UCB Sold For Less, Say MPs

Feb 18, 2003

THE Uganda Commercial Bank Ltd (UCBL) was sold to the South African Standard Bank of Investment Corporation (Stanbic) at less than its value, Parliament was told yesterday.

By Felix Osike
and John Kakande

THE Uganda Commercial Bank Ltd (UCBL) was sold to the South African Standard Bank of Investment Corporation (Stanbic) at less than its value, Parliament was told yesterday.

Members of Parliament were in a riotous mood again after listening to a committee report which indicated that the price paid by Stanbic was US$3.2m (sh5.9b) less than the bank’s value.

The chairman of the adhoc committee on the sale of UCB, Ephraim Kamuntu, said the average value of UCBL based on various valuation methods by the reputed KPMG audit firm was US$28.4m (sh51.2b).

Considering that Stanbic bought 80% shares in UCBL, the estimated price should have been $22.7m, the 31-page report said.

“Stanbic offered and paid $19.55m, which is $3.2m below the estimated average value of UCBL. It shows Bank of Uganda was willing to take any price,” Kamuntu said.

The committee report said the bidding process was not advertised and that the resolutions of Parliament on the sale were ignored.

Cabinet had an emergency session yesterday morning to agree on a position on the report ahead of the afternoon sitting which 30 ministers attended.

John Eresu (Kaberamaido) said members should be given time to internalise the document.

The Speaker, Edward Ssekandi, postponed debate to today after the Minister of Finance, Gerald Sendaula, presents the government stand.

The committee report also said the bid evaluation and negotiation process was not fair to the second bidder, dfcu bank.

The committee recommended that the remaining 20% shares be sold to the public through the stock exchange before the merger of the two banks. Under the sale agreement, the 20% shares would translate into 10% in the merged entity, with a higher price per share.

The MPs said since Stanbic acquired 80% of UCBL at US$19.55m, Ugandans should be able to acquire the 20% shares at $4.8m. They said the price would rise to $8.9m if the shares were sold after the merger.

The committee also found out that foreign consultants involved in the sale evaded taxes worth $348,470. The consultants were KPMG audit firm, Wendy Abt and Bingham Dana.

The report said the finance ministry and Bank of Uganda entered the sale agreement without involving the Attorney General as required by the Constitution.
Ends

(adsbygoogle = window.adsbygoogle || []).push({});