Tropical Bank thrived in Ugandan hands, but the others, not so much
The return of Tropical Bank Ltd has once again raised questions about the fate of the Libyan-owned companies taken over by Uganda last year following UN sanctions against the country which froze its investments around the world.
Bank of Uganda returned the bank to its majority shareholders - the Libyan Foreign Bank which owns 99 percent – on February 6, amidst sound applause and back-slapping for Ugandan managers credited for improving the bank’s balance and keeping it out the malaise that has befallen some of its contemporaries over the past year.
“I would like to assure customers of the bank to trust the new management and deal with them without any doubt,” BOU Governor Prof. Emmanuel Tumusiime-Mutebile said as he handed the bank over to Osama Rami Serrag, newly reinstated as managing director after stepping aside following anti-Libya UN sanctions last year. Serrag also represented the Libyan Foreign bank, through which the Libyan government owns Tropical Bank.
The bank’s chairman, former Finance Minister Gerald Sendaula, applauded the efforts BOU made to keep the bank in operation and sustain customer confidence but told Bank of Uganda: “Now that you have given it to us, we will only meet you for regulatory arrangements.”
“We had no problems at all,” said Sendaula, who was the bank’s chairman even before it was taken over. “I think we have even been performing better than other banks.
Outgoing Managing Director, Prince Kassim Nakibinge, said the bank was ranked between 10th and 12th, out of a total of 23 commercial banks operating in Uganda, with total assets estimated at Shs 250 billion.
According to BOU, Tropical Bank held assets worth Shs 244 billion at the end of 2010, which would indicate a slight growth over the intervening period.
Nakibinge is commended for having mobilised the support of Kampala’s business community, including businessmen Gasta Lule, owner of Ntake foods; Oil dealer Umar Mandela; Medie Ssebaggala of Ssebaggala and Sons; Hajj Katongole of UTODA; Yusuf Yahya of Hared Petroleum; and others, using their influence to stem a run on the bank soon after it was taken over by BOU.
Serrag said the current government in Libya [the National Transitional Council] was considering recapitalising the bank, and its other investments, to strengthen them.
Tropical Bank’s return follows the lifting in December 2011 of the UN sanctions against Libyan government investments, imposed early last year as former President Muammar Gadhafi fought a popular uprising against his government.
The bank’s return however raised questions about the fate of the other Libya-owned companies - estimated at the total value of US$375m -including Uganda Telecom Limited, National Housing Construction Company, Laico Lake Victoria Hotel, Tamoil East Africa and OILibya.
Of these LAICO Hotel in Entebbe, which has been under Uganda-appointed managers since March 30, 2011, is also reported to have done well following the removal of the Libya-appointed management, in which General Manager Mohamed Marghani was replaced by the bank’s Finance Manager Sarah Nabbosa as acting general manager.
“The hotel is still in the hands of the Ugandan government,” an official at the hotel who preferred not to be named told The Independent. “We have not been told of any plans for it to be handed back to Libya and are still operating under the Uganda government’s instructions.”
The official said occupancy of the 104-rooms hotel had been “moderate”, driven by the tourist seasons, but had substantially improved over the past year.
However, he said government had not communicated any plans to hand the hotel back to the new Libyan government. The same air of suspense prevailed in the other companies some of which have struggled without the benefit of Libyan government financing for the past year.
Key among these is the telecom company UTL, owned 69 percent by the Libyan state corporation LAP Green, which owns other telecom interests in African countries including Rwanda, Zambia and others. The other 31 percent is owned by the Uganda government.
Peter Kakaire, who heads UTL’s M-Sente facility, says they hadn’t got any information about returning the telecom company to its Libyan share holders. “So far we don’t know what is happening,” Kakaire told The Independent.
But he dismissed reports that the company’s operations had been crippled by lack of financing, and even core products like airtime were in short supply on the market.
“We are operating normally,” Kakaire told The Independent. “Those are lies.”
Libyan government officials have been reported in Kampala to begin to sort out the mess at the company but this was not confirmed by officials.
A source close to National Housing and Construction Company said it had been operating so well and was not bothered with whatever plans government was making to hand it over to Libya.
“I am told the company is rich enough it can sustain itself even without external support,” the source said. “It is well known and there is no way it can be affected, especially with the profits it is making.”
Reported to own assets in excess of US$70 million (including 5% shares in Housing Financing Bank, Uganda’s 11th largest bank) with annual turnover of US$6 million, NHCC is owned ...by the Libyan government and ... by Uganda.
However, the company’s fate hangs in the balance following a court ruling that awarded US$ 9.5 million to Ugandan businessman and Bukoto South Member of Parliament (MP) Hajji Mohamed Mbabaali in compensation for services rendered to the Libyan government which were not paid for.
The money was meant to recover a 10% commission in respect of a 2001 transaction through which Southern Investments - co-owned with businessman Habib Kagimu - represented the Libyan government in for recovery a debt of USD 166,757,826.86 from the Uganda Government.
While Nakawa Magistrates Court ruled in Mbabali’s favour in January, granting his shares in NHCC, an official at the court told The Independent he had shown no interest in pursuing his interest in the company and the file had been sent to the High Court.
The court award may save Kagimu from being the biggest loser in the Libyan upheaval, as his Tamoil East Africa appears to have walked away empty-handed after its contract to build and operate (for 2 years) the Kenya-Uganda oil pipeline, strategic oil reserves at Jinja, and other operational reserves along the route of the pipeline, was cancelled last year. Tamoil East Africa owned 51% of the pipeline project in a public-private partnership with the governments of Uganda and Kenya, which shared the 49%. The project has reportedly been retendered by the Ministry of Energy and Minerals after it was determined that the company no longer possessed the financial muscle to see it through.
Ugandan and Libyan government officials remain quiet about the fate of the other companies and how well or poorly they have weathered the storm of the past year.