Top Scandals and Mismanagement at Bank of Uganda Over the Years
Here is an in-depth look at some of the major scandals that have rocked the BoU over the years.
The Bank of Uganda (BoU), Uganda’s central financial institution, has long been considered a cornerstone of the country’s economic stability. However, over the years, the institution has been embroiled in numerous high-profile scandals that have shaken public confidence. From questionable transactions to mismanagement and outright theft, these incidents have highlighted systemic weaknesses and raised concerns about oversight and accountability within the bank.
Here is an in-depth look at some of the major scandals that have rocked the BoU over the years.
2011: Shs5b Bicycle Scandal
The BoU faced accusations of enabling the loss of Shs5 billion to a ghost company. The money was meant for procuring 70,000 bicycles for local council officials. The central bank processed payments despite forged documentation in the bill of lading.
Although the Ministry of Local Government had paid Shs100 million to authenticate the documents, they failed to do so, allowing the ghost company to receive funds. Critics argued that BoU should have identified the inconsistencies and blocked the payments. While several government officials were sentenced to 10 years in jail in 2014 for their roles, none of the convicted were from the central bank.
2011: $740m Fighter Jets Scandal
Under the guise of classified expenditure, BoU disbursed $740 million to the Ministry of Defence for the purchase of fighter jets and other military equipment without Parliamentary approval, a violation of the law.
This transaction occurred shortly after the general elections and was widely criticized as an avenue for channeling public funds into political activities. The expenditure significantly reduced Uganda’s foreign reserves, from six months to just four months of import cover.
BoU Governor at the time, Emmanuel Mutebile, publicly opposed the decision but was overruled by President Yoweri Museveni, who later persuaded the NRM Parliamentary caucus to approve the expenditure retroactively.
Shs142b Basajjabalaba Compensation Scandal
Between 2000 and 2011, businessman Hassan Basajjabalaba received loans worth $65 million from commercial banks, backed by letters from BoU stating that the government owed him compensation. The loans were tied to his contracts for redeveloping Owino, Nakasero, and Shauriyako markets, as well as the Constitutional Square, which were later canceled due to protests by traders.
When Basajjabalaba defaulted, the commercial banks used BoU’s letters to recover the funds from the Consolidated Fund, costing taxpayers Shs142 billion. The incident raised serious questions about BoU’s role in issuing guarantees without proper safeguards.
2015: Cyber Attacks
Between July and December 2015, hackers and insider accomplices attempted to steal Shs81 billion from BoU accounts. In one instance, they targeted $12 million, and in another, $2 million.
Investigations revealed that some government officials had shared sensitive passwords with the perpetrators, facilitating the attacks. Despite foiling some attempts, the breaches exposed significant vulnerabilities in BoU’s cybersecurity systems.
2018: Crane Bank Sale Scandal
The controversial sale of Crane Bank to DFCU Bank brought intense scrutiny to BoU. The central bank injected Shs200 billion of taxpayer money into Crane Bank, claiming it was for capitalization before selling the bank at what critics described as a “giveaway price.”
Shareholders of the defunct bank accused BoU of mismanaging Crane Bank during its receivership, arguing that the sale violated the Financial Institutions Act of 2003. Additionally, they pointed out that the sale agreements lacked clear details about the value of assets and liabilities.
2019: Currency Saga
In a dramatic incident, officials at BoU were implicated in a scandal involving a chartered plane carrying newly printed currency notes. Investigations revealed that the plane also carried unauthorized private cargo, raising suspicions of illegally printed currency.
The State House Anti-Corruption Unit arrested several BoU officials, including the Director of Currency, the Assistant Currency Director, and a verification officer. They were charged with abuse of office, negligence of duty, and corruption.
This case prompted a broader investigation into whether BoU had printed more currency than authorized and whether due procedures were followed.
Bank of Uganda Pen Scandal
In 2019, the BoU made headlines for spending an astonishing Shs125 million on branded pens. Each pen reportedly cost over Shs500,000. The expenditure caused public outrage, with many questioning how such an amount could be spent on basic office supplies. This incident further fueled perceptions of wastefulness within the institution
November 6, 2024: Theft of Old Currency Notes
The latest scandal saw Charles Kasede Ochieng, the former head of verification at BoU, sentenced to three years in prison for stealing old currency notes meant for destruction.
Evidence presented in court included 22 video clips showing Ochieng pocketing notes while bypassing the punching machine. The court found him guilty of abuse of office, stating that his actions severely damaged trust in the bank’s systems and its officials.
Impact of the Scandals
These repeated scandals have not only tarnished BoU’s reputation but also exposed glaring gaps in oversight and governance. Public trust in the institution has eroded, with many questioning the effectiveness of its internal controls and the accountability of its leadership.
The BoU’s ability to safeguard Uganda’s financial stability is now under increased scrutiny. Experts have called for urgent reforms to strengthen transparency, enhance internal audits, and modernize security systems to prevent future occurrences.
