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Home Business BoU spills shocking secrets on closure of Bank

BoU spills shocking secrets on closure of Bank

by James Ateenyi

Bank of Uganda officials while appearing Committee of Statutory Authorities and State Enterprises (COSASE) on Thursday reveals the shocking reasons as to why Teffe Bank was closed by the central bank.

Mr. Tumubweine Twinemanzi, the Executive Director -Supervision at BoU said the bank was closed on directive of the former Minister of Finance, Mayanja Nkangi (RIP) despite not having legal powers to do so.

He added that the bank was closed in February 1993 under provisions of the Banking Act 1969 which didn’t contain substantive provisions on reports that the liquidator was supposed to compile.

However, Michael Tusiime, the Mbarara Municipality member of parliament shocked the BoU officials and MPs after tabling a letter authored by Nkangi on 4th November 1993, ordering for the closure of Teffe Bank.

“I find the information the Director is giving contradicting. I don’t think Teffe Bank was closed twice. The Minister made a decision to close Teffe bank on 4th November 1993 after Teffe failing to fulfill the conditionality set by Bank of Uganda. If they are referring to the law, the Minister was referring to Banking Act 1969. I wanted clarity in as far as when Teffe Bank was closed,” Tumusiime said.

After reading the letter, COSASE Chairperson faulted the bank for giving false information to the legislators.

“It isn’t true that Teffe was closed in February 1993, so your response isn’t accurate. Teffe was actually closed on 4th November 1993. What we see is that Minister closed the bank without the relevant authority because the letter that was ordering the closure of Teffe Bank came from his office yet he had no authority to that effect because his powers were trimmed by the coming into effect of the Financial Institutions Statute,” Katuntu said.

The Governor of Bank of Uganda Emmanuel Tumusiime however, said although the Minister ordered for Teffe Bank closure, BoU carriedout the closing exercise of the bank.

“Teffe was closed by Ministry of Finance but the person who put the lock is Bank of Uganda,” Mutebile said.

It was then that Katuntu inquired if the Minister had powers as of 4th November, 1993 to close a Bank and reading Section 34 of the Financial Institutions Statute, it was revealed that at the time of closure, the Minister didn’t have the powers to close the Bank as such powers were vested into the Central Bank.

BoU lead lawyer r admitted that the Minister didn’t have powers to close the Bank under the 1993 Statute.

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