Amama Mbabazi: Physical Cash Lost in NBC Takeover

The shareholders of the defunct National Bank of Commerce (NBC) have protested the manner in which their financial institution was taken over and sold to Crane Bank by Bank of Uganda, saying the process was “illegal”.

“The manner in which NBC was closed was in total violation of the law,” said former premier Amama Mbabazi on Monday morning.

“It was neither transparent nor fair,” he emphasized.

Mbabazi represented NBC before Parliament’s COSASE, which is investigating circumstances under which several banks collapsed or were taken over.

Three branches, being the Cargen House Kampala Road branch, Kabale branch and the Head Office on Yusuf Lule Road were physically seized and closed and taken in the possession of BOU.

Bank of Uganda said NBC’s banking licence was revoked on the same day pursuant to Section 17(f) of the Financial Institutions Act, No. 2 of 2004 (the “FIA”).

“This action has been taken because Bank of Uganda has determined that the continuation of NBC’s activities is detrimental to the interests of its depositors,” the central bank said in a statement before announcing the suspension of the Management and the Board of Directors of NBC.

This meant NBC could no longer carry out financial institutions business and its selected assets and all deposits were sold and assumed by Crane Bank Limited who were duty bound to allow former NBC depositors to access their deposits.


But speaking to MPs today, Mbabazi said BoU’s claims that its move would protect customers’ deposits was “far from the truth”.

He also revealed that NBC’s “cash and assets were forcefully removed from our premises with many bank documents being thrown around”.

Mbabazi, who was among the shareholders of the bank, accused BoU of failure to perform a “cash and asset inventory as required by the Financial institutions Act” before the takeover of NBC.

The bank was formed in 1991, and was named Kigezi Bank of Commerce, with a mission to provide banking services and inexpensive loans to the Kigezi Community.

The previous majority shareholders in NBC were BoU Governor Tumusiime Mutebile, businessman Amos Nzeyi, Mbabazi and current Premier Ruhakana Rugunda.

The minority shareholders included former Finance Minister Ezra Suruma, Jim Muhwezi, retired Supreme Court Justice George Wilson Kanyeihamba.

Mbabazi today moved to discredit claims of insolvency, saying cash and assets “were far more than deposits and loans.”

It is understood shareholders had just secured about $8m in capital for NBC when the bank was taken over.

Mbabazi also shared the shareholders’ belief that plenty of “physical cash found in NBC remained unaccounted for or was stolen in the process.”

It remains unclear how COSASE intends to address the NBC complaint considering the matter is already in court.

Crane Bank sued too

Nzeyi in 2017 sued Bank of Uganda and ex Crane Bank boss Sudhir Ruparelia, saying by the time of takeover, winding up, liquidation, closure and sale of NBC by BOU, it was not an insolvent financial institution since the bank had just undertaken an expansion programme – acquired and refurbished its new headquarters on Yusuf Lule road in Kampala for about $1.8 million.

“It had also, among others, purchased several ATMs and the T24 temenos core banking system with the knowledge and approval of the first defendant [BOU],” the plaint reads in part.

Nzeyi said a one AR Kalan, who was the managing director of Crane bank during the contested purchase of NBC assets, disappeared mysteriously in circumstances inconsistent with good corporate governance of a financial institution.

Though Kalan disappeared, Nzeyi says, BOU did not put Crane bank, Sudhir and Kantaria to account for his mysterious disappearance, neither was a case of a missing person ever reported.

In the suit, Nzeyi says between 2007 and 2016, Sudhir as the shareholder of Crane bank, actuated a litany of dishonest dealings and extensive bank fraud involving the diversion of colossal sums as BOU admitted in its suit.

Cosase is expected to prepare a report for Parliament before close of February.

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