Could Bank of Uganda be Undermining the Orders of the Honorable High Court towards protecting the Ugandan economy from illegal hemorrhages and uncontrolled flows of financial resources and implementing the laws of Uganda or justifying its negligence?
When Concluding his Landmark Judgement, Hon Henry Peter Adonyo, the head of the Commercial Division of the High Court in Uganda directed the Bank of Uganda as follows; “I do issue directives to Bank of Uganda which is the implementing authority under the Financial Authorities Act 2 of 2004 As Amended to take such necessary actions and measures to ensure that the provisions of the law is implemented in accordance with the intention of the law such as to protect the Ugandan economy from illegal hemorrhages and uncontrolled flows of financial resources and to ensure that financial institutional business in Uganda is operated within the letter of the law to protect the nascent banking business industry in Uganda.”
However, in a shocking response, Mr. Emanuel Mutebile the governor bank of Uganda noted in a press statement that “It is not mandatory for a foreign Bank to establish to establish a representative office in Uganda in order to conduct lending activity” which statement contravenes; Section 126 (3) of the Financial Institutions Act, 2 of 2004 (As Amended) which provides that: A financial institution which does any act prohibited by this Act or fails to do anything required by this Act commits an offense and where no specific penalty is provided, the financial institution is liable on conviction to a fine not exceeding two hundred and fifty currency points and in the case of a continuing offense, to an additional fine not exceeding fifty currency points for each day on which the offense continues.
While Regulation 5 (1) of the Financial Institutions (Agent Banking) Regulations 2017 expressly bars such a transaction if not approved by Bank of Uganda. It provides that: “A financial institution shall not conduct agent banking in Uganda without the prior written approval from the Central Bank.” Which regulation was further contravened by Diamond Trust Bank Uganda as cited by Hon Henry Peter Adonyo.
It needs to be emphasized that the terms of these sections of the law are couched in mandatory terms coupled with punishment for noncompliance, which beyond doubt makes it absolutely mandatory to comply with them. Diamond Trust Bank Uganda and Kenya had to seek approval and or license from the Central Bank of Uganda and or any other authorized entity. They did not.
Thus, Bank of Uganda which is the implementing authority cannot be seen to undermine the orders of the honorable High Court of taking the necessary actions to protect Uganda’s economic independence through ensuring that all operations violating the good health of the Ugandan economy are stopped and appropriate action taken against those netted in the act such as Diamond Trust Bank Uganda. He could not be to governor of the regulating authority to come out openly and start defending the law breaking Institutions against the specified law penalties in the Constitution.
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