The Solicitor General has written to Bank of Uganda (BoU) seeking clarification on which Cooperative Bank they sold in 1999.
In a letter dated January 11, Mr JBR Suuza who wrote on behalf Solicitor General asked BoU Legal Counsel Margaret Kasule, for clarity on whether they closed the Cooperative Bank that had been registered under the 1961 Cooperative Societies Statute or the one registered under the Companies Act in 1997.
“Which cooperative bank did BoU close? If it was the latter bank, why were the assets of the former seized and sold instead?” the letter signed by JBR Suuza reads in part.
The letter also asks for “any other relevant information on the subject” pertaining to the winding up of the Cooperative Bank.
The letter also asks BoU to explain that if the closure was of the 1997 bank which was a company, why then it was the assets of the 1964 bank, which the Cooperative leaders say was a cooperative society, that were sold.
BoU closed the bank on May 20 1999, citing inadequate capitalisation and insolvency.
The Solicitor General’s letter to BoU came after the Minister of Trade, Industry and Cooperatives, Mr Henry Mwebesa, sought legal opinion from the Solicitor General regarding the re-establishment of the Cooperative bank.
President Museveni has since given the Trade ministry a go ahead to re-establish Cooperative Bank to provide agriculture and commodity financing to the cooperative movement.
Mr Ivan Asiimwe, the General Secretary Uganda Cooperative Alliance Ltd, said when the Bank was closed on the 19th May 1999, Uganda Cooperative Alliance (UCA) wrote to the Inspector General of Government (IGG) on the 20th October 1999 and the question was the Inspector General of Government to help the shareholders to understand why and how the Cooperative bank had been closed by bank of Uganda, unfortunately there was no response.
“The Cooperative Bank Limited which was previously registered under the Cooperative Society statute was de-registered and instead registered as a limited liability Company under the companies act, unfortunately at the time of closure on 20th, May 1999, the process of turning a bank into a company had not been completed neither particulars nor a return of allotment of shares has been filled with the registrar of companies, ”Mr Asiimwe said.
“As a consequence, the bank was closed and sold before the registrar of cooperative societies had even cancelled the bank’s registration as a cooperative. The question to which we have never received an answer; what did the Bank of Uganda sell? The cooperative Bank under the cooperative societies’ statute or under the companies’ law?”
When contacted on Monday, Ms Charity Mugumya, the Director Communications at Bank of Uganda, explained that the Cooperative Bank was transformed into a corporate entity and its liquidation was concluded without any issues.
“The Cooperative Bank was established under the law in 1963, was transformed into a corporate entity in 1997 under the Company Act, as a precondition to receiving USAID funding. This transformed entity is what was closed in 1999 and whose liquidation was concluded on 25th July 2020.”
However, Ms Charity could not respond to follow-up questions on why BoU sold off the Cooperative Bank assets that was established under the law in 1963.
The matter also came up in the 2018/19 parliamentary probe into the closure of seven banks by BOU.
One of the contentious issues was the price paid for the assets of the bank.
The report by the Committee on Statutory Agencies and State Enterprises, COSASE, noted that the assets were sold a discount of 93 percent, which was described as a giveaway.
