Ugandan Finance Minister Sheds Light on Crane Bank Allegations

Ugandan Finance Minister Matia Kasaija yesterday appeared before he parliamentary committee on Commissions, Statutory Authorities and State Enterprises (Cosase) in Uganda to answer questions relating to events surrounding the closure of seven commercial banks between 1993 and 2016.

Responding to allegations that Crane Bank Limited (CBL) was illegally and unfairly taken over by Bank of Uganda (BoU) officials in October 2016 before being sold on to dfcu bank in January 2017, Kasaija stated that while former CBL owner and major shareholder Sudhir Ruparelia was contesting the decision now that at the time he didn’t mind seeing his bank taken over.

Recounting the details of an alleged conversation he had with Ruparelia prior to the takeover Kasaija explained how he had expressed his preference that the bank be prevented from going under given how such events reflect on the Ugandan economy. He claims to have asked Ruparelia, “The Bank is telling me that your bank us undercapitalised, I know you own some properties here in town, would you mind to sell off some of these properties?” At the time there was a financing hole of around Shs400bn. Due diligence undertaken following the take over revealed a high number of non-performing accounts and a negative net asset position, with liabilities exceeding assets.

In response to Kasaija’s proposal Ruparelia is quoted as responding “No, Minister I am fed up, let the bank go.” Kasaija said that while he regretted the situation that the bank owners were partly to blame for the situation. His comments support those of former Capital Markets Authority boss Joseph Kitamirike who alleged that Ruparelia allowed the bank to go under in order to save other parts of his business, including his real estate and hospitality businesses. As Kitamirik put it “In a way, by letting the bank collapse and not diverting capital from his other businesses, the first winner in the resolution of the Crane Bank transaction is Sudhir.”