MPs Shocked as Cooperative Bank Details Indicate Double Registration

By George Mangula

There was drama in Parliament when it came to light that the Cooperative Bank Limited which was closed by Bank of Uganda (BoU) on May 19, 1999 was registered twice under the Companies Act and licensed twice by the Central Bank, leaving MPs agape and wondering which bank was closed on May 19, 1999.

The first Cooperative Bank was registered under the Cooperative Act 1964 while another with the same name was incorporated in 1997. That goes against the Financial Institutions Act, 2004.

This came to light as MPs on Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) were probing former owners of the Cooperative Bank Limited who were arguing that their bank be re-opened for business.

BoU closed the bank reportedly because of continued poor performance and non-compliance with regulatory capital adequacy requirements.

The licensing of the company twice meant it had two certificates for operation. The latter bank was registered By Dr William Kalema and others on the board of the bank. Kalema is said to have signed as a business consultant of Uganda Manufacturers Association (UMA). Kalema also served the board of DFCU Bank since 2000 to 2012, and also sits on BoU board since 2012.

Dr Kalema told Parliament that officials from the Ministry of Finance asked them to register the new bank. The Auditor General John Muwanga said he signed on behalf of the Ministry of Finance even as MPs said documents showed he signed as an individual. It also emerged that United States Agency for International Development (USAID) has interests in Cooperative Bank.

Dr Kalema would later clash with MP Odonga Otto, who asked him how he came to register the new company in the names of The Cooperative Bank in 1997 yet he knew of its existence. Otto earlier seemed to indicate that Kalema is synonymous with the controversy closure of banks.

And cooperators and clients in Cooperative Bank said a syndicate was formed between BoU officials and those of Cooperative Bank to fleece clients of money and their properties by not giving the official liquidator full information.

Meanwhile, in the case of other closed banks including ICB, Greenland Bank and Cooperative Bank, the total loan portfolio sold of Shs135 billion included secured loans of Shs34.5b billion which had valid, legal or equitable mortgage on the real property and were supported with legal documentation but were sold to Nile River Acquisition Company at a 93 percent discount.

According to BoU, The Cooperative Bank had just over Shs65 billion in liabilities but the Auditor General John Muwanga in his audit report of August 27, 2018 said that amount had reduced to about Shs16.5 billion as the liquidation process was winding up.