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Tuesday,October 20,2020 12:15 PM

First Family Cleared Of UCB Interest

By Vision Reporter

Added 30th May 2002 03:00 AM

PRESIDENT Yoweri Museveni and his family have been cleared of any wrongdoing in the sale of the Uganda Commercial Bank Limited (UCBL).

PRESIDENT Yoweri Museveni and his family have been cleared of any wrongdoing in the sale of the Uganda Commercial Bank Limited (UCBL).

By Okello Jabweli PRESIDENT Yoweri Museveni and his family have been cleared of any wrongdoing in the sale of the Uganda Commercial Bank Limited (UCBL). A report said the bank’s sale “was concluded entirely absent of any corruption.” The draft report compiled by two independent British financial consultants, Paul Rex managing director GBRW and Charles Morrison, a partner in Denton Wilde Sapte, both top British financial consultancy firms, is still confidential. The consultants were in Uganda for over a month and interviewed several people including MPs, journalists and key players in the UCB sale. There had been several complaints and allegations of corruption since the Government sold 80% of its stake in the bank to Standard Bank Investment Corporation (Stanbic) of South Africa. A parliamentary ad hoc committee is probing the same matter. “We feel able to say unequivocally that we did not find evidence of any undue influence having been brought to bear upon those negotiating the sale of UCBL to Stanbic. It is therefore our opinion that the transaction was motivated by, and negotiated and concluded upon, commercial factors which judged objectively, were entirely reasonable and proper,” the report noted. GBRW and Denton Wilde Sapte were commissioned by the British Department for International Development to evaluate the privatisation of UCBL. Britain picked interest in the sale following allegations that the transaction was shady. The experts said certain allegations of wrongdoing were communicated to them, including a claim that the First Family was involved in the transaction. It was also claimed that the true purchasers were unnamed Ugandans and that Stanbic merely acted as a front for them. “However, despite robust questioning of those who had heard or promulgated these rumours, and our offer to investigate any leads suggested to us, we were unable to uncover even the flimsiest factual foundation for these allegations.” They said Henry Mayega, the vice-chairman of the Uganda Peoples Congress Presidential Commission, failed to substantiate his assertion that indigenous Ugandans disguising themselves as foreigners had bought UCB. “It is clear to us that many of the rumours of corruption that have entered the public domain have been based not on factual grounding but upon conjecture and suspicion arising out of the entirely necessary and understandable confidentiality which applied to the sale negotiations conducted with well known and respected financial institutions.” “What has been said is that ‘the deal is being kept secret, therefore it is corrupt; or “the president is in favour of the sale to Stanbic, therefore his relatives must be buying it.” According to the consultants, without anything approaching evidence to substantiate the allegations made, the claims are plainly misconceived. The UK report tallies with a government report that BOU received sh44.7b for the sale of 80% equity in UCB. The report, which The New Vision has obtained, said the purchase price for UCB assets and liabilities consisted of two components. The first was the US$19.55 (sh34.2b) which was paid directly from Stanbic to the BOU. The second was sh8.6b, which was transferred from UCB immediately prior to the closure of the sale agreement. “Because this money was taken out of UCBL and paid to the BOU, the value of UCBL, which was passed over to Stanbic was reduced by this amount,” the report said. The BOU also received an additional $1.1m (sh1.9b) as compensation for the delay in closing the transaction. The transaction was intended to close on 31 December 2001 but delayed until 21 February 2002. “Consequently, the BOU has received sh44.7b for the sale of 80% of the equity in UCBL. That is clearly a fair price for UCBL, given that 100% of the bank had been valued at between sh43b and sh60b,” the report stated. There have been claims that the bank was sold for only sh1,000. “Once the BOU has deducted all of the costs of the resolution, including the costs of paying for the redundancy payments of up to 500 employees, the balance of the purchase price will be paid to the Government.” The report said Stanbic Bank Uganda (SBU) had a higher market value than UCB at the time of their merger. It said the market value of a bank, the value private investors are ready to pay for its equity, depends on many factors, and especially its future profits. “SBU has a track record of profitable operations based upon a sound, commercially viable loan portfolio. Moreover, as a subsidiary of a well-established international bank, SBU is very unlikely to become bankrupt in the future. Investors in SBU can be reasonably sure that their investment is secure and will yield profits,” it said. “The earnings and financial condition of UCBL are much more uncertain. While UCBL earned good profits in 2001, its income was mainly derived from interest on Treasury Bills, which were at untypically high levels in 2001,” the report added. Ends

First Family Cleared Of UCB Interest

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