BoU Erred in Closing Greenland Bank

Bank of Uganda should take full responsibility for any likely loss resulting from the closure of Greenland Bank.
The Governor Bank of Uganda appearing before COSASE earlier this month.
Bank of Uganda should take full responsibility for any likely loss resulting from the closure of Greenland Bank. This is according to a report by Parliament's committee on Commissions, Statutory Authorities and State Enterprises (COSASE).

Greenland Bank was in 1999 put under liquidation by the Central Bank.

The committee's recommendation is carried in the report on the closure and sale of commercial banks presented to parliament on Thursday by COSASE Chairperson Abdul Katuntu.

“The Auditor General observed that Greenland Bank equity investment in African Export-import Bank (Egypt) worth USD 45,000 had accumulated dividends of USD 22,410 as at November 30, 2015, however, the liquidator (BoU) had not sold off the shares and therefore the funds have not been recovered,” reads part of the COSASE report.

COSASE also notes that BoU did not provide evidence of the costs incurred in the suit with Greenland Bank.

“Looking at the awarded sum of 2.6 billion Shillings that ended up on the account of Greenland leads to the conclusion that the cost incurred by the Bank was too high,” said Katuntu.

He further noted that the Central Bank acknowledged an error in its preparation of the Greenland bank's statement of affairs as at 30th June 2016 where full provision of 6.596 billion shillings was made to write off funds due from foreign banks despite partly recovering 2.6 billion shillings from the court case which was credited on the Greenland Bank loan recovery and collection account on March 31, 2015.

While appearing before COSASE early this month, a section of former shareholders of Greenland Bank demanded that the Central Bank accounts for the entire period the institution has been under liquidation.

Leading shareholder, Ahmed Nsubuga said that there was suspected fraud in the handling of securities for loans and advances and in the disposal of land and buildings belonging to the bank.

Nsubuga demanded for accountability of US Dollars 11,450,000 paid by Greenland Bank to the Privatization Unit to fund the acquisition of 49% share by Ms Westmont in Uganda Commercial Bank.

The shareholders further asked questions about the residual proceeds from Greenland Bank Tanzania and Zanzibar which were separate, independent companies with different capitalization.

The COSASE probe was triggered by a 2017 forensic audit report by Auditor General John Muwanga that pointed out irregular operations in the Central Bank and the controversial closure and sale of the commercial banks. 

The banks include Teefe Trust Bank, International Credit Bank Ltd, Greenland Bank, Uganda Co-operative Bank, National Bank of Commerce, Global Trust Bank and Crane Bank Ltd. 

In his report, the Auditor General observed that no asset movement schedule or ledgers indicating assets at closure, assets sold, selling price, a period of sale, assets not sold, performing and nonperforming loans, was provided to support asset movements in the Statement of Affairs of International Credit Bank (ICB), Greenland Bank and Uganda Co-operative Bank.

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