Finance minister Matia Kasaija has revealed that the former owner of defunct Crane bank, Sudhir Ruparelia confided in him that he was fed-up with the financial institution, prior to its takeover by the central bank in 2016.
Crane bank limited was closed by Bank of Uganda (BoU) on October 20, 2016, after it failed to comply with a capital call on July 1, 2016. Central bank governor Emmanuel Tumusiime-Mutebile said that the Crane bank takeover was guided by the systemic nature of the undercapitalized institution to avoid financial sector instability.
Kasaija told the parliamentary committee on Commissions, Statutory Authorities and State Enterprises (Cosase) that he raised Sudhir on phone before the bank closure and urged him to sell off some of his properties and not to let the bank sink.
Crane bank limited was closed by Bank of Uganda (BoU) on October 20, 2016, after it failed to comply with a capital call on July 1, 2016. Central bank governor Emmanuel Tumusiime-Mutebile said that the Crane bank takeover was guided by the systemic nature of the undercapitalized institution to avoid financial sector instability.
Kasaija told the parliamentary committee on Commissions, Statutory Authorities and State Enterprises (Cosase) that he raised Sudhir on phone before the bank closure and urged him to sell off some of his properties and not to let the bank sink.
The minister said that Sudhir did not heed to his advice, responding that he was tired of the bank anyway. Kasaija was appearing before Cosase that is investigating the closure and sale of seven commercial banks between 1993 and 2017. Kasaija appeared alongside BoU governor, deputy governor Louis Kasekende, BoU board members and other central bank officials.
"When the governor brought to my attention the problem Crane bank had, I rang Mr Sudhir [and told him]; ’Mr Sudhir, I don’t want your bank to go under’. If he was here, he would testify. ’I don’t want this bank to go under because when it goes under, it reflects very poorly on the economy…The bankers tell me your bank is uncapitalized. I know that you own some properties here in town, would you mind to sell off some of those properties'…He said: 'No. Hon minister am fed up let the bank go.' I tried, I tried it myself and I can give it to him here. I talked to him on phone and told him let us save this bank." said Kasaija.
However, Kasilo County MP Elijah Okupa told Kasaija that Sudhir's statement could have been incited by the several failed attempts his bank made to secure assistance from the central bank to no avail.
Bukedea Woman MP Anita Among and Iganga Municipality MP Peter Mugema added that attempts by the Crane bank to secure a Shs 79 billion loan from the central bank aborted after the agreement between both parties for the money to be availed. These suspect that this also could have led Sudhir to give up.
Kasaija said that it was unfortunate that minimal attention was given by the central bank to revive defunct banks.
"When the governor brought to my attention the problem Crane bank had, I rang Mr Sudhir [and told him]; ’Mr Sudhir, I don’t want your bank to go under’. If he was here, he would testify. ’I don’t want this bank to go under because when it goes under, it reflects very poorly on the economy…The bankers tell me your bank is uncapitalized. I know that you own some properties here in town, would you mind to sell off some of those properties'…He said: 'No. Hon minister am fed up let the bank go.' I tried, I tried it myself and I can give it to him here. I talked to him on phone and told him let us save this bank." said Kasaija.
However, Kasilo County MP Elijah Okupa told Kasaija that Sudhir's statement could have been incited by the several failed attempts his bank made to secure assistance from the central bank to no avail.
Bukedea Woman MP Anita Among and Iganga Municipality MP Peter Mugema added that attempts by the Crane bank to secure a Shs 79 billion loan from the central bank aborted after the agreement between both parties for the money to be availed. These suspect that this also could have led Sudhir to give up.
Kasaija said that it was unfortunate that minimal attention was given by the central bank to revive defunct banks.
"It is very unfortunate that you let a patient who is still breathing and you and your doctor you give him something to finish him off." Kasaija said.
Appearing before Cosase on Wednesday, Sudhir said that the agreement for the sale of Crane bank to dfcu bank was shoddy and fraudulent, saying that the Purchase of Assets and Liabilities (P&A) agreement signed between BoU and dfcu did not have details of all assets and liabilities that were being taken over.
Alex Rezida, a lawyer and former director in Crane bank also said that the illegality of the sale is confirmed by the auditor general's report which stated that the central bank would have been concerned with the revival of the institution instead of breaking it.
Appearing before Cosase on Wednesday, Sudhir said that the agreement for the sale of Crane bank to dfcu bank was shoddy and fraudulent, saying that the Purchase of Assets and Liabilities (P&A) agreement signed between BoU and dfcu did not have details of all assets and liabilities that were being taken over.
Alex Rezida, a lawyer and former director in Crane bank also said that the illegality of the sale is confirmed by the auditor general's report which stated that the central bank would have been concerned with the revival of the institution instead of breaking it.
The auditor general had earlier queried the failure by the central bank to prepare a plan to revive Crane bank and the consideration of Shs 200 billion from the bad books as the selling price for Crane bank to dfcu bank. BoU officials had also told the same committee that they never had a plan to revive the bank since the financial institution could not be revived.
But Rezida argued that BoU shouldn't have appointed a statutory manager if their institution could not be revived. He further said that a decision to sell Crane bank should have been born out of a report by the statutory manager. Rezida says that there was unprofessional conduct in the sale of Crane bank.
Cosase chairperson Abdu Katuntu told Rezida that the BoU statutory manager Edward Katimbo Mugwanya had told his committee that he learnt of the bank sale when he received a WhatsApp message indicating that dfcu was a carrying out files from Crane bank. Katimbo also told the committee that he never handed over a report.
Former Crane bank chairman of board of directors, Joseph Biribonwa, the central bank frustrated investors who were willing to revive the bank.