the matter but failed to provide written evidence to the effect.

"Is it also true Mrs Bagyenda that you’re the only officer in Bank of Uganda who signed and witnessed the signing of this document?" asked Katuntu. 

"Yes [but] after consulting the offices that were relevant to the drawing of the MDA.” she said. 

Mutebile denied having been aware of the decision. The secretary to the central bank board, Susan Kanyemibwa also said the matter had not been discussed by the board.

"I doubt that that’s the case but I want to know from board affairs if this matter was discussed in the board meeting because that would be where that authority could have been obtained." said Mutebile. 

"Thank you very much chair and through you governor, I have with me the minutes of the board for the period January 2014 to December 2014 and this particular issue of the agreement that is being referred to was never discussed." Kanyemibwa said. 

Asked how the potential Global Trust bank acquirer was zeroed on, Bagyenda said that they looked at the potential of other 25 banks but still failed to avail minutes to the process.

Global Trust bank's license was revoked in July 2014 allegedly due to poor performance which, according to the central bank, resulted from under-capitalization and corporate governance weaknesses.

BoU says that Global Trust bank, which had built a network of 23 branches at the time of its closure, had accumulated losses to a tune of Shs 60 billion. The bank which was valued at Shs 75 billion was then handed over to Dfcu.

A forensic audit report by the auditor general pointed to a number of irregularities and procedural lapses in the transaction. The audit found that there were no guidelines and regulations to guide the identification of the entity that assumed the assets and liabilities of Global Trust bank.

It's on the basis of the finding that Cosase raised concern over the absence of vital documents relating to the transaction. The required documents include negotiation minutes of the sale, evaluation reports of Global Trust bank and bidding documents. Bagyenda confirmed that there was no procurement process followed and no existing bid document.

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