Mutebile resignation is not warranted

By Johnson Mujungu

THE fallout from the controversial compensation payments made to the Haba group of companies, owned by Hassan Basajjabalaba, payments which were criticised in the report of the Parliamentary Public Accounts Committee, continues to dominate the headlines.

I want to address some of the misconceptions which have clouded the discussion about the role of the Governor of Bank of Uganda in this affair, because it seems that the differences between ministers of the Government and senior public officials, in terms of their roles and responsibilities, has not been fully grasped, and this has led some people to draw erroneous conclusions.

The PAC report led to the resignations of the former finance minister and Attorney General. These two ministers resigned because they took responsibility for the political decisions they themselves had made in regard to the compensation payments; notably to accept Government’s liability to Basajjabalaba and to authorise payment of this liability with public money.

PAC is not a court of law and the PAC report did not determine the guilt or innocence of any individual involved in the Basajjabalaba compensation case.

The former minister of finance and Attorney General did not resign because they had been found guilty of any criminal offence – they have not even been charged with an offence – but because the PAC report was highly critical of the political decisions which these two individuals made to pay such a large amount of compensation to Basajjabalaba.

Given that ministers must answer to Parliament which has the authority under the Constitution to censure them, it could be argued that the two ministers had no alternative other than to resign.

The role of the governor is not comparable with that of the two former ministers. The governor is not a politician and had no role whatsoever in the decision to pay compensation to Basajjabalaba or the amount of compensation which was paid. His role in this affair was purely to act as banker to the government, which is one of the primary functions of the Bank of Uganda.

The governor only provided letters of comfort to commercial banks which had extended loans to the Haba group because the correspondence that he received from the former minister of finance and the Attorney General stated unequivocally that the Government had a legal liability to compensate Basajjabalaba in the amount of sh142b and that this money would be paid from the Government budget.  

The governor took no part in determining whether the Government had a legal liability to Basajjabalaba or how large this liability was, nor had he any legal responsibility to be involved in such decisions, which do not fall under the purview of the central bank.

This is an important point, because the two ministers who resigned did so because they took political responsibility for the political decisions which they made, and which were the subject of the criticism by PAC.

That was the only basis for their resignations. As such, it is unfair to demand that the governor also resigns, on the grounds that he is equally culpable, when he played no role in the political decision to pay compensation to Basajjabalaba. 

In all modern economies, the governor of the Central Bank enjoys some legal protection from political pressure. This is essential, because without such protection, decisions which are important for the economy, such as those related to monetary policy and bank regulation, would be distorted by political pressures.

In line with modern practise around the world, the Constitution of Uganda accords the governor a strong degree of operational independence and protection from political interference. The Constitution also sets out very precise criteria for the dismissal of the governor.

The only grounds for the President to dismiss the governor are:

i) inability to perform his/her duties because of infirmity,

ii) misbehaviour or misconduct, and

iii) incompetence.

The governor is clearly able to perform his duties; he is clearly not incompetent, far from it given his record of economic management and nor has he been found guilty of any charge of misbehaviour or misconduct. As such, the resignation of the governor is not warranted.