Government is finding a hard time to convince parliament to give Bank of Uganda a whooping Shs484b as recapitalization fund because the central bank has failed to account for Shs 478 billion it claims it have spent on Crane Bank Limited during the time it was under its control.
In October 2016, the central took over management of Crane Bank after it claimed their commercial bank’s proprietor Dr. Sudhir Ruparelia had failed to manage the bank and needed help. In the process, the central allocated Shs478 billion as money it would use to bring Crane Bank to life.
However, as we all know, this didn’t happen and Bank of Uganda cannot account and explain how it used the Shs478 billion. An auditor general report and an investigation by parliament failed to get answers from the central bank.
And now that the central bank needs such money, Bank of Uganda’s integrity is becoming questionable. According to the Auditor General John Muwanga, out of Shs 478 billion, Shs320 remains unaccounted for by BoU. This issue came up as MPs probed BoU on the irregular closure seven banks between the years 1993 and October 2016.
Analysts say that whereas recapitalising BoU is a strategic and urgent business for parliament, it should also be equally urgent and strategic to quickly implement the recommendations of parliament’s Committee on Commissions, State Authorities and State Enterprises (COSASE) which among others call for the restructuring both the management and regulatory regime at the central bank.
“The people who are behind the mistakes that led to the need for recapitalisation, cannot be the same people to manage the recapitalised central bank. That would be the equivalent of throwing good money at bad money,” an analyst who spoke to Eagle Online said.
“Insanity is doing the same thing over and over again and expecting different results. BoU potentially faces up to Shs1 trillion in lawsuits as a result of the findings and recommendations of COSASE.
Parliament should not put the proverbial cart before the horse; BoU needs overhauling first before anything else. You can’t just take a request to parliament to give you Shs484.2 billion before you account for Shs478 billion stolen in the name of Crane Bank Limited’s capitalisation,” another analyst adds.