The Former General Manager of the defunct Cooperative Bank, Perez Bukumunhe, yesterday admitted that its directors started it without knowledge of commercial banking, reports Anne Mugisa and Milly Kalyabe.
Bukumunhe appeared before the bank probe commission chaired by Justice James Ogoola. The other members on the panel are justices David Porter and Japheth Katto. He said the cooperators who were majority shares started the Cooperative Bank as a credit institution but ran it
as a commercial bank.
The organisation, called the Uganda Co-operatives Credit and Savings Bank, lacked manpower, audit and accounts systems, among other things.
“The cooperators didn’t study banking or the Bank of Uganda guidelines.
They just started a bank without knowing about the Bank Act,” Bukumunhe said.
Bukumunhe denied that the cooperators were not happy when Bank of Uganda asked them to justify their application to operate a full commercial bank. He had been queried as to a seeming discontent in the justification letter he wrote in response to the Bank of Uganda query in 1977.
The commission’s lawyer, Geoffrey Kiryabwire, had asked Bukumunhe if he felt spited by Bank of Uganda’s demand for justification of their application for a commercial banking licence.
“It is ironic that a bank which was created to give credit should have to justify its application for licence to do commercial banking,” a paragraph in Bukumunhe’s justification read.
But Bukumunhe said the justification was also addressed to the cooperators who did not have the banking know-how.
He said the institution’s performance in 1971 was promising and prompted directors to apply for a commercial banking licence. Bukumunhe also blamed Bank of Uganda, saying they did not follow the rules to inspect the Cooperative Bank.
Bukumunhe returns to the commission today to give further testimony.
Last Friday he failed to appear because he had gone to attend a graduation ceremony at Kaliro National Teachers College in Kamuli. His absence, after he had been served summons, annoyed the commissioners.