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Shocking Details: Why It’s Very Risky To Bank/Save With Post Bank Uganda

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By Otim Nape
In a detailed report, a group of auditors supervised by KPMG have made shocking findings and unearthed rot at Post Bank Uganda Ltd (PBUL) which is 100% owned by the government of Uganda. The report, a copy of which is in our possession, shows that many things that have gone wrong at PBUL clearly giving reason why any reasonable depositor or saving customer should shun this bank.
METHODOLOGY
The auditors examined financial statements of the bank regarding its statements of comprehensive income; charges in equity and cash flows. The auditors also quizzed the bank’s directors on some of the shocking scandals they unearthed. The other information was obtained from the bank’s annual internal audit reports and its other reports on corporate governance, risk reporting and shareholders report. The auditors give a disclaimer that their report isn’t exhaustive meaning the situation at PBUL could even be worse than stated in their report.
PBUL began in 1998 and has 40 branches and 92 other locations served by its 10 mobile vans. It’s categorized as Tier II Financial Institution and it’s licensed as such by BoU under the Financial Institutions Act-FIA-2004.
The report captures PBUL’s adherence to financial compliance requirements; internal control structures; safeguarding of its assets; controls in the computer-based systems and its compliance to statutes governing procurement, accounting and HR practices. The shocking findings are as follows;

Post Bank CEO Stephen Mukweri on the right greets one of his PBUL loyal customers

 

LOANS CLASSIFICATION
The auditors say that at PBUL there is wrong classification of loans in the loan arrears report and that this is rampant practice at PBUL. There is poor performance and monitoring of project/scheme loans and
breaching of rules concerning mobile phone banking platform.
Inaccurate interest is often charged on the loans taken especially under the Miracle Motorcycle Loan Scheme catering for hundreds of boda boda borrowers. There are also lapses in staff training practices at PBUL resulting into incompetence. There are also deficiencies in management reviews on daily teller reconciliations and on spot checks supposed to be done on tellers, vaults and ATMs. Tendencies of non-reconciliation of transactions on the suspense (DR) account and inefficiencies and non-compliance on the loans disbursed to MPs. There are also problems concerning dual access to ATMs not being observed at most PBUL branches; there is wrong classification of loans in the loan book; charged/written off loans often remain on the loan book as well as matured loans being kept on the loan book as active. The loans maturing dates are also often not properly captured and the auditors say this is done to serve the fraudulent motive of some officials at PBUL. There are inaccurate names of customers being kept on the bank’s general ledger; fraudulent interference with unclaimed or uncollected money on the fixed deposit accounts at PBUL; fraudulent practices regarding the SAGE project in comparison to the FINACLE system as many of the successful payments remain deliberately unsynchronized to satisfy the fraudulent motive of some officials at PBUL.

SAGE is a GoU program giving old people monthly upkeep of 25,000 each. It caters for hundreds of thousands of such elderly persons in different districts and PBUL was chosen by the ministry of gender to be the implementing agency at a fee. The auditors further show that ATM transactions at PBUL are poorly processed and inconsistently.

PBUL BOD Chair Grace Bakunda whose supervisory powers auditors say have been eroded

THE SHOCKING DETAILS
The auditors reveal a lot about Peg-pay which is an aspect of mobile  banking platform. That the system is exposed and customers’ money is always deducted and cashed out by fraudsters without the bank
detecting the problem or acting rapidly enough to protect its customers. The auditors state that; “most of these breaches are internally perpetrated” making PBUL very unsafe for the public to transact with. The PBUL management is further faulted for failing or refusing to do “a penetration test to assess the internal and external
vulnerability of its IT systems.” As a result of this vulnerability, the auditors add, “PBUL has incurred losses worth Ugx240m in fraud cases.” The report adds; “There is also a reputation risk associated with such cases and this may have a negative effect on the growth of the bank.” The auditors conclude on this issue that the bank remains highly susceptible to many more future cyber attacks that will most likely re-occur.  The bigger finding by the auditors is that “quite often mobile banking platform clients have had their money or savings withdrawn without their prior approval.”

BRANCH MANAGERS USURP BOD POWERS
The report adds that PBUL has witnessed rampant cases of project/scheme loans being inappropriately monitored and underwritten as a result of fraudulent connivance involving some officials in the bank. Examples are given whereby many “small loans are issued from branches like Arua and Kapchorwa and all of them are covered by a single MoU.” This is a very irregular practice and makes PBU a very risky bank for any depositors to associate with. That branch managers actually approve loans which require approval of the board or top management in Kampala. This is a very big risk for those saving with PBUL. Every loan that exceeds 150m, the branch manager must seek approval of the board but this is rarely done. Speaking of the Arua and Kapchorwa experiences, the auditors have this to say; “The aggregate sums involved are material to the operations of the bank. Such individual small amounts end up being approved by the branch yet the total amounts involved require the approval of either senior management at the head office or the Board.” At one of the two branches, a manager recently approved and gave out up to 1.3bn to a group called Farmers Ltd Company and this happened between January and July 2017 whereby many small farmers got about 5m each totaling to billions. Today the group members haven’t repaid even a penny to the PBUL since the disbursement of the 5m to each. At the time auditors wrote their report, these loans were worth 1.3bn and were in arrears for over 354 days which puts the savers’ money or deposits at risk.

The 2 branches which are just a tip of the ice berg slipped into a loss-making position as follows; 921m for Arua branch and 742m for Kapchorwa. “These loans were directly disbursed onto the customer accounts and on the same day, the amounts were (dubiously) debited off the customer accounts and directly wired to the Farmers Ltd Company bank account noted above,” the alarmed auditors say in their 46 Pages report. “The customers never received the above disbursed loans…and large exposures that are disguised as various small loans to the Farmers Ltd Company may lead the bank into financial loss.” When contacted the sources within the PBUL top management claimed that the 742m loss in Kapchorwa branch resulted from the bad weather and poor farmers’ harvest and added that staff had been punished for this irregular conduct. Disgruntled insiders in PBUL added that this wasn’t the first time PBUL branch leaders upcountry were committing such crimes leading to financial loss at the bank based at Nkrumah road in Kampala. The bank’s own rules require that every loan that exceeds 150m must get board approval but the practice is different at PBUL.

Insiders blame such losses to poor underwriting by the PBUL teams that poorly assess loan applications.  The auditors refer to the perennial poor rating of PBUL by BoU inspectors in its quarterly reports. This
rating bases on assets quality, management capabilities, liquidity and other sensitivity areas of the banks. PBUL has always registered very poor and marginal ratings in these BoU quarterly reports. Because of
this unsatisfactory performance, PBUL has always been required to pay additional risk adjusted premium towards the Deposit Protection Fund under Section 109(7) of the FIA Act. BoU rates PBUL very poorly,
according to the auditors, because of its “deteriorating assets quality and management weaknesses.”  The auditors candidly state that: “Due to this poor rating by BoU, PBUL is likely to incur additional risk adjusted premiums to its contribution to the Deposit Protection Fund.” BoU makes these quarterly reports basing on its inspectors’ findings during their onsite examination visits. PBUL has been rated as Marginal for the last 5 years-ranging from 2013 to 2017. This is more cause for depositors to worry given its fragility as a bank if the contents of the audit report are anything to go by. The high risk adjusted premiums imposed by BoU is an additional operational cost eating into PBUL’s viability as a bank entrusted with depositors’ money.

BoU believes that experiences like the Farmers Ltd Company-related loans and repeated cyber attacks make PBUL qualify for perennial marginal rating. The bank’s position is also rated marginal by the BoU because of the poor performance of loans lent to UPDF soldiers operating in Somalia. The other problem is that all group loans arrears are never appropriately classified as required by the MDI Licensing regulations of 2004. Sometimes at PBUL, such classifications are manually falsified or altered by rogue elements amongst PBUL’s staff. Disgruntled insiders say that some of the top management bosses who are supposed to reprimand rogue elements are too discredited and weakened by involvement in sex scandals with female staffers.  We don’t want to go into sex scandals involving top
managers at PBUL; lest we trivialize a very important story contained in the audit report.  Insiders say that even the ICT system meant to mitigate against fraud by human actors wasn’t properly constructed or configured yet colossal sums of money went into its procurement.
BODA LOAN SCHEME
The auditors show that under the Miracle Motorcycle Loan scheme, the problems of inaccurate interest being fraudulently charged on borrowers is rampant and wide spread at PBUL.  These loans would be given to Boda groups but some of the individual borrowers were charged and cheated to pay a higher interest rate of 30% instead of the 22% as stated in the group loan agreement. This is broad day robbery clearly targeting the innocent boda-boda borrowers whose income as we all know is very meager. But the shacks at PBUL have no compassion towards such very poor fellows. The auditors note in their very damning report: “There is a risk of bad reputation if customers are charged more than what was agreed in the offer letter.” Because of the weaknesses or even criminal connivance of the credit administration teams at PBUL,
this exploitation of the poor desperate borrowers has been ongoing for long at the different PBUL branches where this scheme has been implemented. Nobody has been punished because the bosses in top management rightly fear that acting will prompt the fraudulent staffers squeezed to spill the beans regarding the sex scandals involving married bosses feasting on their subordinates.
CORPORATE GOVERNANCE BREACHES
In his public speeches, PBUL MD Stephen Mukweri always preaches corporate values but his bank isn’t respecting even the most core or basic corporate governance requirements. How else can we explain the
failure to have a single AGM meeting which the company Act in section 138 requires to be held at least once in every 15 months? The appalling example is that in the whole of 2016, not a single AGM meeting was held yet the previous one had been held in June 2015. One then wonders where and when the PBUL top management gets the chance to interface with shareholders of the company and its members from whom they are supposed to get instructions and guidance. Is it that the top management fears the members and shareholders of the company may ask the very tough questions regarding the scandals at the bank? Your guess is as good as ours. The auditors also raise queries regarding the remuneration of PBUL board members. The top management led by Stephen Mukweri is accused of using hefty perks to compromise the board members and neutralize their expected independence to supervise management.

The perks and allowances of the board members are supposed to be determined by the shareholders and the mother ministry of finance. But Mukweri stands accused for paying them allowances that exceed what the shareholders approved. The auditors question why Board why board members are paid generous allowances in form of sitting allowances, retainer fees, entertainment advances, business development allowances and airtime advances as if they are executive directors involved in daily running of the company. In fact BoU inspectors have for long been bitter about this payment to the board by Mukweri and his management team. In their November communication to PBUL management, BoU inspectors held this to be irregular payment to board members.   The auditors also question why managers at several branches sometimes defy internal audit directives to submit some information. The affected branches are given as City/Summit branch, Kasese, Kanungu, Nakasongola, Bugolobi, Kitgum, Kakiri, Bweyale and Kamwenge. That the officers there don’t answer audit queries and undermine the internal audit department by withholding information yet the PBUL’s own internal audit plan requires they fully submit to the authority of the internal audit department.

A table from the very damning auditors’ report showing discrepancies in Post Bank’s ATM-based transactions

POSTING CYBER FRAUD ENTRIES
Auditors raise a red flag on this saying that the very department which caused the fraud in the mobile banking platform is the one making entries into the cyber fraud journal to correct those frauds which they themselves created in the first place. The auditors say this is wrong and shows that PBUL top management lacks the political will to stamp out fraud in the bank’s systems. The auditors say that duties should be segregated because “fraudulent transactions could easily be originated and processed without being detected and fraud can be penetrated and concealed.”  Best practice journal entries requires that staff who operate the system aren’t the ones who post cyber fraud entries’ correction and rectification. The trial balance of PBUL has been manipulated and used as a gap for fraudsters to have “unauthorized transactions leading to misstatement of financial statements.” The problem was most rampant between 2011 and 2016. In the same period written off/charged off loans weren’t transferred to the general ledger sub head code “38400” for non performing loans.
General ledger imbalances are common at PBUL whereby the written off loans are not transferred to the general ledger allowing it to continue existing in bank records as performing loans. The developer
or vendor who sold the FINACLE system to PBUL should be recalled to review the FINACLE core banking system to identify underlying reconciliation errors causing these imbalances, the auditors recommend. Top management is also faulted for not doing enough on staff development whereby the bank’s well elaborated staff training plan is only on paper and never implemented. The different staff categories were planned to be trained; examples being legal department staff to be trained on contract drafting and negotiation; finance department staff to train in taxation and e-tax management and operations department staff to be trained in laws relating to bank practices. The auditors wonder why there is never induction for new staff that join PBUL. The auditors say “this has led to operational inefficiencies amongst PBUL staff.”
TELLER/VAULTS NOT RECONCILED
The auditors show that whereas it’s a best practice requirement, there is no routine reconciliation of cash received by tellers from the vault at the start of the new day and cash held by tellers at the end of the day. That the managers and supervisors are never in a hurry to do daily reviews of the reconciliations submitted by tellers. This practice is a must, the auditors note, otherwise the tellers play with depositors’ money by concealing fraudulent shortages or overages. Even in rare cases where this is heeded and done, the auditors suspect the reconciliations aren’t accurately done because supervisors are never available to review the reconciliations submitted by tellers. In some branches, auditors show that, tellers commit acts of fraud even in cases involving online payments. This makes PBUL even more risky to be entrusted with depositors’ cash. Branch managers must regularly do spot checks on teller cash and their/branch managers’ reports are in turn scrutinized by quality assurances managers.

The branch managers must also spot check on the ATM cash transactions at least twice a month to confirm existence of the ATM physical cash. The auditors say that the above wasn’t heeded or done at PBUL for much of 2016 and the most affected branches were Kampala Road, Wandegeya, Ndeeba and Fort Portal mostly in the months of January, June, September and October.
“Failure to perform spot checks creates a lapse in the treasury management process at the branch and gives opportunity for concealment of fraudulent activities,” the auditors note.  Spot checks have to be done in relation to teller staff, vault and ATMs. There is also the issue of incident reporting whereby branch managers must report to the head operations whenever they receive late deposits and are unable to bank that excess cash. But the practice at most PBUL branches is that branch managers can hold cash exceeding the vault cash holding limits and the auditors were unable to find any evidence for incidence reporting ever being undertaken. Examples are given including the Kampala road branch manager who recently held more than 310m against his branch vault limit of 300m; Makerere branch manager in September held over 259m against the branch vault limit of 250m; Ndeeba in  August held 486m against the vault limit of 400m and Arua branch manager in September held up to 650m against his branch vault limit of 250m. The alarmed auditors say that “failure to raise the incident report exposes the bank to risk in case such excess amounts are not insured.”
DEPOSITORS’ CASH NOT SAFE AT ATM LOCATIONS-
Section 9.15.4 of the PBUL’s operations manual requires that no staff is allowed to access the ATM lobby area alone yet in practice that isn’t enforced at all PBUL branches. In most cases one staff freely accesses the ATM lobby area and the example given by auditors is of 30TH September at Wandegeya branch when the technician called Fred W was locked up there between 4-5pmwith no one else. On 20th October the
Fort Portal branch manager negligently allowed one staff to be in the ATM lobby area under the guise of upgrading the ATM machine yet he wasn’t a technician possessed with the requisite technical know-how.
The auditors warn that “failure to observe dual access to the ATM lobby area provides opportunity for concealment of fraudulent activities and theft of the depositors’ money.” There are cases of negligence amongst PBUL staffers eg the auditors say that at Makerere branch; the worker on teller 01 connived with a customer to steal money. The customer whose account had zero balance filled the withdraw slip and Ugx260,000 was given to him yet he clearly had insufficient funds on his account. The auditors say “such cases expose the bank to losses in case such a customer can’t be traced anymore yet the cash is already paid out.”
MPS’ LOAN SCAM-
The Board on May 19th approved the MPs’ loan scheme with following guidelines; the total scheme was to initially have 20bn and no single MP would borrow more than 400m. The interest rate was put at between
18-20%. However the PBUL management flouted these very basic rules and guidelines by allowing at least 5 MPs to borrow in excess of 400m each and unfortunately the MPs even defaulted and these became bad loans hence a loss to the bank. The auditors say this has exposed the bank to “avoidable credit risk.” The management is also on the spot for spending billions procuring the Group Lending Software (GLS) but even
with that software, PBUL has had difficulties monitoring especially group loans. Despite having the GLS in place, the PBUL loan book doesn’t capture or show details of individual borrowers but details for the entire group yet cash continues to be negligently lent out to such multiple groups. The bank also lacks a unique identifier for project loans hence making monitoring a nightmare. There is also the problem of multiple borrowing from the same bank by unscrupulous members of such groups. There depositors are concerned that the current PBUL loan book records group borrowers and not individual borrowers in such cases. In the bank’s loan book, some still active loans are recorded as charged or written off loans whereas not.

Examples include loans taken under the following account numbers; 9160032000374; 9060042000053; 9140034000251; 9140027000189; 9140027000190; 9140027000188; 9140027000186 and 9180017007724. The auditors consequently say “there is a risk of material misstatement of the financial statements.”  The PBUL management has been reluctant to enforce a control to call over all loans disbursed in the system to ensure appropriate classification of the loans.  In some cases written off loans are dubiously maintained on the loan book including on account numbers like 9160000000202 under GL Code 38400. Matured loans too are sometimes fraudulently maintained on the loan book e.g. as of 2017, the PBUL loan book still had 45 loan accounts for loans that had matured in 2013!!!! “These loans had also exceeded the mandatory 365 days for loan write off as per the Act,” the auditors note in their report. PBUL also lacks a system that can properly close off fully paid loan accounts. And the auditors find that “Over 11,300 accounts with maturity dates ranging from 2012 up to 2018 with NIL balances remained on the loan listing as of December 2017 and haven’t been
automatically closed off.”  They add that “Non-performing loans increase uncertainty regarding the bank’s net worth and lower the bank’s risk taking capacity.” Equally bewildered BoU officials are concerned that such anomalous omissions, which Mukweri blames on human error, are becoming too many and too rampant at PBUL.  Some loans have had their maturity dates wrongly captured and in some cases maturity dates stated exceed the period duration assigned to the account as per the loan agreement with the customer. Examples of such cheated customers or borrowers include those under the following account numbers; 9180001007208 to whom a 15m loan was advanced; 9190045000017; 9030000018056 and 9080007008566. That isn’t all the auditors are faulting PBUL about.

The bank’s general ledger has sub codes with company names that don’t exist anymore and examples include; Alliance One being recorded in PBUL general ledger as BAT Farmers; Sparkasse Bank as Allied Bank; WFP DRC & REA recorded as IFRS Fees; Mobile Banking Registration miss-recorded as UTL ; Smart Saver Cards recorded as Passbooks; and Board Costs or expenses recorded as AGM costs.   The auditors say this increases the risk of general ledger accounts being used to commit fraud. The auditors add that it’s bad for “the GL names to reflect names that are different from what currently appears on the current activities of those accounts.” In banking practice, long outstanding reconciliation items should be cleared within one month
but at PBUL, 4 months can elapse without the same being done. Examples include the 23rd August Citibank-related incidence which witnessed transfer instructions to Citibank not being executed for 4 months. The
same fate befell 8 remittances PBUL was instructed to transfer to BoU internal account on 12th December. The two instructions related to 8.6m and 7.9m respectively. Yet failure to clear reconciling items can give cover to staff to conceal fraudulent overages or shortages.
UNCOLLECTED FIZED DEPOSITS-
Many fixed deposits matured but weren’t claimed by the customers as at 31st December. The auditors wonder why PBUL management would be indolent and quiet on such an issue well knowing that “such acts are susceptible to fraud and can be used to perpetrate fraud or conceal unauthorized transactions on such fixed depositors’ accounts.” The best practice would be that once one’s fixed deposit account matures; the money thereon is automatically transferred to his or her operational account in the same bank.  This seldom happens in PBUL.
There are 1000s of such accounts in PBUL and auditors call for deeper investigations to establish the full extent of the problem. The auditors also unearthed 345m lying idle on what management called Customer Proxy Account. This unclaimed cash has been accumulating on this account since 2009 and the owner has never showed up claiming his money. The auditors say even if he showed up to day, this being PBUL,
“the recoverability of this money is in doubt.” The auditors warn that categorizing such money as income for the bank results into the bank’s income being grossly misstated once the system keeps creating such proxy accounts.
DISCREDITING SAGE

The auditors also unearthed big problems discrediting PBUL’s relationship with the Ministry of Gender to manage the SAGE page scheme which gives old people 25,000 per month as the Social empowerment grant from the government. The audit report shows that some unscrupulous bank officials sometimes cheat the intended beneficiaries and auditors recommend deeper inquiry into this scam orchestrated by some heartless PBUL officials. The auditors say there is no proper interface on the FINACLE system and SAGE pay server in the bank. This is what the auditors have to say specifically; “Of the 78,902 accounts that matched in both SAGE pay server and FINANCLE, the audit team noted that 20,621 accounts didn’t agree to what was debited on the corresponding customer accounts in FINACLE.” The auditors add that “whereas only SAGE pay transactions of status SUCCESS are expected to be debited on customer accounts in FINACLE, the audit team noted that 40,106 accounts in SAGE pay system with payment transactions of status UNCONFIRMED which however had been processed and debited on customer accounts in FINACLE system.” As a result, auditors fear that, “unauthorized transactions may be passed and easily go unnoticed under SAGE.” Auditors fear that SAGE may put PBUL in big problems because there is evidence of millions being paid to beneficiaries in the field yet the records haven’t been updated on the respective accounts in FINACLE.” This further makes PBUL a bank any risk conscious customer must shun on grounds of being unsafe. There are regular interface failures between SAGE pay servers and FINANCE which exposes the bank to additional risk to lose money.

Many of the old people continue to get monthly payments from PBUL mobile vans yet the bank has no record of their biometric data, photographs and finger prints. This is important for system validation and authentication of payments made thereof. Over 84,362 beneficiary accounts are being operated without biometric data, photos and finger prints. This shows fraudulent intent, negligence and laziness among the concerned PBUL staffers. Some top PBUL officials we spoke to on anonymity blamed the problem on the ministry of gender officials whom they said haven’t been cooperating well because some of them preferred another bank taking the SAGE deal. Even for the elderly whose biometric data was availed, the PBUL teams have been too lazy to synchronize the information. Beyond SAGE, there are also inconsistencies in the utility payments processing via PBUL. The auditors are also questioning the PEG-pay system being used to pay NWSC, UMEME and KCCA utility bills through PBUL and over 1.9bn is at stake. There are also inconsistencies in the ATM transactions processing at PBUL.

 

To  talk to  the Grapevine, call or sms: 0755973863, Email: info@thegrapevine.co.ug

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OPINION: Kitatta – The Fly That Followed The Corpse Into The Grave – Political Blogger Stings Boda Boda 2010 Boss After Kayihura Release

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Political commentator and blogger Afuwa Kasule has blasted Boda Boda 2010 boss Abdallah Kitatta for being too blind to see that anytime he may fall with his boss.

In his article title “Abudallah Kitata – The Fly That Followed The Corpse Into The Grave”, Kasule says that Kitatta, who is currently under detention at the military barracks in Makindye, while his former boss is now Germany receiving treatment, should have played his cards wisely and known that he was dispensable.

MUSEVENI AND BUGANDA BACKGROUND
In his post, Kasule starts with giving the background of how Museveni has been dealing with stubborn Baganda. Kasule writes:

When Museveni first appeared on the political scene with the Tanzanian army that ousted Iddi Amin in 1979, he strategically followed the Western axis. That way, he was able to bolster his briefcase FRONASA with Westerners and in particular Banyankole.
When he took to the bush in 1981 to fight the UPC government, he chose Buganda region as the base for his Bush War. He wanted to exploit the old Baganda hatred for Obote and his UPC for the events of 1966. He also wanted to undermine the predominantly Baganda rebel fighting groups of UFM and UFF of Andrew Kayiira and Prof. Lule which had already established bases in the strategic Buganda.
First he tricked Prof. Lule into merging his UFF with Museveni’s NRA to give rise to the NRM/A. He went ahead to make Prof. Lule the Chairman of NRM while Museveni became his Vice Chairman but also headed the strategic armed wing, the NRA. That is why Museveni was predominantly referred to as the Chairman of the NRA High Command and not the Vice Chairman of NRM. The High Command became the Supreme Organ of the Bush War and in that, way Prof. Lule was tactfully overshadowed. Many Baganda peasants and fighters rallied behind the NRA in an honest belief that their own, Prof. Lule was to become the leader of Uganda.
It is prominent Baganda like Male and Habib Kagimu who introduced Museveni to Libya’s Gadaffi for military aid. He also used the likes of Dr. Samson Kiseka, Sam Njuba, Bakulu Mpagi, and others on his NRA’s External Wing just to win moral support of Baganda in the diaspora. In particular he targeted the Buganda monarchy community that was in exile abroad.
His next huddle in neutralizing the Baganda was how to deal with a predominantly Buganda fighting group under Dr. Kayiira, the UFM. A series of meetings between Kayiira and Museveni did not yield anything. Within the UFM circles it was strongly believed that the NRA was directly spying on the UFM and indirectly supplying such intelligence to the government. The betrayal was plainly exhibited during one of the incidents when the NRA agreed to join the UFM in a joint attack on the government army positions in the city but at the last minute the NRA never showed up. Instead, it ambushed the retreating UFM and seized a big cache of arms that had been captured from the attack on Lubiri barracks. The UFM was weakened by the sustained attacks by government troops , capture of its top commanders and it eventually disintegrated.
Next Museveni moved against the Kakooza Mutale group, Vumbula which had set up bases in areas of Zirobwe and it was compelled to surrender to the NRA. Since then Kakooza Mutale has undergone a series of ‘use and discard’ coupled by humiliation. Deep in Galilaya, Kayunga, the armed group under David Matovu refused to join hands with Museveni’s NRA. When Museveni took over power and David Matovu eventually joined him, he became a jail bird over repeated treasonous allegations.
Museveni’s scheming against Baganda influence suffered a temporary setback when the prediminantly Baganda DP backed the coup against Obote in 1985 and joined hands with the Okello junta. The former UFM fighters and its splinter group, FEDEMO had also reorganized and joined hands with the Okello Junta. Within the NRA, Baganda fighters grumbled that they were being used to do the donkey work for Museveni’s Banyankole. Museveni moved very first to neutralize the ugly situation by inviting Prince Mutebi to visit the Liberated Zone in western Uganda. The Prince was smuggled through Rwanda from UK and he was manipulated into calming the situation.
A few months before capturing power, Prof. Lule died in the UK and Museveni took over as Chairman with a toothless Muganda, Moses Kigongo as his Vice Chairman. When Museveni took over power in 1986 he formed a government that was dominated by the predominantly Baganda DPs. Dr. Samson Kiseka became his Vice President. He moved to neutralize the UFM and FEDEMO fighters who had now joined the NRA. UFM’s Kayiira and a couple of prominent Baganda politicians and army officers were arrested over treasonous allegations while some other UFM officers fled the country. Just a day after the High Court exonerated and released them, Dr. Kayiira was shot dead leading to further purge of Baganda in both government and the army.
Museveni reinstated Buganda Kingdom just in name in order to hoodwink the Baganda. In the mid 1990s when he felt that he had consolidated his hold on power and to some extent he had neutralized the influence of Baganda, he got rid of the DP and the Baganda in government. Already he had successfully dealt them a heavy blow within the security forces. Fearing that some Ugandans would resort to armed rebellion following the 2001 rigged elections, Museveni initiated a campaign of violence dubbed Operation Wembley under Brig. Elly Kayanja. The operation committed heinous crimes against humanity especially in Buganda. Since then Brig. Kayanja has been held hostage or else he would lose protection against criminal proceedings for those crimes.
Around the same time the army underwent privatisation by sending Gen. Katumba Wamala to police in order to give way to the rogue Gen. Kaziini and junior Gen. Aronda to rise to the office of Army Chief. It was after the army was privatized that Gen. Katumba Wamala was appointed to head the toothless residue of the army after creation of SFC as an autonomous entity. Gen. Kalekyezi headed for the police to carry out the same privatisation.

ON KITATTA, KASULE NOTES:
Following the Arab Spring in North Africa, Museveni feared that the opposition in Uganda would replicate the same, more especially in the strategic central region and Kampala city in particular. That is when he used Gen. Kalekyezi to create rogue youth groups in Kampala under Abudallah Kitata. With full backing of and blessing by the regime, Kitata’s ruthless gangs carried out a campaign of violence against the general population and the opposition in general. Imagine at one time Museveni invited Kitata to deliver a lecture to a cabinet retreat. The alleged arms and other military equipment were given to him by the regime.
It was not until the Hima/Tutsi power struggle involving Gen. Kalekyezi and the Rwanda connection, that Museveni moved against Kitata. His crocodile tears before the military court can’t help him. He ought to have heeded to advice by not following the corpse into the grave. Despite his low education level, Kitata ought to have known what befell prominent Baganda Bush War politicians and fighters like Kiseka, Njuba, Bakulu Mpagi, Omulangira Mawuuba, Gyagenda Kibirango, Mukwaya, Zizinga, Kagwa, Mutebi, Ssebatta, Musisi Karampenge, Mawanda, Kawuma, Sseguya, Kawuma, Dragon, Kigundu, Sserwanga Lwanga, Sula Ssemakula, and several others. What about Col. Fred Bogere and Brig. Waswa Balikalege!
They were often generalized as; “Abaganda nabashuma (Baganda are thieves) but history has now exonerated them and Ugandans now know who the real Bashuma are. It is only a few Bipepewo (Butterflies) insignificant Baganda officers like Katumba Wamala, Kasirye Gwanga, Nalweyiso, Kakooza Mutale and a dozen other sellouts that pick crumbs from under Museveni’s table that are being exhibited.

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UNTOLD STORY: Shocking Details Of Meeting Between Museveni And Kayihura, Flamboyant General Reports State Enemies, To Be Given Two Cars And Have His Medical Bills Paid

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President Museveni (L) and Kale Kayihura (R)

On Thursday, news broke that the military court prosecution is finalizing all steps to drop charges of neglecting war affairs and abetting the illegal repatriation of Rwandan nationals against General Kale Kayihura the former Inspector General of Police (IGP).

According to prosecution, the state is still struggling to convince the panel of military court martial judges chaired by Lt. Gen Andrew Guti that the flamboyant General Kayihura committed the crimes he was charged with recently.

It should be remembered that the mighty Grapevine reported that the Commander in Chief of the armed Forces, who is also the president, Yoweri Museveni was not convinced with the evidence lined up by Kayihura’s prosecutors. Much of the evidence against Kayihura was collected and verified by Internal Security Organization (ISO) and Chieftaincy of Military Intelligence (CMI).

According to our security source, some of the evidence collected was connecting Kayihura to the death of the former spokesperson of Uganda Police Force (UPF) AIGP Andrew Kaweesi, the murder of other top citizens like Joan Kagezi, Muhammad Kiggundu and other Muslim clerics like Sheikh Hassan Kirya, Mustafah Bahiga.

Up to now, the masterminds behind the murder of these top citizens have not yet been netted. However, ISO and CMI pin these murders on former top police commanders who Kayihura bossed.

According to some of the evidence from ISO and CMI, they allege that some of these killings were executed by Kayihura’s blue eyed boys like Nixon Agasirwe and Hebert Muhangi. The two security organs claim that Kayihura’s men  arrested innocent suspects and their revelations were proved by the judgment made by three justices.

Among the evidences which ISO and CMI took to Museveni to prove their case against Kale and to allow the state to prosecute him included a recorded phone conversation allegedly between Kayihura and Hebert Muhangi, the former flying squad boss.

In this recording, a voice allegedly of Kayihura is heard thanking Muhangi for successfully executing the murder of Kaweesi, however our sources told us that Museveni, who has a strong interest in Kayihura’s case verified the evidence and concluded that this was not sufficient to pin the former police chief.

KAYIHURA TELLS MUSEVENI ABOUT HIS KAGAME LINKS

After several attempts by Kayihura to meet his boss president Museveni, this website has been told Museveni finally accepted to meet the pencil thin general at Entebbe state house. Kayihura was accompanied by his lawyers Jeff Tumwebaze, Elly Karuhanga and Peter Kabatse from prominent Kampala Associated Advocates (KAA), his sureties Major General Sam Kavuma and Major General James Mugira and other relatives.

In the meeting, Kayihura first thanked president Museveni for granting him his freedom when he ordered Gen. Guti to release him on bail. One of the closest friends to Kayihura disclosed to the Grapevine that the reason why Kayihura thanked Mr. Museveni is because as a serving UPDF officer and a lawyer, he knows very well that all the members in the court martial are still serving officers who are obliged to follow the commander in chief’s orders, so if he had ordered them not give him bail, he would be in jail up to today.

Kayihura told Museveni that the information given to him by top government officials and from military circles that he was planning a deadly mission to overthrow the NRM government was false.

Kayihura openly told Museveni that he has never sat with Rwanda president Paul Kagame or worked with his agents here and abroad to overthrow the government. He told him that it seems some of his officers were working behind his back with some individuals in the Rwanda intelligence to disorganize Uganda government but he was not involved.

In the meeting, Kayihura was grilled on his meeting with Rwanda operatives in Algeria and Turkey. Kayihura vehemently denied meeting any security operatives from Rwanda in those countries, he revealed that he only met security experts in those countries who gave him security ideas to fight terrorism and civil riots.

He admitted that he learnt later before he was fired that some of his boys were working for foreign countries and that they were given money to act as mercenaries.

He apologised for ‘sleeping on the job’ and asked Museveni for forgiveness. Kayihura finally asked Museveni to allow him to go abroad and seek medical attention because he no longer trusted Ugandan doctors.

M7 FORGIVES KAYIHURA AND AWARDS HIM

Our source revealed that Kayihura left state house that day without an answer from his boss who told him that he will call him and talk more about his issues.

A few days after the meeting, Museveni personally called Kayihura on phone and told him that he is free to get his passport and go abroad for medical attention. He however advised him to follow the procedures of the law.

Kayihura immediately instructed his lawyer Jeff Tumwebaze to ask the court martial to give him his passport because he was allowed by the president to travel to Nairobi.

The court without objection allowed Kayihura to take his passport and he didn’t take it back when he came back from Nairobi. Museveni also ordered the Ministry of Defense through the Permanent Secretary to purchase for General Kale two posh vehicles, one for him and another for his wife.  According to one of Kayihura’s henchman, each car is to cost shs600m, so the two cars will cost Shs1.2 billion.

Museveni also ordered UPDF top leadership to beef up Kale’s security especially at his home.

“For all the years I have served in this government from the bush, now I feel like a full General,” Kayihura told his friends who visited him two weeks back, according to his close friend.

The sources added that Museveni also ordered the ministry of Defense to sort out Kale’s medical bills both in Nairobi and in Germany where he is right now.  Kayihura was also provided with well-trained officers to move with him in German after expressing his fear that he may be attacked by operatives from a foreign country who think that he betrayed them and revealed their secrets to Museveni.

MY SOUL IS BLEEDING, WHY DID THAT BOY BRAND ME A MURDERER – KALE SWEAR TO PUNISH KABUSHENGE

Our source, who is very close to Kale further revealed that Kale is very furious about the way New Vision reported his case especially in their leading dailies of Bukedde newspaper and New Vision. Kayihura told his friends that new vision top leadership was used by his enemies in government and in the military to spoil his name by branding him a murderer.

New vision reported recently insinuated that Kayihura was the mastermind behind the killing of Kaweesi. “That boy (Kabushenga) has been used by government mafias to spoil our names and take our jobs, now let me see how he will handle Kale and his lawyers. This is his time to pay for his sins,” a friend to Kale told this website.

He added that what Museveni did to Kale is a sign of solidarity to junior officers in security who are fighting seriously to save his government from the mafia.

EXPERT PREDICTED EARLY

Before Museveni forgave Kale, senior counsel Dr. David Mushabe, who commonly represented Generals in the court martial predicted that Kale was only supposed to apologise to his Commander In Chief to be saved from being harassed and humiliated in the military court martial. Mushabe noted that all the other Generals like David Sejusa, James Kazini, Henry Tumukunde and others were saved after apologising to Museveni.

 

By Jamil Lutakome

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INVESTIGATION

SELFISH: How Sudhir Badly Frustrated Bank Of Uganda Talks, Kenyan Crane Bank Shareholder Feared Being Arrested On Ugandan Soil

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Tycoon Sudhir Ruparelia

Shocking secrets have come out showing how Crane Bank proprietor Sudhir Ruparellia frustrated BoU on the talks the President had directed in order to protect him against being prosecuted for criminally mismanaging his own Crane bank.

Sources have told this website that when BoU moved in to control the mess and Crane Bank and protect the clients who had their money there, they discovered that the bank had only Ugx1,500,000,000 in its possession. This was against depositor obligations of more than Ugx1trn.

That’s how Price Waterhouse Coopers auditors discovered things which had gone wrong. BoU had to stabilize the economy by using its own capital (and that’s how BoU became insolvent) to make sure depositors didn’t get to know that their money had been diverted to other things creating liquidity problems for Crane Bank Ltd which forced BoU to come in and solve it. This was dangerous because Crane Bank was the 3rd largest bank in Uganda at that time. Sudhir and other shareholders were supposed to be arrested and prosecuted which never happened because Museveni pleaded for them.

Instead, BoU agreed that Sudhir and other shareholders must repay the tax payers’ money BoU had used, which was in a tune of more than Ugx400bn to cater for the depositors. BoU hired city law firms like MMAKS to recover the money from Sudhir and other shareholders. Meetings would he held at MMAKS headquarters at Diamond Trust. When lawyers wrote to the Kenyan shareholder Rasik Kantaria, he panicked and first feared coming to Ugandan for BoU meetings because he feared he would be arrested because the Crane bank mess was a very big case which in a normal country was clearly going to lead shareholders to Luzira.

The Kenyan-based Indian shareholder later on agreed to come but he was full of fear. A total of USD80m was at stake and BoU hired the MMAKS lawyers to recover it from Crane bank shareholders. The Kenyan shareholder was assured by BoU that he wouldn’t be arrested and that’s why he agreed to come for the meetings.

In the first meeting, the Kenyan shareholder Kantaria cried like a little boy and repented his sins saying he was misled by his business partner Sudhir to embrace the Crane Bank saga. The lawyers told him all was well and all he had to do to escape jail was to pay up to his liability as a shareholder. The Kenyan/Indian shareholder who was escorted by lawyers from a law firm called ABMAK in Kololo thanked the lawyers and immediately agreed to pay USD7.5m not to be prosecuted. Sudhir whose extravagancy is understood to have caused Crane bank liquidity problems also paid USD8m and promised to pay the balance later. The balance was USD65m. When Sudhir failed to get the money, he came back to BoU lawyers and said he had his properties which he was staking to cover the USD65m.

BANK OF UGANDA AGREES

BoU management and board agreed that if he can surrender his properties, then it’s okay. Meetings were held at Diamond Trust building inside MMAKS offices but Sudhir made a U turn and started acting funny. He complained to Museveni that the BoU lawyers were very complicated. The Indian tycoon is understood to have caused Crane bank problems because he was lending to politically exposed entities and these are borrowers who took cash without being able to pay back and yet they are too powerful for the bank to foreclose by way of attaching their security properties. Others were unable to pay because the loans weren’t properly assessed against the amounts sought right from day one. When he was ready with the properties, Sudhir gave a phone call to BoU officials and meetings were held at MMAKS lawyers’ offices. While there, Sudhir’s lawyers shocked everybody when they delivered titles for properties that were legally not good for any value. These included 50 acres of land covering the whole of Kinawataka wetland. The BoU lawyers wondered how anyone can have a private title in a wetland which is supposed to be gazetted public land.

They even doubted there can be 50 acres in Kinawataka.

They refused that title and Sudhir’s lawyer quarreled and stormed out of the meeting. Sudhir also delivered a title for land in the Kitante valley which BoU lawyers rejected because it was similarly a wetland. Sudhir also tendered a title for the land situated in Kololo near Summit view. There was also land for the Nakasero primary school playground and the Kololo School which Bamugemereire is now investigating. The big tycoon was exposed on the Kololo land near Summit View. He gave in the title saying it was his land which BoU can sell to recover Ugandan taxpayers’ money. However, when BoU surveyors reached there they got arrested immediately by SFC soldiers.

They accused them of criminal trespass and made them crawl on their berries. The soldiers kept saying this land belongs to the army. The surveyors were detained for many days for illegally accessing the army land under Summit View barracks in Kololo. BoU top management had to contact the President for the surveyors to be released. The surveyors were so terrified some of them even resigned their jobs and refused to go to any other Sudhir land for similar surveying. Apart from the SFC chasing them away saying this is army land, the surveyors also found that the Kololo land was bad property because it had no regular access road meaning that even if BoU had accepted it, there would be little value because of the access problems. On being told of his weaknesses, Sudhir became even more annoyed and started accusing the MMAKS lawyers of being complicated.

He also reported to the President that the BoU team had refused his land titles because MMAKS MD Timothy Masembe Kanyerezi hates and wants him to die in prison. The lawyers wrote to BoU showing that the properties combined wouldn’t exceed USD13m in value as opposed to the USD45M that was still pending. The lawyers also advised BoU not to accept the properties because the Auditor General and MPs would in future raise a red flag for causing financial loss because BoU would be asked why they accepted wetlands which is clearly public land.

Sudhir made the talks even more complicated when he started demanding that BoU gives him back the titles for properties like Bauman House which used to be an extension of Parliament. Bauman was taken by BoU/DFCU because it’s among the properties or companies of Sudhir which were borrowing from Crane Bank and the rich Indian wanted BoU to return it to him to strengthen his tenancy arrangements with Parliament and later on the Ministry of Justice which now rents Bauman. BoU bosses refused which led to problems and made the tycoon even more annoyed.

The Grapevine strives for accuracy by providing in-depth, objective and non-partisan information if you have a hot story or scandal you would like to share with us, please reach us through 0752 227640, or grapevineug@gmail.com, info@thegrapevine.co.ug.

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