URSB Failed To Do Due Diligence -COSASE

  • Posted on: 12 February 2019
  • By: sanyu-fm-news

Parliament's committee on Commissions, Statutory Authorities and State Enterprises (COSASE) has faulted the Uganda Registrations Services Bureau (URSB) for not carrying out due diligence during the incorporation of Cooperative Bank in 1997.

The Bank was created to replace and take over the assets and liabilities of a previous Bank of the same name incorporated under the Cooperative Societies Act in 1964.

However, during the course of its investigations into the closure of seven commercial banks by the Central Bank, COSASE discovered that the 1964 Cooperative Bank was never dissolved and the process and resolutions to transfer assets were never concluded when the new bank was shut down in 1999.

The Uganda Cooperative Alliance has over the decades claimed for return of its assets that they say were illegally confiscated and liquidated by the Bank of Uganda (BOU).

On Tuesday, MPs quizzed officials of URSB on the circumstances surrounding the incorporation of the bank in 1997.

The legislators insisted that the URSB did not carry out effective investigations and due diligence to ascertain the identity and legitimacy of the subscribers to the shares in the memorandum of association.

COSASE Chairperson, Abdu Katuntu pointed out that the names of the share subscribers were individuals instead of names of the cooperative societies they were meant to represent.

 The subscribers were Sam Magona, Anthony Sekweyama, Joseph Nsereko, Fred Nyakaana and John Muwanga. Katuntu also argued that there were no resolutions showing whether these persons were authorized by the cooperatives to take over the shares.

He noted that the magnitude of the situation when the assets worth billions were at stake should have forced the registration bureau to take the matter more seriously than it did instead of quickly incorporating a new company.

Caroline Egesa, the URSB Board Secretary argued that they went ahead and incorporated the company since government was a subscriber represented by John Muwanga, the then Accountant General in the Ministry of Finance. However, when quizzed by Katuntu whether there was documented proof of this she said there wasn't any.

MPs blamed URSB for the mess that led to two banks with the same name being in place at the same time leading to the loss of assets by the cooperative alliance during the closure of Cooperative Bank in 1999.

Mbarara Municipality MP, Michael Tusiime also read out to the URSB officials a letter from the registrar of companies written on 17th June 1999 indicating that Cooperative Bank of 1997 had never filed any returns since incorporation on particulars of directors and allotment of shares. The letter was signed by the Assistant Director of Companies John Ojuko.

According to Katuntu, the letter implies that the company never took off. Katuntu then directed that the Central Bank explains tomorrow who the directors and shareholders were of the bank that they licensed.