Parliament Blocks Sale Of UCB Again

By John Kakande And John Odyek PARLIAMENT yesterday defied Government and passed a resolution stopping Bank of Uganda from selling Uganda Commercial Bank Limited (UCBL) to a foreign core investor. The resolutions passed after a stormy debate, asked BOU to handover UCBL to its owner (government) immediately. It was further resolved that Ugandans should be given first opportunity to buy the UCBL’s shares through the stock exchange. Minister of Finance Gerald Ssendaula, who presented the Government’s position, said the opening of bids for the bank’s share purchase was scheduled to take place on Monday. The atmosphere in the House was tense as Ssendaula, who gulped several glasses of water, spiritedly defended the imminent sale of UCBL. He also made reference to resolutions passed by the previous 6th Parliament endorsing the bank’s sale. MPs rejected an amendment, which was proposed by First Deputy Prime Minister and Minister of Internal Affairs Eriya Kategaya, that sought to allow the opening of the bids to go on as scheduled, but the sale to be put on hold pending more consultations with all stakeholders. Standard Chartered, Barclays, Baroda and Development Finance Company of Uganda (dfcu) have showed interest in purchasing UCBL shares. Ssendaula, speaking to journalists outside Parliament later, declined to say whether or not the opening of the bids would proceed. “The bids are not with me, they are with the Bank of Uganda. The Executive has received the resolutions. It will sit and discuss,” he said. Asked whether the bids would be opened, he said, “Do you want me to defy the resolutions? I am not party to defying resolutions of Parliament,” Ssendaula, Kategaya, the Prime Minister Prof. Apolo Nsibambi as well as Third Deputy Prime Minister and Minister of Foreign Affairs James Wapakhabulo earnestly pleaded with the MPs to let the process of privatising UCBL proceed in the interest of giving confidence to the investors. Nsibambi said stopping the UCBL sale would “destroy investor confidence in our country.” He said it was necessary that the Executive and Parliament harmonise their positions on UBCL. “What is the way forward? We should not delay the matter any more, it is painful and costly,” said Nsibambi and urged MPs to back a core investor to take a controlling stake and leave the minority shares to Ugandans. Nsibambi said he knew that MPs were unhappy about remarks made by the Governor of BOU, Tumusiime Mutebile, on WBS television. He said he had asked Mutebile to be cautious. Mutebile reportedly said the bank would be sold irrespective of the MPs views. Ssendaula warned that reversing the divestiture of UCBL “would be extremely damaging to the credibility of government and our ability to attract investment.” He also rejected the view that the UCBL majority shares should be sold to Ugandans. “A diverse and dispersed ownership structure is not good for a bank because such ownership cannot control the management of a bank,” he argued. “The management and governance needed to protect UCBL’s deposits and indeed interests of the public who are minority shareholders, must be provided by a reputable and credible bank which should have a controlling equity stake in the bank,” Ssendaula said. Jacob Oulanyah (Omoro) said BOU had no powers to sell UCBL. He said the divestiture of UCBL could only be implemented under the PERD Statute. Oulanyah’s argument took the Executive by surprise. Wapakhabulo and Minister of State for Finance Isaac Musumba were seen scrutinising the Financial Institutions Statute (FIS) and making consultations. Wapakhabulo admitted that the laws do not give BOU powers to sell UCBL. He, however, said BOU, having seized UCBL, had powers to reorganise it. Ends