BOU: Leaked documents raise concerns about the central bank
Kampala, Uganda | HAGGAI MATSIKO | Fear of heads rolling at BoU has intensified ever since it was confirmed that the Inspector General of Government (IGG) was looking into the accounts of top officials of the central bank, including the Governor Tumusiime Mutebile and his deputy Louis Kasekende.
According to informed sources, IGG Irene Mulyagonja has a trove of leaked documents that her team is going through as it looks into the wealth of the top officials.
In turn, more questions are now being asked about why these documents are leaking now and who is behind the leaks.
The documents, some of which are in the public domain, are assumed to be leaking as a result of point-scoring in a three-pronged fight over the take over and sale of Crane Bank by the central bank to DFCU bank.
One fight is between Sudhir Ruparelia; who was the majority shareholder in Crane Bank and BoU officials, the other is between Sudhir, BoU’s lawyers and DFCU, which bought Crane Bank from BoU, and the last is a clique battle among BoU senior managers. Now it appears that the battle has gone to the heart of Uganda’s financial sector.
According to informed sources, President Museveni is so concerned about the dwindling reputation of the central bank and its impact on the economy that he is looking to shake up the top leadership and even get rid of both Kasekende and Mutebile.
The only concern is that firing the two of them at once threatens to distablise the central bank even farther, yet it is a very sensitive institution with major implications for the entire economy.
The issue reportedly was raised when Kasekende met a very close contact of President Yoweri Museveni a few months back.
At the time, Kasekende appeared about to be sacked. But then after the meeting, talk of imminent sacking abetted. Only to resurface now.
Kasekende meets Museveni’s contact
The Independent has recently been given details of that meeting and now reports that
Kasekende had been looking to meet President Museveni in vain and had just returned from a work trip abroad that week when he met with Museveni’s contact person.
At that time, reports had just emerged showing that President Museveni was looking to shake up the top leadership at the central bank partly because of disagreements between Kasekende and Mutebile.
Insiders say Museveni was concerned that these disagreements amongst senior officials at the central bank were increasingly damaging its reputation for monetary policy integrity.
The main disagreement between them appeared to be a fall-out from the process of BoU’s takeover and eventual disposal of Crane Bank.
The main contest was on how to resolve the crisis that erupted after the sale of Crane Bank to DFCU; the myriad court suits and countersuits and the negative publicity; including allegation of insider dealings and corruption.
Faced with these, Mutebile was said to favour a quick negotiated settlement as ordered by Museveni. But Kasekende insisted on a court battle, which he insisted BoU would win. While the successful outcome Kasekende promised was uncertain, the court case – it was feared – would be drawn-out, drag BoU in the mud, and cost a tonnes of cash in lawyer fees.
By the time Kasekende met Museveni’s contact person, he was also in disagreement with Mutebile on how BoU should resolve issues of the shilling which was depreciating rapidly against the dollar. One side reportedly favoured injecting dollars into the system but the other feared the dollars would be gobbled by speculators and result in an unsustainable spiral. These events, officials were concerned were further eating away BoU’s reputation.
At the meeting, Kasekende reportedly raised concerns that he was being witch-hunted. And even though he did not put it explicitly, he reportedly suggested that his major concern was that Mutebile’s allies were fighting him.
At this point, Museveni’s confidante reportedly dropped a bombshell.
“May be you should both leave,” the confidante said.
Insiders say that from that tone, the scenario of getting both Kasekende and Mutebile out of BoU was being considered. There was a sense Museveni’s contact was putting out feelers on what Kasekende’s reaction to leaving BoU could be, especially what factors Kasekende would raise in his case.
Part of the reason for this is that Kasekende is not an ordinary banker. Apart from being a well-published and well-respected economist internationally, for years he has been seen as Mutebile’s natural successor.
And he belongs to Uganda’s two biggest political constituencies—he is a catholic and a Muganda. Not an ordinary Muganda, he is close to the powerful Mengo establishment. The catholic establishment and Mengo would not take easily to his firing.
But Museveni might also not find it very easy to fire Mutebile, a long time loyal servant who also belonged to the powerful Kigezi region. In fact, part of the problem between Kasekende and Mutebile was down to Museveni having his hands tied.
It is the reason Kasekende was possibly not appointed the Governor when Mutebile’s contract expired in 2015 as had been anticipated.
According to informed sources, when former Prime Minister Amama Mbabazi declared intention to challenge Museveni in the 2016 presidential election, the President felt that he could not replace Mutebile as this would spoil the Kigezi vote.
He decided to renew Mutebile’s contract. He, however, reportedly consulted the PS/Secretary to the Treasury Keith Muhakanizi on whether he could only renew the Governor’s contract for two years. But apparently, Muhakanizi said that the laws provided for only five years.
A feud ensued as Mutebile now sensed an opportunity to thwart Kasekende who was waiting for his job.