Tension has continued to escalate at Bank of Uganda as President Yoweri Kaguta Museveni is expected to make major changes at the central bank after a tripartite committee he set up to investigate the internal operations of Bank of Uganda in relation to some specific decisions recommended reforms at the central bank, including curbing the powers of the governor of Bank of Uganda.
State House Insider have informed us that “in the next couple of months” there is likely to be new faces at the central bank after the president received a shocking 79 page report.
“Heads are going to roll and there will be surprises,” the source said.
In February 2018 as questions were being asked about operations of the bank, the president reportedly set up a secret committee comprising of among others the selected members of parliament and senior officials from the Inspectorate of Government (IGG) and Bank of Uganda to probe the bank.
There was no public or official announcement of the probe.
The members of the Committee included: Abdu Katuntu (MP) – Chairperson; Anita Among (MP); Michael Tusiime (MP); Elijah Okupa (MP); Lady Justice Irene Mulygonja Kakooza (IGG); David Makumbi (IG Staff); Justus Kareebi (IG Staff); Sarah Birungi (IG Staff); Judy Obitre-Gama (BOU Board) and Keith Muhakanizi (BOU Board).
The committee was chaired by Bugwere member of parliament Abdu Katuntu.
The formation of the committee followed a memo on February 7, 2018 by the governor bank of Uganda, Tumusiime Mutebile appointing new staff and transferring others.
In the same memo, the governor communicated the appointment of five staff from outside the Bank to various positions in the Bank.
As a result of Mutebile’s communication complaints were made to the Inspectorate of Government and the Parliamentary Committee on Statutory Authorities and State Enterprises (COSASE). In the complaints it was alleged that the Governor acted in contravention of the laws and policies governing staff recruitment, promotions and transfers in the Bank.
Due to the bad press the followed, Museveni appointed the committee to look into these issues.
The committee interviewed more than 100 people including staff of Bank of Uganda, former bank staff and board members.
In the 79-page report by the committee which was compiled in February this year and seen by The Nile Post, it was observed that the governor had been given a lot of powers by the law and this needed to be rectified immediately.
“The Committee recommends the possible splitting or separation of the functions of the Governor and the Chairperson of the Board especially with regard to administrative matters. The Committee noted that the Governor’s decision of 7th February 2018 was characterised by the fact that the Governor was essentially performing both the role of Chief Executive and Chairperson of the Board. Corporate Governance best practice normally requires that the two positions are separate as the Chief Executive Officer is normally supervised by and is therefore answerable to the Board. In the instant case most of the problems caused as a result of the Governor’s decision could have been avoided if the two roles were separate with no opportunity for the Governor to function as both Board and Chief Executive Officer.”
The committee also faulted Mutebile for not consulting with some organs of the bank before making certain key decisions.
Some of these decisions included the appointment of Dr. Twinemanzi Tumubweine as executive director in charge of supervision of commercial banks.
On 31st May 2018, according to the report, Tumubweine informed the committee that he had been ‘head-hunted’ and requested by the governor to express interest in the job.
He claimed that his interaction with Mutebile started in 2017 during the activities of the Financial Markets Development Committee of the Bank of Uganda.
He explained that he attended the said committee as a stakeholder representative for the Uganda Communications Commission (UCC) where he was previously employed.
He also stated that he had authored a PhD dissertation under the title “Interest Spread and Emergency Setting Behaviour of Commercial Banks: Evidence from Uganda” in 2008 and that the Governor had asked him about it.
“As a result Dr. Tumubweine wrote to the Governor of Bank of Uganda on 2nd October 2017 and expressing specific interest in joining the Banking Supervision Directorate of the Bank of Uganda,” the report notes.
The committee however noted that while Dr. Tumubweine had taken great effort to upgrade his academic qualifications his first degree in Statistics and Applied Economics was a Pass Degree.
“It therefore fell below the standard requirement of 1st Class and Upper Second Honours and also below the standard set for exceptional circumstances which is Lower Second Honours degree. It is also pertinent to note that Dr. Twinemanzi lacked experience in commercial banking as stipulated in the job description for Executive Director Supervision. There was no mention of any working experience relevant to commercial banking in his personal records at the Bank,” noted the report.
On his part, Mutebile told the committee that the law gave him powers to make such decisions.
“He referred to Section 28(4) of the Bank of Uganda Act which provides that except as may otherwise be provided in the by-laws of the Bank, all appointments of employees shall be made by the board. The Governor then went on to refer to Sections 8(2)(a) and 8(2)(e) of the Bye-laws of the bank created in 1968 which he said entrusted the Governor with the responsibility of organisation and management of the bank as well as ensuring proper discharge of duties of the other officers and other employees of the bank,” he said according to the report.
Mutebile also justified his decision on the grounds that he was acting with the authority of the board delegated to him as Chairperson of the Board by virtue of a resolution of the Board of Directors at its 311st Meeting held on 30th May 2012.
The committee also noted that the infighting between people allied to Mutebile and his deputy, Dr Louis Kasekende had led to a toxic atmosphere in the bank.
The committee confirmed that there were cliques at the Bank allied to Mutebile and Kasekende
“During the interviews conducted by the committee one of the evident concerns was about the existence of ‘cliques’ built around the persons of the Governor and Deputy Governor and while no evidence was found to suggest that the two principals at the Bank had any hand in the formation of the cliques, it was increasingly clear to the Committee that cliques do exist in the Bank and that to that extent the Bank was polarized,” the report noted.
Almost all the staff interviewed, according to the report, alluded in one way or another to the existence of the cliques while at the same time denying being part of either clique. From the various interviews held with staff it was noted that there are camps at the Bank aligned to the governor or deputy governor.
The Nile Post understands that the activities of the committee were kept out of public view and only the president was informed of developments by the members.
Even as Katuntu led a parliamentary probe into the activities of BoU, on the other hand, he pursued another investigation at the behest of the president. Its report was handed to Museveni in March.
Bank of Uganda is currently embroiled in a currency saga that has led to the arraignment of three staff at the Anti-Corruption Court.