PostBank not for sale - Kiwanuka

Apr 07, 2012

FINANCE minister Maria Kiwanuka has clarified that PostBank and Posta Uganda are not for sale. She was reacting to

By Mary Karugaba 

FINANCE minister Maria Kiwanuka has clarified that PostBank and Posta Uganda are not for sale. She was reacting to the Auditor General’s report, which said the Government was secretly planning to sell off the institutions to a private Canadian firm after signing a Memorandum of Understanding. 

The memorandum was reportedly signed by former finance Syda Bbumba. Below is Kiwanuka’s full statement: 

"I wish to inform the public that the Government is not in the process of selling PostBank. The objective of forming PostBank was to fill the gap left by the sale of UCB that was providing financial services to the middle and lower of the market. The Government is still committed to this objective and the sale of PostBank to a private firm would jeopardise its realisation. 

PostBank Uganda Ltd is and remains under schedule of the Divestiture Act, meaning the Government intends to retain 100% ownership of the bank. Even if the Government wanted to divest itself of the bank, it would still have to comply with the legal requirement of seeking both the Cabinet and Parliament’s approval to do so. This position of the Government has not changed and therefore the public is accordingly informed. 

I wish to reiterate that the Ministry of Finance, Planning and Economic Development is committed to the rule of law and all its action must conform to the law."

The New Vision this week revealed how Government last year entered into a secret deal to sell both Post Bank Uganda (PBU) and Posta Uganda Limited (UBL) to a Canadian-registered firm.

Post Bank was created to fill the vacuum left when the Uganda Commercial Bank was sold off to Stanbic Bank. 

Post Bank and Posta Uganda were both established as entities after the restructuring and divestiture of the Uganda Posts and Telecommunications Corporation. 

The Government retains 100% shareholding in the two entities. 

A report that was released by the Auditor General, John Muwanga, on Tuesday revealed that the Government, without the approval of the Attorney General and presented by the Ministry of Finance in 2011, hurriedly signed a memorandum of understanding with Fair Field Corporation Limited (FFCL), a company registered in Canada, for the sale of Posta Uganda and Post Bank.

The Auditor General (AG) says the examination of the documents revealed that the Minister of Finance forwarded a draft memorandum of understanding (MoU) to the Attorney General for approval on May 10, 2011, “but later retracted the request, indicating that the sale had been stopped.”

But later the finance minister, in complete disregard of guidance from the Privatisation Unit, went ahead and signed the MoU with the company, without the approval of the attorney general. 

The signing was witnessed by the ICT minister.

Although the report does not mention names, at the time, the finance minister was Syda Bumba.

Bbumba was recently forced to resign over another controversial transaction involving payments to city tycoon Hassan Basajjabalaba. The ICT minister then was Aggrey Awori.

Under the MoU, it was agreed that when the Government completes the divesture action plan for both the PBU and UPL, it will invite the company to negotiate the acquisition of part of its shares in these two companies.

The Government and the company agreed to maintain confidentiality and not to disclose to anyone the terms of the MoU except where disclosure is required by law.

“The parties also agreed that should the outcome of the divesture require the Government to fully divest all its 100% shareholding or more than 49%, first priority of acquisition will be given to FFCL,” the AG’s report says.

The AG said government stood to lose money in the transaction. “Should government offer or accept any bid to or from any other party or should government make a decision not to continue with the divesture plan, the Government shall indemnify and fully compensate FFCL,” the Auditor General observed.

“It was observed that although the Privatisation Unit had been consulted over the divestiture of Post bank, they expressed ignorance over the existence of the signed MoU,” the AG said.

“I was, therefore, not able to verify the authenticity and validity of the MoU. It was noted further that this agreement appears to have been entered into by the Government without receiving any form of consideration from the FFCL,” he added.

In the report, the Auditor General also unearthes a series of transactions in which billions of shillings have been lost by the Government. 

Over sh54b could not be accounted for by various ministries and government departments, according to the AG.

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