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BoU closed down a ‘ghost’ bank

On Tuesday, Cosase tasked officials from the Uganda Registration Service Bureau (URSB) to explain circumstances under which two banks were registered under the same name.

BOU PROBE | Bank of Uganda closed a ‘ghost’ bank as officials could not place apart two commercial financial institutions registered as Cooperative Bank.

The Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) learnt on Tuesday that the last bank to register the trade name did not do banking business.

On Tuesday, Cosase tasked officials from the Uganda Registration Service Bureau (URSB) to explain circumstances under which two banks were registered under the same name.

Sendo Cleaners

Caroline Egesa, who represented the Registrar-General of URSB, told the committee that Cooperative Bank was filed Memorandum of Article of Association on November 20, 1997 with the main aim of taking over assets and liabilities of another Cooperative Bank that had been incorporated in 1964 by the Cooperative Act 1963.

The new bank also argued in their application forms that upon taking over, the Cooperative Bank Limited shall cease to exist and the new team will carry on business of banking as defined in the Financial Institutions Act.

Some of the owners of the new bank were; William Kalema, John Muwanga, Anthony Sekweyama, Jacob Nsereko and Samuel Magona. The shareholders claimed to have sought the authorization of both Kigezi and Bugisu Cooperative Unions.

URSB’s statement attracted more questions than answers with Cosase Chairperson Abdu Katuntu tasking the bureau to table the authorisation from the cooperators giving authority to the new team to take over their company.

“There is a company, it has assets somebody says I am going to take over assets and you just register and without ascertaining whether it is true. If somebody had asked those questions at the time, we wouldn’t be asking these questions,” Katuntu said.

He added that the hands of the committee are tied because when the former shareholders of the first Cooperative Bank who were cooperators appeared before the committee, they wanted to know how was their bank closed and who took their assets.

“Bank of Uganda told us that it was Cooperative Bank of 1997, what happened to Cooperative Bank of 1964? The owners want to know how their assets were taken over by the 1997 including their name,” said Katuntu.

Phiona Egesa, who also represented the Registar-General of URSB, admitted that it was an oversight on their part not to conduct due diligence and weren’t aware of the existence of Cooperative Bank.

However, Cosase rubbished her argument pointing out that Registrar of Companies should have asked for evidence that first Cooperative Bank had ceased to exist.

“You can’t say you didn’t know about Cooperative Bank even the premises, assets and business were the same. Looks like the company registrar didn’t do adequate due diligence there are a few questions he should have asked. There was never a process of this company taking off and therefore taking over assets,” Katuntu said.

Katuntu admitted that the committee was faced with a crisis because the owners of the first bank are asking who took over their assets and how another Bank could have taken over assets without taking off.

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