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MPs query Central Bank over sh10b payment

By Vision Reporter

Added 7th November 2014 09:59 AM

MPs on the Public Accounts Committee (PAC) want the governor of the Bank of Uganda, Emmanuel Mutebile, to explain how the bank reportedly paid out sh10b and later wrote it off.

MPs query Central Bank over sh10b payment

MPs on the Public Accounts Committee (PAC) want the governor of the Bank of Uganda, Emmanuel Mutebile, to explain how the bank reportedly paid out sh10b and later wrote it off.


By Mary Karugaba

KAMPALA - MPs on the Public Accounts Committee (PAC) want the governor of the Bank of Uganda, Emmanuel Mutebile, to explain how the bank reportedly paid out sh10b and later wrote it off.
 
This was after Keith Muhakanizi, the finance ministry Permanent Secretary, failed to explain the circumstances under which BOU wrote off a liability of sh10b relating to promissory notes.
 
A promissory note is a commitment to pay at a specific time in future.
 
Muhakanizi and the Accountant General, Lawrence Ssemakula, were, on Tuesday, appearing before PAC to answer queries raised by the Auditor General, in his report to Parliament for the financial year 2012/13.
 
In a letter dated September15, 2014, BOU’s chief accountant, Zephaniah Mugisha, wrote to the Accountant General in the finance ministry indicating that the bank’s board had agreed to write off the money.
 
“We enclose an extract of the finance committee of the board of Bank of Uganda that approved the write off of a liability relating to promissory notes of sh11b. The decision was ratified by the board at its meeting No. 295 of June1, 2009,” Mugisha said.
 
But while meeting Muhakanizi on Tuesday, MPs demanded to know how the money arose and how it was later written off.
 
“This means BOU gave out the money somewhere and you (Government) promised to pay the bank. We must know how it arose and why the Bank later changed its position. How did it eventually reach that stage of being written off?” MP Nandala Mafabi asked.
 
He argued that according to the law, it is only parliament that has the power to write off any debt.
 
During the meeting, officials from the Auditor General’s office explained that a promissory note is like a guarantee which BOU entered into and later wanted government to pay back, which means, money must have exchanged hands.
 
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Keith Muhakanizi, the finance ministry PS, appears before PAC. PHOTO/Maria Wamala
 
The Accountant General, Lawrence Ssemakula, told the legislators that the amount originated from Bank of Uganda many years back as a purported liability which had never been fully verified.
 
Ssemakula said a decision was later taken to classify it as a contingent liability due to lack of documentary evidence.
 
“BOU has, however, since derecognised it from their financial accounts and the Treasury has also derecognised it from the Government of Uganda accounts as of financial year 2013/14,” Ssemakula said.
 
“We have been demanding for evidence and if we don’t have it, we cannot pay. The creditor (BOU) said I don’t need it and asked us to write it off.”
 
While scrutinising the treasury books of accounts, the auditors established that included under Note 21 (1), Treasury Bills and Bonds, was a figure of sh10b in respect of promissory notes.
 
The auditors, however, complained that they were not provided with documentation to support existence of the liability and were therefore doubtful.
 
Committee chairperson Alice Alaso said there is no way the committee could ignore such a figure and accept the explanation without first establishing how the money arose and how it eventually disappeared.
 
When the committee insisted that Muhakanizi explains, he said it was not him who spent it but BOU.
 
“You summon the person responsible to explain.” The committee agreed to summon the BOU Governor and Accountant General to explain the money.

MPs query Central Bank over sh10b payment

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