Court of appeal dismisses Bank of Uganda case against Sudhir

By Deo Wasswa

The court of Appeal has dismissed a multi-billion case against businessman Sudhir Ruparellia and his Meera investments company in which the Central Bank accuses him of siphoning over 397 billion shillings from Crane Bank .

Three justices of the court including; Deputy Chief Justice Alfonse Owiny -Dollo , Cheborion Barishaki and Steven Musota have unanimously ruled that after a careful perusal of evidence; they too find no misconduct against Sudhir that would warrant litigation and hence forth they have ordered Bank of Uganda to pay costs incurred by the businessman to defend himself in both courts .

In their ruling read to court by registrar Mary Babirye, the Justices have also confirmed that at the time of filing this suit in January 2017, Crane Bank Limited was already in receivership and a non -existing entity whose life time was terminated /ended when Bank of Uganda sold its assets to DFCU in October 2016.

The justices have been in further agreement with trial Commercial Court judge David Wangutusi that being in receivership; Crane Bank had no capacity to institute legal proceedings against its former Director or could anyone drag it before court because it as no assets to be claimed for.

But having been dissatisfied with the above position ; Bank of Uganda petitioned the Court of Appeal last year to challenge the decision of Justice Wangutusi to condemn it to pay costs yet he did not fully hear the case but disposed it off basing on a point of law .

The court of Appeal has instead also further condemned it to pay costs having found out that the Central Bank wrongfully dragged Sudhir to court .

Bank of Uganda and Crane Bank had wanted Sudhir and Meera to pay back over 397Billlion shillings that it claims the 2 fraudulently took out of crane Bank where Sudhir was owning 100% shares.

Immediately after the court ruling; Sudhir who was in company of his son Ranjiv explained that he will be seeking millions of dollars in costs .

Bank of Uganda will now regulate all digital payment systems

By Edwin Muhumuza

Bank of Uganda has been granted more powers by parliament to regulate all financial services after the National Payment Systems Bill, 2019 was passed into law.

According to the parliamentary Committee on Finance, Planning and Economic Development chaired by Rubanda East MP Musasizi Henry, the previous absence of a national payment systems law, has led to uncertainty, where service providers who are not financial institutions engage in electronic and digital financial payments and as such, there has been inadequate protection of money across all digital platforms.

The amendments grant Bank of Uganda more powers of regulation and not Uganda Communications Commission as has been.

The passing of the bill ensures that the legal framework for the financial sector does include non-financial institutions like MTN, Airtel, Uganda Telecom, PayWay, SafeBoda and Uber that provide payment systems.The move, parliament said would address the regulatory gaps that have affected users of these payment systems for some time.

Among other concerns of the bill was to provide for the safety and efficiency of payment systems; to prescribe the rules governing the oversight and protection of payment systems; to provide for financial collateral arrangements; to regulate payment services providers; to regulate issuance of electronic money; to provide for the oversight of payment instruments and for other related matters.

Observations made previously was that the law regarding payment systems was not comprehensive enough since Bank of Uganda relies on Article 162 (1) of the Constitution which provides that Bank of Uganda shall encourage and promote economic development through effective and efficient operations of the banking and credit system to develop the payment and securities settlement systems.

Such payment systems include the Real Time Gross Settlement System (RTGS) for interbank transfer, the Automated Clearing House (ACH) System for the clearance of cheques, and the Electronic Fund Transfers (EFT). The securities settlement systems, including the Central Securities Depository (CSD) system operated by Bank of Uganda and Securities Central Depository System operated by Uganda Securities Exchange have been implemented.

However, these developments by the central Bank have been surpassed by a growing and developing economy which has seen a shift from traditional payment systems to the evolution of new systems such as electronic and mobile money.

This has exposed gaps in certain aspects such as licensing, regulation and supervision of the providers of the emerging payment systems thus posing a danger to users of the payment systems, a predicament, that the new law seeks to solve.

Court dismisses Jaffery Forex bureau case against Bank of Uganda

By Sania Babirye

Kampala High court Judge Musa Sekana has dismissed a case filed by Jafery Forex Bureau Limited against Bank of Uganda in which the Forex bureau had sought 9.5 billion from BOU for allegedly revoking its license illegally.

While dismissing the said case, Justice Sekana ruled that the Forex bureau filed the case unlawfully and out of the stipulated time.

Justice Sekana has observed that Forex bureau filed the said case in July 2019 when their foreign exchange and money remittance license was cancelled on the 10th of May 2016

On the 16th of July 2019, Jaffery Forex bureau through their lawyers of Kinobe Mutyaba Advocates dragged Bank of Uganda to the high court civil division after BOU accused the Forex bureau of flouting regulations that govern foreign exchange and money remittance business in Uganda.

According to an affidavit sworn in by the Forex bureau’s director Asim Morbi, the said bureau had been operating legally dealing in legal businesses since 1997 when it was formulated until when BOU suddenly revoked their license.

The revocation followed after Bank of Africa accused the Forex bureau of engaging in illicit transactions in which the bank lost a lot of money despite police clearing the Forex bureau of any alleged illegal activities in October 2016.

These had sought court to declare the decision by BOU to revoke their license illegal, have their license reinstated,unfreeze their freezes bank accounts and award them 9.5 billion in both punitive and general damages.

Bank of Uganda losses worry MPs

By Edwin Muhumuza

The parliamentary Finance committee has expressed concern as to why Bank of Uganda is making losses , a trend that is affecting the national reserves.

The committee heard that the central bank had invested Uganda’s reserves in Europe ,a move which did not yield any profits following the negative interest rates.

The revelation was made by officials led by Dr. Adam Mugume, Executive Director of Research, at Bank of Uganda while appearing before legislators to account for another 450bn shillings for re-capitalization.

Mugume told the committee that currently Uganda’s reserves have been invested in the United states of America,whose market offers an interest rate of 2%.

This though did not go well with members of the committee chaired by Hon.Paul Musasizi ,Member of Parliament, Rubanda County East Kigezi Sub Region amid concerns stemming from the conservative investment approach of the central bank with eyes on overseas financial markets.

Uganda has reserves now amounting to US $32billion but these could be swept away in a blink of an eye following poor investment decisions, warned the director of research.

During the interface, Amos Lugolobi ,a member of the committee and chair of the budget committee of parliament wondered why the central bank was adding to Uganda’s debt burden with such demands even after over 200bn was advanced to the bank in the previous financial year for re-capitalization.

Among the central bank’s expenses include monitory policy infrastructure, increased use of garnish orders, and high costs of currency infrastructure.

The Auditor General’s report 2018 notes that Uganda’s debt to GDP ratio of 41 per cent is still below the International Monetary Fund (IMF) risky threshold of 50 per cent and compares well with other East African countries. However economic analysts challenge that figure stating that the country is already well above the threshold with estimates at 55% which they say is unfavourable compared to national revenue collected which is the highest in the region at 54 percent”.

Concerns have always been about the sustainability of debt, taking in more commercial loans, whose conditionalities are probably not very conducive for Uganda as a developing country.

Meanwhile Parliament has resolved to have a national dialogue with officials from Bank of Uganda and the ministry of finance about the fate of Uganda’s economy more so over the ever increasing national debt as a result of multi-year programs that need constant funding as well as supplementary expenditure.

Bank of Uganda pushes for new regulations, honest customers to get credit without security

By Alice Lubwama

The central bank is coming up with regulations that will require utility companies, landlords, and providers of trade credit including manufactures to report to the credit reference bureau on their customer’s transactions.

Speaking at the financial inclusion symposium in Kampala today the director supervision bank of Uganda Dr Tumubweine Twinemanzi said that the information will be used to create a credit profile for borrowers to enable the trust worthy customers get cash or trade credit without
having collateral.

“Let me give an example when you go to buy a car , the car dealer will ask for your national identification number and every time you make your promised payment on time ,the car dealer will report to the credit bureau and when you’re late they will report the lateness.

He noted that by understanding people’s transaction behaviour, one may not need actual physical collateral to be able to borrow.

Tumubweine adds that once the regulations have been approved by the ministry of finance, they will now organize trainings of various stake holders in the industry including traders, manufacturers, utility companies on how they can provide information to the credit reference bureau who will then create credit profile for their customers and in turn use the information to make credit decision.

The managing director Compuscan group company, one of the credit bureau for consumer data, Mark Mukasa noted that the benefits of the regulations are both positive and negative since it will create positive truck record for the people who access credit in the country but at the same time also have a punishment for defaulters who will not be able to access credit from other lenders if they don’t pay up their credit from formal lenders.

“Property has been at the centre of the requirement for one to access credit for formal lenders, yet very few people own property in Uganda.” Mukasa said

He said that by getting credit information over a period of time, lenders will start growing reputation collateral of individuals, that will be used for one to access credit.

According to the central bank credit reference bureaus supports robust growth of the financial sector through providing timely and accurate information on borrowers debt profile and repayment history.

Ugandans dissatisfied with COSASE

By Edwin Muhumuza

Debate on the COSASE report starts this Tuesday (26 February) on the floor of parliament amid high expectations that maybe officials implicated by the probe will be brought to book. What the public is demanding for already are the heads of the culprits.

When it was finally completed and read to the house a section of the public said it had promised too much but only to deliver too little.

While appearing on the Capital Gang Radio Show, Chairperson Abdu Katuntu expressed disgust that members of the public did not appreciate the role of other state institutions. This was in response to claims that his report was toothless and that culprits would walk away free as had been noted in other previous parliamentary reports especially the oil handshake report.

…‘a parliamentary committee report goes to the house where it may be adopted, dismissed or amended. When you have government institutions, they work in accordance with the law. Why we talk about the rule of law is to have different institutions perform different roles. Do not expect a parliament of a republic or a parliament of any country to start having the powers to prosecute or arrest. What will the Judiciary do, Katuntu argued!’

In 2017, Ugandans were angry that 36 government officials shared Shs.6 billion oil bonus code-named the “golden presidential handshake” by officials from the Justice ministry, Uganda Revenue Authority (URA), Ministry of Finance among others. It was this same committee that probed the saga and in public view nothing has been done about the officials. This was one of the issues that Katuntu had to explain in recent weeks amid intense criticism from sections within his FDC party including his successor MP Mubarak Munyagwa for what they said was incompetence during his two and a half tenure as COSASE Chairman.

Now another major report is due for debate by public representatives and the question being asked is what will the discussion help if nothing may be done to those the report seems to indict?

Katuntu says, ‘our focus was in the actions more than individuals because at the end of the day there are state agencies that should be able to take up the individuals. What we did was to say, look here, actually, we used two words deliberately, the officers and officials who participated in this process should take full and personal responsibility. That covers their actions but we imagine that other state agencies now go and look at exactly who handled this process’.

For over two months, Bank Of Uganda (BOU), officials led by the governor Tumusiime Mutebile appeared before the committee chaired by the Bugweri County MP to answer to queries raised by the auditor general’s confidential special audit report which 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.

The sale of Crane Bank, however seemed to have opened a can of worms after the proprietor businessman Sudhir Ruparelia accused Bank of Uganda of being unfair. Crane Bank was a commercial bank licensed and supervised by the Bank of Uganda, the national banking regulator with total assets‎ amounting to approximately ‎UGX 1.81 trillion employing over 600 staff.

This was a much bigger financial entity compared to the other defunct banks and certainly had to attract immense public attention including the media. 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)

Most Ugandans are aware that the closure of Crane Bank by Bank of Uganda was illegal, what remains to be seen is what happens to the culprits that were engaged in this illegality and whether other agencies such as the Inspectorate of Government, the ministry of Finance, Criminal Investigations Department of Police will bite.

Parliamentary committee sets up a team that will read all documents submitted by Bank of Uganda

By Edwin Muhumuza

The parliamentary committee on Commissions, Statutory Authorities and State Enterprises(COSASE) yesterday decided to set up a team that will read all documents that are mainly confidentially submitted from Bank of Uganda for purposes of scrutiny. Chairperson, Abdu Katuntu said there will be no photocopying or taking photos of the documents to avoid leaking them to the public.

‘I set up a two-man committee involving one person from the NRM and one from the opposition, Hon Twesiime and Hon Medard Ssegona. They are going to be handling the confidential issues supervised by the vice. However, this information is not restricted to them because even members may access it for purposes of reading. No reproduction, No photocopies or even phones…’Katuntu said.

Meantime, the committee also accused Bank of Uganda of wrongfully closing Teefe Bank in 1993. Hon. Katuntu said that the then Finance Minister Jehoash Mayanja Nkangi did not have the power to order its closure on grounds that he based on the Bank Act of 1963 instead of the Financial Institutions Statute of 1993.

And as legislators began to point out more faults and seemingly about to condemn the Central Bank officials, there were appeals for patience at this stage of the probe.

‘now that we have ascertained their responses about the law, we are not going to judge anything at this point, let’s go through the process until the end, before we can make conclusions because we shall have heard all the information we need’ Katuntu remarked.

Earlier Bank Of Uganda Governor Tumusiime Mutebile was faulted over wrong and contradictions in his response about the dates of the closure of Teffe Bank. What was reflected in the response was not accurate according to the committee chair, Abdu Katuntu who noted that it was closed on 4th November 1993, and not in February 1993 as reported.

This amid arguments about the different legal regimes they acted to close it;1969 Bank Act or the Financial Institutions Statute 1993.

Members expressed disappointment amid calls for the Bank officials to go on oath, thus invoking powers of a High court to penalize witnesses over the contradictions.

While members mulled at the circumstances surrounding the failure of the Teefe Bank, Bank of Uganda Governor Emmanuel Mutebile revealed that he would not intend to reopen any of the defunct banks. This while responding to queries from Aruu county MP, Odonga Otto. ‘In principal, I would never dream of reopening a bank I have closed before.’

The committee will meet BOU officials every day except Saturday and Sunday until they are done.

Man drags A-Plus funeral services, Bank of Uganda to Court over Semwanga’s burial

By Sania Babirye

A concerned citizen a one Abey Mgugu has  dragged A plus funeral management and the bank of Uganda to the high court seeking orders to open the grave of Uganda socialite Ivan Semwanga and retrieve the money buried with him.

Mgugu is also seeking court to have the would be retrieved   money sent back into circulation so that the currency of Uganda and others are respected.

Mgugu also wants declaration that  the bank of Uganda  willfully  and negligently failed to ensure that all currencies buried  with the deceased are respected.

The public was amazed when a group of people calling themselves members of the rich gang stormed the burial ceremony of the late Ivan in Kayunga district and threw money into his grave before and when he is being lowered into his grave on Tuesday  this week.

The currencies  thrown ranged from 20 and  50 000 while others were  South  African  rands  and USA dollars.

Court is yet to pronounce itself on the matter.

Bank of Uganda has reported drastic raise in Annual crop inflation.

By Alice Lubwama

Bank of Uganda has reported drastic raise in Annual crop inflation in the last three month.

This comes at the time when many part of the country is experiencing drought which is likely to last until the end of this year.

While releasing the monitory policy statement for October  2016, the governor bank of Uganda Prof Emanuel Tumusiime Mutebire said that in the last month food inflation have jumped from -1.9% to 5.1%.

He explained that the major cause of this the drought that affected affecting planting season and subsequently harvest has been extremely poor.

He however said that the trend is likely to change if rains start in the near future.

Meanwhile annual headline and core inflation declined to 4.1% and 4.2% in September respectively from 4.8% and 5% in august prompting bank of Uganda to lower central bank rate to 13% from the previous 14%.

Photo: Alchetron

BOU warns against fake 100,000 Ugandan shilling note is trending online

It has come to the attention of the Bank of Uganda that unknown individuals have created and are circulating an image of a bank note of UGX. 100,000 purportedly issued by Bank of Uganda. This is illegal.

The public is informed that the Bank of Uganda has not issued any new denomination of Uganda currency and does not plan to do so in the near future.

The individuals circulating these illegal images are hereby warned to stop doing so with immediate effect. Misinformation of this nature has the potential to cause confusion and disruption of normal economic activities especially among members of the public in rural areas.

The public is urged to ignore the image as a hoax and report known perpetrators to Bank of Uganda.