Uganda: Statement on Escalating Fuel Prices of Petroleum Products by Minister of Energy and Mineral Development (20.11.2018)

A look into ‘Project Nyonyi’ the PwC Forensic Review of the Crane Bank!

This are just one of them days, when the glaciers really get to much heat and becomes water. Than underneath all those years of ice and snow, you will find some relics of the past, which was hidden by the massive amounts of snow. That nothing these things hidden inside the glacier, that had the need to resurface, because no one would have the capacity to dig that deep. In the same sense, the PriceWaterhouseCoopers report of the Crane Bank reveal damaging reports on the state of the Bank. The Bank that Bank of Uganda took into receivership before trading to another third party. The bank that were praised and suddenly disgraced itself. Therefore, lets look at the important quotes from the report!

“This report has been prepared solely for BoU for use in considering immediate steps to safeguard Crane Bank’s interests and the additional investigative and evidence collation work that is required on key areas of concern to enable the preparation of a report that can be adduced as evidence in a court of law” (PwC, P:3, 2016).

“The above direct and circumstantial evidence suggests that Dr Ruparelia and persons associated with him, effectively owned and controlled 96% of CBL (With control of White Sapphire, the only shareholding not held by Dr Ruparelia and his immediate family, is the 4% shareholding held by Mr Jitendra Sanghani, (“Mr Sanghani”)). This contravenes the prohibition on an individual or body corporate controlled by one individual owning more than forty nine per cent of the Bank’s shares, and the restriction on the right to control financial institutions by those who are not reputable financial institutions or public companies as set out in S.18, and 24 of the Financial Institutions Act 2004 as amended (“FIA”)” (PwC, P: 14, 2016).

“The false accounting was partly achieved by crediting income with entries from off-book accrued interest receivables accounts and by keeping some liabilities (fixed deposits and borrowings from other financial institutions) off the books” (PwC, P: 15, 2016).

“The off book liabilities were brought back into the books in 2013 and a fictitious asset recognised by overstating the balances in the Nostro Account. It is not clear why CBL brought back this liability at this point. Due to this entry in the Nostro Account, as at 31 December 2013, there was a difference of USD 80m or UGX 200B between the system and actual balance in one of the Nostro Accounts; the Deutsche Bank USD account” (PwC, P: 15, 2016).

“As at 20 October 2016, loans amounting to UGX 63.6B had been advanced to related companies out of which lending totalling to UGX 63.1B (99%) had not been disclosed as insider lending. In addition to the companies considered as insiders in deriving the amount above, there are allegations that Logic Real Estates and Developers Limited (“Logic”) which had an outstanding balance of UGX 26.9 B as at 20 October 2016, is also related to Dr Ruparelia. Logic obtained this loan on 23 December 2014 and the amount appears to have been deposited back into a CBL “interest receivable” account labelled “Personal FD”” (PwC, P: 18, 2016).

It is not strange that a Crane Bank fell, when all the irregularities and mismanagement in their practices comes to the forefront. The Bank of Uganda could have seen this, but did not act upon it. They just let it be and let it go. That must have been because of the ties between Dr. Ruparelia and President Museveni. Certainly, the political affiliation has helped the financer and foreign investor in his prospects in Uganda. Since the off-books practices plus over-extended ownership did not apply to current legislation concerning healthy bank practices. Still, they let it all happen. This secret PwC report even entails provisions and statutes the owner of the bank has breached in his practices.

“Dr Sudhir Ruparelia: As a Director, major shareholder, vice chairman and generally as a person that exerted the greatest control over the Bank, Dr Ruparelia, concealed his true shareholding in the Bank; he oversaw the irregular transfer of the Bank’s branches to MIL, he benefitted from irregularly declared dividends, ‘due’ to White Sapphire; he conspired with others to embezzle/cause financial loss to CBL by use of cash extractions from Interdico, AI and TA; he was instrumental in the approval of credit facilities for related companies and associates, when there was no intention the loans would be repaid; and he failed to disclose his interests.

In addition to the above charges:

 Receiving stolen property in respect of bank branch transfers, and White Sapphire dividends.

 Embezzlement.

 Influence peddling.

 Nepotism.

 Receiving and possessing property for himself or related parties, otherwise than in payment for the full value, in respect of the branch transfers, (FIA S126 (6).

 Breach of the Prohibition on insider transactions” (PwC, P: 23, 2016).

When you read that a review and outsider opinion sees this and that the Bank of Uganda are just taken the bank into custody before trading it off to DFCU. Proves that they knew of the liabilities and the off-books practices, but put a blind an eye to the matter. Don’t see and don’t tell policy are clearly the BoU acts of the day, no matter what principle or legislation that has been breached by the former foreign investor in the good graces of the President.

Certainly, this is again, with all the other reports of the sudden fall of grace for the ones astonishing bank, the Crane Bank are now history and eaten by DFCU. While the subjects running this one to the ground are walking around like free men. The ownership and board are left off the hook, even as this secret report entail embezzlement and fraud of the bank. This is accepted and repeated without any consideration of all the clients and customers  who at one point trusted the Crane Bank. They we’re used as pawns, to secure wealth for Dr. Ruparelia and his comrades. Peace.

Reference:

PriceWaterhouseCoopers (PWC) – ‘Project Nyonyi – Report on the Preliminary Forensic Review at Crane Bank’ (21.12.2016)

Uganda: Fluctuating Fuel Prices in the Country (24.07.2017)

Correction of factual Inaccuracies by The Observer News Paper concerning Ernst & Young (EY) as the auditors of Crane Bank (17.07.2017)

The Uganda Chamber of Mines and Petroleum (UCMP) elects new board (11.07.2017)

Hon. Evelyn Anite clearly doesn’t know the fair market regulation in the Communication Act of 2000!

 

“Speaking at the launch, the State Minister of Finance for Investment and Privatization, Hon Evelyn Anite praised UTL for taking the lead in spearheading such initiatives” (Uganda Telecom, 19.06.2017)

Honourable Evelyn Anite, the State Minister for Investment and Privatization, the one who was speaking on the 19^th June 2017 at the Constitutional Square in Kampala. This is where she uttered words of special disgrace. Especially in a free-market ideology that the National Resistance Movement (NRM) has bought into with the Structural Adjustment Plan (SAP). Together with the privatization of all sort of markets. Uganda Telecom isn’t the only Cellphone provider or the ones delivering telephone services in Uganda. There are dozens owned by local and by foreign investors. These are all from MTN to Airtel, even Smile Telecom and others. These are in competition and is one of the most profitable industries in Uganda.

Therefore, just look into what the Privatization Minister said yesterday, which is interesting.

“Once the managerial problems at Uganda Telecom have been fixed, Ugandans will be compelled to own a UTL Simcard just like having the national identity (ID) card Evelyn Anite, the outspoken State minister for Investment and Privatization has revealed” (…) “”It did not take us to get somebody from another country to come and fix what is [problems] in UTL. We’re not yet done but we are close by…I want to tell you something; that once we fix the problems in Utl, it is going to be compulsory for Ugandans to hold a UTL line just as it is for you to have a national ID, you must have a Ugandan line. That is the spirit of patriotism”, she said” (URN, 2017).

Sometimes, there should be given some public ethics and governance practices to fellow ministers, as their reach and their possible outreach of laws and proposals. Even the State Minister Anite should learn some parts of the Uganda Communications Act of 2000, which says: “56. Commission to encourage fair competition. The commission shall, in the performance of its functions under this Act, promote, develop and enforce fair competition and equality of treatment among all operators in any business or service relating to communication“ (Uganda Communication Act, 2000). So the laws abiding by the state itself, says it is supposed to be fair, but what is even more neat.

The Second section in Part X, which is worth looking at, since this is the exact part that the operators and the Minister totally forgotten or overlooked, if ever have read: “57. Prohibition of acts exhibiting unfair competition. An operator shall not engage in any activities, whether by act or omission, which have, or are intended to or likely to have, the effect of unfairly preventing, restricting or distorting competition in relation to any business activity relating to communications services. Without limiting the generality of subsection (1), an act or omission referred to under that subsection shall include— any abuse by an operator, either independently or with others, of a dominant position which unfairly excludes or limits competition between the operator and any other party; entering any agreement or engaging in any concerted practice with any other party, which unfairly prevents, restricts or distorts. competition; or (c) the effectuation of anticompetitive changes in the market structure and, in particular, anticompetitive mergers and acquisitions in the communications sector. Neither the Uganda Telecom Limited nor any of its affiliates shall hold or acquire an ownership interest in the second national operator or its affiliates. Neither the second national operator nor its affiliates shall hold or acquire an ownership interest in the Uganda Telecom Limited or any of its affiliates” (Uganda Communication Act, 2000).

So the idea of the State Minister of Privatization are actually thinking of making provisions for the failing state-owned company Uganda Telecom, to get all citizens to have sim-cards and making them costumers in the midst of free-market and also in the midst of all competitions. This is clearly a massive breach of the law and these pieces of legislation. You don’t need to be a scholar or a man of wisdom to understand the possible problems of UTL. This clearly can be seen as limiting the competition and the other companies, as the state only in this way looks into UTL and not helping the other companies. Because she didn’t say all citizens should have MTN and Airtel too, only mentioned UTL.

This is not enforcing free and fair competition and equality of treatment between them. The words of State Minister Evelyn Anite isn’t enacted or become law, even a motion to Parliament. But shows the disregard for functioning law by the own Parliamentarians. That is clearly needed and Speaker Rebecca Kadaga should get the functioning staff to teach their fellow MPs. So they know their laws and provisions within their departments. This so they don’t create these sort of embarrassment, which Anite has done yesterday and revealed today. If not maybe a NRM Caucus at Kyankwanzi could be a learning seminar instead of bashing in the glory of the President and his controlling ways. Peace.

Reference:

URN – ‘Uganda: UTL Simcards to Become Mandatory for Ugandans – Anite’ (20.06.2017) link: http://allafrica.com/stories/201706200332.html

URSB: Press Statement on Provisional Administration of Uganda Telecom Limited (28.04.2017)

Libya: Regarding recent development concerning UTL (03.03.2017)

Government Takeover of Management and Affairs of Uganda Telecom Limited (UTL) – (01.03.2017)

UCC letter: “Termination of Interconnection Agreement with Uganda Telecom” (30.01.2017)