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THE LAST WORD: BOU’s war with Sudhir

Crane Bank’s Sudhir Ruparelia (R) listens to Bank of Uganda Governor Emmanuel Tumusiime -Mutebile at the opening of a new branch in Jinja. INDEPENDENT/JIMMY SIYA

How the central bank’s handling of the problems of Crane Bank showed lack of imagination and strategy

THE LAST WORD |Andrew M. Mwenda| I have always had high respect for Bank of Uganda (BOU) because of its management competences. Since the collapse of Uganda Commercial Bank in 1999, BOU has kept our banking industry stable hence its impressive and sustained growth. For instance, nonperforming loans as a percentage of total loans fell from 40% in 1995 to 5% in 2015. Since 1995, commercial bank assets have grown from Shs700 billion (Shs4 trillion in 2016 prices) to Shs24 trillion; deposits from Shs383 billion (Shs2.2 trillion in 2016 prices) to Shs16 trillion. All other indicators – profits, wages, branches, accounts, have grown exponentially over the same period.

These achievements were only possible because of effective regulation by BOU. However, the banking sector has grown in size and complexity and BOU seems ill equipped to handle this. Indeed a lot of the competences the state in Uganda acquired during recovery, especially in the field of economic management, are tactical not strategic. They ensure efficient resource allocation but fall far short of what is needed to transform our country from a poor, agrarian society to a modern industrial economy.

When Crane Bank’s nonperforming loans eroded its capital adequacy, BOU asked its shareholders to recapitalise it with Shs165 billion within one month. The main shareholder, Sudhir Ruparelia, said he didn’t have that cash and asked the central bank to lend it to him. He offered his shares in companies on the stock exchange and his real estate holdings as collateral. BOU refused.

Crane Bank was the fourth largest bank in the country with Shs1.8 trillion in assets and Shs1.4 trillion in deposits. It was owned by a Ugandan who had grown it from scratch in a market dominated by multinational banks like Standard Bank, Standard Chattered Bank, Barclays Bank, etc. This was a sign that Crane understood the needs to local borrowers better than foreign banks whose lending rules are set in Johannesburg, Dubai, and London.

Yet Crane had made many mistakes. The strategic challenge for BOU was to balance the Crane’s internal mistakes against the benefits it brought to Uganda’s economy generally. To be fair to BOU officials, there were some efforts to do this but they were half-hearted. Also BOU officials tended to confuse Sudhir with Crane. When he acted in a manner they felt was arrogant, they got angry and sought to use the law to whip him into line, thereby missing sight of Crane’s strategic role/value in the wider economy.

Since 2000, BOU had faced some commercial bank failures. But the banks involved were small with deposits of not more than Shs20 billion. These banks did not pause systemic risk to the banking sector. So BOU could shut them down and pay their liabilities off her balance sheet without any significant harm to the economy. The problem was that if Crane Bank failed, BOU’s balance sheet could not pay for its failure and the wider economy would suffer. This is why handling Crane required both strategy and imagination.

69 comments

  1. Africa’s greatest thinker alive…is there a field in which you have no knowledge?

    • Sasha, this is very flattering. I will buy you a beer if and when we meet

      • Andrew, as a friend to Mr. Ruparelia, don’t you think you have an actual or perceived conflict of interest in writing this article? Also, having been privy to meetings between BoU and Mr. Ruparelia, discussing your observations from those meetings seems not proper to me unless you obtained their go ahead prior to publishing this. I also believe BoU is mandated to regulate and follow the law as written. This strictness in sticking with the spirit and letter of the law has brought them the success you aptly described. If they had handled the Crane Bank issue in any other way, it would have raised concerns of unfairness in as far as this is not the first bank to go down. Lastly, I believe in capitalism, where companies that are managed well succeed and those managed otherwise collapse. Crane bank fits the latter from what I have read so far.

        • i truly think that having been part of those meetings, then this advice should have been given in there.

          There’s actually conflict if interest

      • Nakyambala kimbsotswe

        Massaging that ever increasing ego 😊. Good thinker me thinks, not GREATEST. Where then would you rank Mandela, Nkurumah, etc.

      • Great insight!

        What would it cost me to get my hands on to that U.S. Federal Reserve documentary?

      • I will buy you a beer when we meet, which is our destiny for the work we have to carry together. You have been a great teacher, I a petulant student. But I needed to learn some lessons. I wish you would write a plan for Uganda’s industrialisation. Just read about BUBU, so exciting. We can make it and reach out to the rest of Africa and the whole World.

  2. ejakait engoraton

    FLATTERY gets you very far.
    Look how it has brought out AM from the woodwork.
    All along I used to think that he never even bothered to read the comments.
    I have seen several times when challenges have been made to him, even most recently by RWASUBUTARE but all went unanswered.
    And here goes our SASHA, who hasn’t been around for sometime flattering and the great man and a drink is offered.
    They also say the way to a fools heart is flattery

    • don’t expose him so openly ejakait. we must try with hope that we may rehabilitate him yet. he was a nice guy till recently…. when he started supporting weird ideas and deeds (like the hand-shake) and others which he kept mum when he should have used his forum to speak up. so ejakait, AM is doing sins of commission and omission. but we shall retrieve him. can’t afford to lose him.

  3. ejakait engoraton

    I argued at one point that in certain cases one needed to apply political solutions to financial problems.
    But this must be in a system that is fair and rational.
    My argument was based then on the demise of Premier Building Society, a financial institution that was owned by a Ugandan, Sam Ejangu(rip) back in the 80s.

  4. ejakait engoraton

    Sam had been clever enough in that he had registered Premier as a building society but it was operating as though it was a bank mostly in as far as taking deposits were concerned.
    But that is where it stopped and he could operate as he wished because he was not under the supervision of BOU

  5. ejakait engoraton

    Soon other locally owned banks, most notably ICB of Tom Kato, TEEFE, which was looked at as a Baganda bank and Greenland were all allowed or made to go under where the prudent thing was to let them survive with help from the government / BOU.

    • The owners of Greenland Bank actually pleaded that they had received capital injection of some US$70 Million from Saudi Arabia but H.E. the Ssaabalwanyi was adamant that the bank must be closed.

  6. ejakait engoraton

    This had the unfortunate effect of creating the impression that Ugandans are incapable of managing/owning financial institutions.
    Despite all pretentions people look at Sudhir, and he too probably considers himself first and foremost, an Indian or at best British, unless where it suits him to be Ugandan

    • “””Different sources say President Museveni has given full backing in as far as the prosecution of Sudhir, his daughter Sheena who has been superintending Crane Bank on behalf of his family and the other shareholders of Crane bank are concerned if found guilty.

      The forensic investigations are expected to be completed within a month to pin the top individuals who were responsible for causing the massive erosion of capital.

      Sudhir is said to be speaking to his friends high up in government asking them to speak to the president in turn to save him from prosecution and attachment of his properties as he races against time.”””” TheUgandan 24/7/2017.
      ejakait, methinks this prominent Uganda Citizen called Sudhir was given free-hand to do as he peased and do he did. these are the consequences. Andrew Mwenda; so right in his own eyes and so set in his ways sees more fault by BoU than by his friend; which friend sold a public institution to himself by using proxies and back-door ways to dupe the public. If sincerity is old-fashioned and obsolete in the modern good business practice, then Mwenda and Sudhir are right and it is those who see otherwise BoU included, wrong. But methinks theft, even in politics, the second oldest profession after prostitution is not condoned. Mwenda, Luzira is no respecter of persons.

  7. Two issues raised by Andrew:
    1. BOU (the lender of last resort) refused to lend 165b to Cranebank.
    2. BOU stopped Crane from giving out new loans, overdrafts, bid bonds, letters of credit, performance guarantees etc. i.e. from doing any new business.

    1. Why couldnt Cranebank and Sudhir borrow from other lenders locally or globally? Could this point to creditworthy concerns over Crane bank and Sudhir which one can not blame on BOU?
    2. The actions taken under issue no. 2 are clearly written in the financial institutions Act 2004 and are meant to protect customer deposits. Did Andrew expect BOU to act outside the confines of the law to defend his friend in which case customers would have had a very good case against BOU?

    Finally the collapse and bailing out of the US banks was due to collapse of the whole sectors and therefore can not be transfered/equated to an isolated bank collapsing due to slef-inflicted internal weaknesses

    • Crane Bank was controlled by the Ruparelia family at 47 per cent, with MS White Sapphire, a company domiciled in the Mauritius, holding 46 per cent of the shares.

      Ms Justine Bagyenda, the executive director supervision at BoU, says the former top management and shareholders of the bank will soon have to explain why the bank became significantly undercapitalised in a space of less than a year.

      “There is a forensic investigation going on to find out whether there were people involved in the loss. The investigation will have numbers as well as legal implications,” she said.

      In the financial world, forensic audit investigations are often carried out in order to evaluate whether there is enough information to bring the matter to court for criminal proceedings basing on whether there was fraud, embezzlement, excessive insider lending, weak corporate governance and whether financial claims can be made against the individuals responsible.
      Monday, July 24, 2017 edition of ‘THEUgandan’

    • Thanks @ Rwasubutare, point noted

  8. Crane bank,bank of our own????? Sudir is Sudir, Sudir is crane bank,crane bank is Sudir… that is BoU’s main argument, if you lend to crane bank your lending to Sudir… its like someone defrauding you money and asking you to lend him more first so he can do business and pay you back later.. in short its someone “playing” in your own money to get richer at your own cost.

    Two other observations;

    Sudir has confiscated so many buildings in the name of non performing assets (loans) by many borrowers through his other business arm Crane management services and …its alleged that these include (Somani brothers_Bauman house that now houses MPs,Ferroz Kassam_Speke hotel,Anis mamdani_Namulanda Rose farm,Kampala Parents _Edward Kasole,sese gate way beach,crane bank head office,Riyarz kurji dolphin suites bugolobi,emka house by emma kato, bombo road, Sebagala and sons etc etc…….the small ones i will not mention. WHY DID HE NOT LEND OR CAPITALIZE OR RESTRUCTURE THESE LOANS TO SAVE STRUGGLING UGANDAN BUSINESSMEN, he would argue he is simply following the law,courts would agree in all these takeovers. why now use politics to override the same law?

    Mr. Andrew has been inconsistent in the last 5 years,he has thus eroded his trust in public,while some of his arguments may be true,the inconsistency is not proper and has affected you arbitration or cousel.. you may need to be more principled.

    Its thus in order for BoU to use the Law as Sudir has been using the law in those takeovers.

    • OLD MAN of the clan, grow up and live to your name and title. If you continue to side with suspects and speak on their behalf, you will soon lose credibility. Need I tell you that credibility is like virginity; once lost it is gone gone gone irretrievably? When you were still a child,in 1972, one man, who was rumoured to be the richest in Uganda, attempted to bribe another very big man who then ruled Uganda. He was sent to Luzira post-haste and from there, deported. People who were adults then know the details because it was all over Voice of Uganda (the paper). fact: Uganda the nation-state is host to all homeless who come to it; but it is best told to them that “there is a limit to what you can safely eat; risking to vomit it all when you exceed it” paraphrasing Gen. Rukara rwa Magigi (Commander of King Kabalega’s Special Forces) as told by my mentor Irumba.

    • Some clarity I need from you Andrew Mwenda. Were the actions of Sudhir and his top management in defrauding the bank criminal? Was it possible to rescue the Bank but not Sudhir? Do you not think selling the bank was a way of rescuing the business and not necessarily the name “Crane Bank”? Increase in the volume of business for DFCU is still a win for the local industry. This was not a Bank, it was more of a “ponzi scheme”. Somewhat reminds me of Bernard Madoff.

  9. I think that you are indeed correct in your analysis although the issue is that this is nothing new what be fell crane bank is exactly what happened to Greenland bank and CIB if only they were recapitalized and encouraged to have more frugal and bettet management they would still be here today so in that sense what you say is simply what everyone else has been saying all these years only that this time unlike the previous ones it affected a personal friend of yours.

  10. wouldn’t it serve us better if we talked about “operation wealth creation” and not these small, worthless fights between Museveni and Mbabazi? If one has to kill the other, should we all be dragged in?

  11. Thank you for your article! Have one question: why should BOU lend sudhir money when he was sending his cash abroad and why is your article silent on this accusation by BOU?

  12. Why are you sugarcoating serious fraud, insider lending, and other crimes by the bank’s greedy owners simply as ‘ internal mistakes in the bank’. A mistake is something that happens accidentally without intent. What Crane owners did was no ‘mistake’. They intended from day one to defraud the Ugandan tax payer. And you are now blaming BOU for having insisted on enforcing the law to stop these crimes?? Besides, I would not trust you as an honest analyst of this issue given your obvious conflict of interest on the side of the bank. We used to see the adverts they used to place in this newspaper, just one example. And If you wanted to demonstrate to the governor examples of bailouts, why didn’t you show him Charles Ferguson’s ‘Inside Job’, probably the best documentary out there on the 2008 global economic meltdown and the role of Key financial institutions in it, and how the U.S taxi payer had to suffer ‘double punishment’ by bailing out the same thugs that screwed their lifetime savings? Mitt Romney in 2011 wrote a New York Times titled ‘Let Detroit Go bankrupt’ which probably led to his loss to Obama in 2012. But it would be appropriate to use it here becuase Sudhir is no industry and I don’t think he should be shown any deference (How many Ugandans, except cooks and handymen at his properties, does he employ?): Let Sudhir go bankrupt; Sell his properties and recover tax payers’ money.

    • Now someone is talking. Indeed why should Sudhir’s activities of stealing from his bank ie depositors’ money, be not considered serious financial crimes? Is this not a culture of impunity overlaying the whole political/economic ethos of the country. AM blind endorsement is like riding a tiger. I am beginning to feel sorry for him and what is left of his journalistic principles.

  13. 1.I love discussions that have economics ,G7 and Law in them they bring out the best in me.
    2.With the liberalization of the economy and emergence of rich businessmen, availability of experienced and technical personnel ,BOU and other Banks in the world will have to amend the requirements for one to open up a Bank without shareholders e.g Cant Bill Gates open a bank?why would he need shareholders?Sudhir could have been a victim of such old fashioned requirements where he is forced to form partnership with others for the sake of meeting BOU ‘s requirement.
    3.What is BOU after?Clients of Crane Bank have not lost money?The balance of inconvenience is minimal coz Crane Bank paid taxes and employed Ugandans
    4.How will BOU prove that Sudhir was the sole proprietor of Crane Bank yet they received the names of shareholders?
    5.ICT is a new innovation that is a mother of all fraud there is a possibility that there was deliberate interference with the ICT system by both BOU and Crane BanK thats why some monies could not be accounted for.
    6.Why is BOU more interested in the sale of Sudhir’s property and not the sale of his shares in the Stock Market? Has it become a tit for tact game?
    7.BOU seems to be in a hurry to dispose off Sudhir’s property what cant wait?the man is even willing to pay why put him under pressure?There are charges one pays when transferring or withdrawing of huge sums of monies if Sudhir didn’t pay let BOU list those transactions.
    8.BOU should put a bounty hunt on Kalan the former MD.
    9.In Law,there are retainer agreements that can be cancelled or withdrawn if a client for example, fails to honour legal fees or fails to disclose facts that are essential to the case.I guess Masembe the former lawyer of Crane Bank departed ways with his clients on those grounds therefore,Its just unprofessional for Masembe(He was Crane and Barclays Bank’s lawyer) to be the one to be in the team prosecuting his former client.
    10.Its good that M7 intervened i time otherwise we risk having our guest poisoned in Munyonyo during conferences.
    11.Sasha you better leave Andrew alone if you want peace on this page.
    12.Rajab do you have a Bank Account?

    • I had two which have since been transferred to dfcu (019…48 and …..0009) and another with lloyds tsb (Scotland). Happy???

  14. James jones bantu

    As we all know sudhir had numerous finacial interestes in Uganda and I suspect a broad too. Given that some of his interests were shared with top people in uganda like his excellency. The take over of the NBC which solely belonged to top dogs in uganda so that news of sudhir empire taking a nose dive was in waiting for people who understand sudhir and his dealings, he can never survive the wrath of the top dogs. He enjoyed in his days dead big deals now it’s time to pay.

  15. James jones bantu

    Crane Bank was established for one major cause ” to swindle money from ugandan, if thorough and open investigations are carried out on shudhir’s dealings, the results could cause Ugandans to develop stomach runs and high blood pressure. Keeping other sudhir’s dealings under the carpet and talk about crane bank alone is not right, so sudhir has a lot of questions to answer and we know he has alot of top government secrets which he may soon through into the open. The fat deals he got from government and that money deposited in crane bank, all security guards in Iraq, get paid through crane bank and many more big deals he gets, sudhir should stop mourning and just pay back what he owns, and I think this is the beginning of the nose dive,more tricks will be played to flatten him financially Watch this space. .

  16. Oh Mr Mwenda, what an unconvincing apologia for Mr Ruperalia
    -First, by stating “friendship” with Mr Ruperalia you jettisoned any semblance of journalistic objectivity

    -you refer to the problems inside Crane Bank as “mistakes”; even the most casual follower of the affair knows it is much more than that

    -you gloss over the fact that the recapitalization of Crane Bank demanded by BOU was only Shs165b. Surely Mr Ruperalia’s massive real estate holdings are more than adequate to raise, by mortgage or sale, that much money. They are, on paper. But again, there is more to Mr Ruperalia than meets the eye (even the eye, apparently, of a top journalist) It appears that his actual net worth and creditworthiness are at question.

    -You paint a picture of BOU as overzealous enforcers. Nobody in Kampala believes this. They gave glowing evaluations to Crane even as all sorts of suspect transactions were going on.

    -You neglect to mention the odd actions of other agencies; NSSF failed to notice for years that one of the biggest corporations in the country was not remitting pension contributions for its workers; A very senior government official who is by law not allowed to interfere with management of the central bank apparently arranged meetings in his office between BOU and Mr Ruperalia “to iron out the matter amicably”.

    • Well sought analysis. Though not agreeing with you lately on politics but this was a masterpiece of economic analysis the old man of the clan. Thank you!

      • Wasn’t it just? It showed the depth of analysis the Old Man of the clan is capable of. I cannot wait for his views on how to advance the goal of #Bubu in Uganda. The only show in Africa in the 21st century should be about local transformation and deploying innovations aimed at adressing the continent’s dilemmas. Less politics…

  17. The answer to the question of whether banks should be rescued is about economics and incentives. But the problems banks create and how these problems are solved are also a matter of morals and ethics – law and justice. Uganda welcome aboard.

    Government support for insolvent banks violates a fundamental principle of economics: We should avoid supporting unprofitable activities. We do not rescue a business that is bankrupt. Instead, we should allow businesses that are profitable to take over. Over time, this improves the conditions for a healthy economy.

    When the authorities bail out fraudulent banks, some parties are spared the consequences of their own choices. Bailing out investors and owners using public funds conflicts with people’s ordinary sense of fairness, promotes despotism, corruption to mention.

    Moreover, government support for insolvent banks undermines the stability of the financial system. When the authorities bail out banks, the incompetent and fraudulent bank owner merely transfer their losses to others, while reaping the gains in good times.

    When the government assumes a substantial portion of bank risk in this way, there is a widespread perception that the authorities in reality stand behind banks, banks may take insufficient account of the risk of losses when making decisions. In particular, the risk that things can go horribly wrong may be underestimated, because banks do not have to bear the consequences of a crisis. By bailing out banks, we in turn reduce the motivation of banks’ owners and creditors to take full account of the risk associated with their activities. The pricing of risk is easily set too low. Banks may therefore end up taking excessive risk.

    Government should not reward incompetency whatever the cosmetic benefits.

  18. ejakait engoraton

    In making your above statements, firstly you assume, and I’m 100% sure on this, wrongly, that economics is divorced from politics and likewise from the real world

  19. ejakait engoraton

    You again make the wrong assumption that economics is an exact science where say 1+1=2, even though this is also not always the case

  20. ejakait engoraton

    You seem to be unaware that economics laws or principles are assumptions based on other or a variety of factors and that all these are based on the universal proviso ‘ ceteris paribus ‘ or all things being equal, which they never are.

  21. ejakait engoraton

    Sometimes, you can not divorce politics from economics/ finance, that is why we have public goods, subsidies, taxes etc.
    Just like you need to make the right call when making economic / financial decisions, you have to make the right political call with issues that involve economics or finance

  22. ejakait engoraton

    That is where politics comes in and makes laws that regulate business/economics/finance, and if these are made and regulated fairly and objectively, then all is well.

  23. @ Rajab: Ugandans who have bank accounts in Europe at least have accounts with international banks like Barclays,Stanbic or Standard chartered this means you are telling a lie that you own an account in England.

    @Ejakait: Politicians don’t poke their noses in the business of professionals have you ever heard politicians determining interest rates?

    @ Bantu what money was swindled from Ugandans have you heard any former client of Crane Bank complain that he lost money?it was Ugandans’ poor paying habits that caused crane bank’s down fall why is BOU not interested in following up those loan defaulters?When Green Land Bank was closed they had to pay clients using money from the treasury(our taxes) MPS and BOU officials did not find it odd was it coz Kggundu was 100% Ugandan?

    Barclays,Stanbic always auction property of loan defaulters the only difference between Crane Bank and other international Banks like Barclays is that they are based abroad(there is a way Ugandans quake and respect foreign owned businesses Secondly, banks like Barclays are owned by wealthy shareholders like Sheik Mansour of UAE whom Ugandans dont know if he was based in Ug like Sudhir, we would also think he is a con man.

    • And you forgot to add Winnie; that Kigundu NEVER transferred his (Greenland’s)earnings outside Uganda….. which Crane and Sudhir have done. To bail out Sudhir and not bail out Kigundu would be more racist than apartheid……. practiced by BLACK men in favour of………. (you can feel in the blanks ejakait)

      • @ Rwasubutare:Kiggundu had nothing to transfer abroad besides that,there are more business opportunities abroad so don’t blame Sudhir for investing abroad.

        BOU was afraid to sell Sudhir’s shares in the stock market coz he would dis-stabilize the economy.

        Is it BOU’s role to collect transaction fees for banks or URA?Where is URA in all this?

        When ICT systems are off in Ug,just know that dirty deals are being conducted.

    • Which international banking book are you reading from? I must have missed that headline- my bad.

  24. ejakait engoraton

    WINNIE as usual, you are all over the place.

    Interest rates is not the only way that the government makes interventions.

    I am sure you know that in the UK the government had to bail out most of the banks and some are almost owned by the taxpayer.
    I think without going into details , the issue of Crane bank is well above your pay grade and its not worth my while going into arguments with you.

  25. The role of a regulator is to regulate, not to facilitate. If a business needs additional support, be it capital, technology, intellect, expertise, they can bring in additional shareholders, and hire expertise. Facilitation quickly would lead to BOU having a vested interest in the bank, which would inevitably colour the decisions they take on it. This is why auditors are independent – to the extent that they should not provide significant other non-audit services to audit clients. It is quite an elementary practice, and common sense (and experience) tells us that it is the right way to go. Also, to claim that Sudhir and BOU are “equally culpable” in the sad demise of the bank is quite a bold and empirically incorrect statement: One party upheld the law and regulations in the manner it is currently mandated to do (albeit not in the way you suggest they should do), while the other seems to have used his position to fleece the bank to the benefit of his other companies. How can you equate their guilt in the matter?

  26. ejakait engoraton

    Sudhir definitely seems to have learnt a thing or two from BCCI, a bank which was set up at the time for purposes of fraud and money laundering and which was wound up eventually but not before they had virtually broken every law in banking.
    It had been set up by a Pakistani national and one of the rich Ugandans of Pakistan origin was a beneficiary of an unsecured loan of a reputed £30 m at the time.
    He used this money, which was originally in his late wife’s names to buy properties and is reputed to have made her sign transfer forms on her death bed and later had legal battles with her children

  27. Crane Bank was salvaged by BOU, when it was bought over by DFCU. Iam failing to understand Mwenda’s argument? Should top managers, failing the due diligence test, be accorded immunity because of their mistakes worth billions? Mwenda fails to separate the business entity from Sudhir.

  28. Mwenda should know that Bank of Uganda has exercised its regulatory mandate. Its Priority as a regulator is to ensure prudential banking practices. Bank Of Uganda is one regulator that exercises a lot of restraint on Banks. Do you want it to work like UCC which closes FM Stations that host government critics? If Bank of Uganda was sleeping, we would not be having this debate. In terms of failing to lend as a lender of last resort, the Central Bank too, like any lender uses its on credit scored that probably this time round rejected Crane Bank, especially with the kind of management it had. Mwenda should also know that BOU in exercising its supervision roles, develops its own reports and provides the Banks with timelines to repair any anomalies found. Why are you silent on compliance reports that Crane Bank has been receiving from the Central Bank over the years. I think BOU was excessively restrained to take the ultimate action, as it allowed management of the bank, over the years, to make adequate reparations.

  29. Robert Masereka

    Andrew, in your whole article you seem to be blaming BOU for crane bank’s failures. The point is how did crane bank get there. It was deceit by Sudhir from the word go. I think most ugandans would sympathise with banks if they failure b’se of genuine market failure and a sluggish economy like we have now but for for sudhir to siphon money from his bank intentionally was outright theft and therefore malice aforethought. such a person should not be protected and doesnot deserve any soft landing. Let us encourage financial discipline and punish severely financial indiscipline. I think sudhir is lucky that he knows powers that be but seriously what he did would have landed him in jail.

  30. I saw a few comments pointing to Andrew s bias, after reading the article I find it very honest due to the fact that Andrew points out that crane bank made mistakes. Am not even sure I read the whole article as page 2 failed to open.

    Some of the mistakes involve land, what Sudhir did is legal as several large companies such as Walmart do the same , the problem is that he used bad legal advice. The core business of crane bank is banking not land, if u look at what Stanbic did, they sold all the ucb properties including the big prize which is now Cham towers.

    By the way has anyone read the comments using a phone, the rendering is awful

  31. ejakait engoraton

    Yes, Sudhir belongs in jail.
    He did what another noted criminal Robert Maxwell, did.
    How do you explain the theft of NSSF contributions of his employees.
    I remember one time someone was being hounded for NSSF crimes even when he claimed he had not reached the threshold in numbers where one is supposed to comply.

  32. ejakait engoraton

    Mugarura, how naive!!! Just because Mwenda states the very obvious, by stating that Crane bank made mistakes, does not make his article objective.
    In fact by calling what Crane bank did mistakes is the understatement of the millennium!!!!

  33. ejakait engoraton

    There is nothing patently wrong with a financial institution dealing in real estate as long as it is done within the law.
    Sudhir used his bank to lure unsuspecting customers to borrow money using their property as security.
    The money lent was bank money and the process used to attach and dispose the properties was wrong, which property ended up in the personal ownership of Sudhir with the loan being designated a bad loan, even when the property was attached as recovery.
    This nearly befell Dick Kizito who was only saved by state intervention.
    Others like Capt Roy among many, were not so lucky.

    • What is naive is failure to comprehend the basic English I typed. If the land was fraudulently taken that’s the matter for the courts – and that was not the thrust of my argument. English as a foreign second language can be difficult for many people. I can explain to you my take on this matter but I can’t comprehend it for you. A bank’s core business is not land / real estate and what I stated earlier is very simple. It makes business sense to transfer it elsewhere as is a common practice , I did however note that his lawyers or whoever advised him to take the route he did, could have made the advice based on limited legal knowledge, crime or fraud. A smart lawyer could have given him good advice – that can’t be too hard to understand Ejakait, can it ??

  34. James jones bantu

    From Luzira to a tycoon? Sudhir’s dealings should be investigated not only crane Bank, but also other deals, crane Bank was a mere conduit for dirty cash, nothing less than that. Man was in Luzira for one year for fraudulent deals, so if a criminal like sudhir can be allowed to establish a Bank what would you expect? . Sudhir is just a broker for top people in uganda, if some us can remember a scandal about campy called premera or premier own by sudhir and his excellency so that was one the company sudhir owned and Museveni or NRM has interest in it. It we can recall the basaja balaba scandle museveni him self got in involved on several occasions, and he was on basaja balaba said, alot of cash was lost by Bank of uganda but that is how museveni and many government officials make money, and attribute the cause to the broker. SUDHIR IS JUST A BROKER FOR MUSEVENI.

    • in other words, he should not have been given an 8 foot pole to open a bank account, let alone own a bank. please remind me of the year he was in jail for 1 year on fraud charges, am becoming old

  35. ejakait engoraton

    What I find naive and probably a little stupid is a person who says an article is objective even when by their own admission they only read one page of it.
    So your judgement is based on AM admitting that Crane zbank made mistakes, when he actually committed crimes, and reading one page of a two page article.
    BRILLIANT

  36. It seems this is the malady (and perverted strategy) of too-big-to-fail afflicting commercial banking. No bank should hold the country hostage to their failures just because if they collapsed the economy too collapses. This is why the global economy was brought to it’s knees — because commercial banks became too big for their own good and the good of everybody else. They’ve put in controls but the banks have started rolling them back to the state of affairs that existed before the great recession. These banks are over-leveraged. They borrow too much with little, threadbare capitalization to support their unscrupulous ways and risky deals and transactions. When they collapse, guess who bails them out? You are right, it’s the tax payers. It is called corporate welfare. If a bank isn’t viable any more let it go under. That is what capitalism and how it works. To keep bailing failing banks is corporate socialism.

    • Otecho, there is no harm in practising what you have referred to as “corporate socialism”, as long as the practise is a known public policy. What we are currently witnessing in our economy is what Karl Marx viewed capitalism for what it was/is. Marx generally viewed capitalism as the unstable system which only solved the problems it generated by creating even greater obstacles in future. This is so similar to what you have described here as a malady (“too big to fail”). And the eventual outcome was what he described in his famous passage at the end of volume one of ‘Das capital: “Along with the constantly diminishing number of the magnates of capital, who usurp and monopolise all advantages of the process of transformation, grows the mass misery, oppression, slavery, degradation, exploitation; but with this too grows the revolt of the working class, a class always increasing in numbers and discipline, united, organised by the very mechanism of the process of capitalism. The monopoly of capital becomes a fetter upon the mode of production which springs up and flourishes along with, and under it. Centralisation of the means of production and socialisation of labour at last reach a point where they become incompatible with their capitalist integument. The integument is burst. The knell of capitalist private property sounds. The expropriators are expropriated.” From Marx’s passage, one can rightly assert that Sudhir has been “expropriated.”
      I what to play the “devil’s advocate” here (not that I am not), in a narrow sense it would appear that I am in support of Mwenda but I what to be “Ugandan” for once. The Central Bank can carry out such operations as may be consequential or incidental to the exercise of its powers and discharge of its duties under a particular Law. Among the many roles/duties of a central Bank is to “supervise and regulate” which is a monetary function. Under this function, the central Bank monitors the activities of cheque clearing and wire transfer services. Which could include; inspecting, supervising and regulating other financial institutions so as to ensure they are sound and safe. The argument is, how did the central Bank let Crane Bank carry out these fictitious dealings without any timely intervention? The only logical conclusion is; “incompetence.” Otherwise it points to an “in-house” connivance with parties within the central bank to defraud the depositors.
      The Central bank also acts a “lender of last resort.” Under this duty, the central bank stabilises the economy. It also lends to prevent the ambiguous effects on money supply- preventing banking panics. The closure of a bank has a chilling effect on the investors- it reflects on the performance of the economy. It is therefore in the interests of government through its agency (central Bank) to provide assurances to the investors. It is therefore, very clear that the Central Bank (BOU) not only failed to perform its supervisory and regulatory function but also failed in its duties of lending to Crane Bank which had chilling effects on the economy / portrayed it in bad light.

  37. James jones bantu

    Sudhir’s companies are among 60 companies in uganda that exempted from paying taxes. So he make a chunk of cash from duty free imports, and swindling money from uganda.

  38. James jones bantu

    How was a criminal, chief allowed to establish a Bank in uganda. The so called investors are mere chiefs nothing more that, not only sudi, but nearly all foreign investors come to bankrupt our country, uganda is even more exposed to fraud perpetrated by the so called investors, whom museveni is obsessed with. Those chiefs must be apprehended and sent to Luzira.

  39. James jones bantu

    Andrew, I can’t find the button to edit my comments, any options to edit my comments pls.

  40. James jones bantu

    Not in a minute, I will ever accept that sudhir own all those investments by himself. Never it can be, sudhir was a poor man just recently until he made contact with his excellency and plans were discussed and sudhir was to turn into Museveni’s top gun. If true then this war is between MUSEVENI vs BANYAKIGEZI, and we know Hon. Amama Mbabazi,Mutebile and many more big guns are part of them. These people lost their bank and that was done within ours, NCB was gone. These Banyakigenzi have money more than any other tribes in ugandans, hence they can get what they want. Finally sudhir will throw in the tawel and go to exile or risk being chewed like peanuts. In all this war it is Mr museveni loosing the battle as Mbabazi digs deeper. It’s easy to cripple museveni’s government financially,subsequently leading to the fall of government. Crane Bank was a good start because that is were Mr museveni does his deals and get money to support NRM, the fall of sudhir might be the beginning of museveni’s nose dive.

  41. The Exponential Law… (Wanting to know everything… ends up knowing nothing). Sometimes thinking that you have knowledge of everything leads you to write such trash…. If BoU is the regulator why shouldnt it exercise its mandate to close Crane bank? was Crane bank the first to be closed? where were you when other bank were being closed? Where is the fiduciary requirement from you a citizen when someone is fraudulently taking our money to his own benefit? is it just because he is your friend?

    So u give Sudhir 165m to recapitalise…what happened to the innitial capital anyways? Your thinking is for an ordinary chap… think like an accountant. But then yo not. U r just a know everything guy… ZERO.

  42. godfrey kambere

    wonderful debate but was Terp consultant part of Sudi’s advisors?

  43. James jones bantu

    The colapse of crane bank is already yelling good information of the network of cartels that crane bank operated, running under the knowledge of sudhir. Sudhir was a conduit for cartels to do the laundering of dirty cash. People like an in a hers who took sh 110 billions from crane bank , how did that happen, now investigations are revealing top secrets for the first time. AMIN HERSI account revealed a series af accounts being operation by her in crane bank and the manor in which that monies was moved to various account in different region of the world is very very suspicious. This lady is just a front for big guns in government, now that the beans have spilled out, let us just waint for the burble to bust. Too much plunder where is actually uganda hending to? Disaster or catastrophe?

  44. James jones bantu

    Amina HERSI

  45. Bless Byamugisha

    I like this article from Andrew. Atleast you have blamed both crane bank management and Bou all together. Both had what they couldn’t do right.

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