A letter, said to have been authored by disgraced former Bank of Uganda, Executive Director, lifting key anti money laundering reporting requirements for dfcu Bank in regard to a Shs570 billion bad-loan book, which same loan book was ‘secretly’ transferred to dfcu by BoU, has surfaced; lending more credibility to claims by Crane Bank shareholders, that the seizure and rushed sale of their bank was “a well calculated heist by certain rogue officials at BoU and dfcu Bank, aided by conflicted lawyers” for their own private benefit.
According to the January 25, 2017 letter (signed on the same day as the Crane Bank sale agreement) among many other waivers, Bagyenda instructed dfcu to “ring-fence”, manage and report on the “non-performing loans and advances acquired by dfcu separately from dfcu’s pre-transaction balance sheet for a period of at least twelve (12) months.”
Curiously, the letter was not copied to any one at Bank of Uganda as would be the case for such critical communication and neither did the Purchase & Assumption (P&A) agreement of Crane Bank’s assets and liabilities signed between Bank of Uganda and dfcu, mention anything to do with the non-performing loans.
This has raised suspicion that Bagyenda’s letter, was a cover-up for the key architects of the controversial sale and would legitimize the process of recovery on the bad loans, without placing the recovery process under the usually rigorous BoU scrutiny and the strict anti money laundering reporting process.This would then allow the the rogue dfcu officials to deploy the conflicted lawyers to start the process of recovery- for which they would earn huge commissions that would later be shared by officials at BoU, dfcu Bank and their mastermind lawyers.
For those unable to pay, the dfcu lawyers would then quickly start the process of selling off the collateral, most of which comprised of prime properties at forced sale value, keeping the balance for themselves and co-conspirators.
Another third way in which dfcu lawyers and BoU officials would eat from the bad loan book, is a repeat of what was done in 2007- create a shell a company, in an offshore location; possibly owned by themselves or a mask and tow which they would sell to the bad loan book at a massive discount
For example, it shall be remembered that the Auditor General discovered that the assets of International Credit Bank (ICB), Greenland bank, Cooperative Bank, Global Trust Bank and National Bank of Commerce worth a combined Shs164 billion were sold for a mere Shs32 billion- a discount of 80%!!
M/S Nile River Acquisition Company, a company that that bought bad loans worth Shs135b in 2007 at $5.25m (Shs8.9bn), according to the AG led to a loss of Shs126b. The Shs135b loan portfolio included Shs34b of loans that had valid, legal and equitable mortgage supported by proper legal documentation.
The sale price offered of UGX8.9bn according to the AG, represented 26% of the total secured loan portforlio and 7% of the total loan portfolio. Moreover, the Audit report says BoU did not furnish auditors with bid documents that guided the procurement of M/S Nile River Acquisition Company, meaning that it could not be established the process that was followed in the awarding of the debt selling deal to this company.
