According to confidential records obtained by this investigative website, Masembe, Makubuya, Adriko and Ssekatawa (MMAKS) Advocates were on December 14, 2016 paid $166,796 (Shs 608m) by BoU as “professional fees” to handle the Crane Bank case.
The money was sent to MMAKS Advocates’ dollar account in Barclays Bank under fee note number 7419A.
Earlier on November 28, 2016, MMAKS under reference number TMK/M0006-0245, sent an invoice to the Legal Counsel of Bank of Uganda for payment of $251,000 (Shs 916m) for “transaction advice IRO to take Over Crane Bank.”
MMAKS Advocates informed BoU they were invoicing for instructions at the “pre-take over stage on the intervention in Crane Bank Limited (CBL), the options under the Financial Institutions Act, 2004 (FIA) and to prepare and review together with yourselves the requisite documentation for take over and other matters related.”
According to MMAKS’ invoice, BoU also was paying for instructions to participate in the ‘post takeover activities” which included advice on the “selection and appointment of an auditor to make statutory inventory of the assets and liabilities of Crane Bank.”
Indeed, BoU would later, on the advice of MMAKS, hire Price Water House Coopers to audit and carry out a forensic audit of Crane Bank.
The invoice also shows that MMAKs wanted BoU to pay for “advice on the sale of Crane Bank”.
This means as early as November 2016, MMAKs planned for the sale of Crane Bank.
Dfcu eventually acquired Crane Bank at an unknown cost as the sale agreement was never made public.
But the same tax invoice indicated MMAKS were instructed to “coordinate and compile all expressions of interest and advice on eligibility criteria; be the repository and central focus point for all buyer information and correspondence; coordinate the due diligence activities on CBL by prospective buyers; coordinate the invitations for bids and receive bids that will be made and finally, assist in the evaluation of bids.”
The invoice blows the lid off the unknown central role of MMAKS in the entire Crane Bank saga.
It’s interesting that the law firm which was already preparing for the sale of Crane Bank participated in negotiations between the financial institution and the central bank aimed at avoiding a legal battle.
When negotiations collapsed, MMAKS Advocates relied on a report of PwC, which the law firm helped to procure, as a basis to take on Crane Bank’s former proprietors in a legal battle.
More to this, MMAKS Advocates was paid by BoU to “coordinate the bidding process, conduct due diligence
In brief, the law firm, which previously represented Crane Bank in many cases, advised BoU to take over Crane Bank and selected the suitor.
The law firm also went ahead to receive instructions to “advise on the suitable mode of disposal and draft, negotiate and conclude the requisite sale documentation and progress the matter to a successful conclusion” upon identifying a successful bidder.
For this job, MMAKS was paid an extra Shs $251,045 (Shs 916,150,000) on account number 4169179, Barclays Bank of Uganda Limited, 16, Kampala Road using swift code BARCUGKX.
Asked to comment on the large sums of money paid to external lawyers despite running an internal legal department, BoU’s Communications Director, Christine Alupo said she would “get back” to us.
Alupo, who is Nairobi, later referred media to her junior, Kevin Kizito Kiyingi.
But Kiyingi responded: “I am not in position to comment”.
He didn’t give us reasons why he couldn’t comment on such a contentious issue.
However, it will be recalled that MP Abdu Katuntu and MPs sitting on the Statutory Authorities and State Enterprises (COSASE) committee recently tasked BoU to defend its continued expenditure on external lawyers.
“What sort of legal opinion do you seek from external lawyers which you can’t handle as a department or bank?” asked Katuntu.
“You would rather grow your capacity (legal department). That’s what other institutions are doing.”
BoU’s legal department official Margaret Kasule said the institution recently spent “Shs 1.5bn on a bill for a case that has been litigated for 13 years.”
But officials had earlier told this website that the total legal budget for the 2015/2016 financial year was about Shs 400m and external lawyers were being hired because of very few practicing lawyers on the Bank’s staff.
They further stated that BoU had taken a “proactive stance to expand its legal capacity in the preceding financial year and its own staff will begin to represent it in Court over the near-medium term in line with the improving capacity.”
Kizito refused to explain why BoU did not fully open up on the billions of shillings spent on the Crane Bank case.
BoU said in a statement on July 13, 2017 that “court filing fees of Shs 394m were assessed and paid to Uganda Revenue Authority” in relation to the Crane Bank case.
The statement further stated that, “other than that, there has been no payment of legal fees in connection with the suit. The BoU will settle any legal fees in accordance with the law governing remuneration of advocates.”
But today’s revelations indicate BoU wired more than Shs 3.5bn to MMAKS Advocates’ bank accounts in late 2016 and early 2017 – long before the July 13 statement.
MMAKS Advocates is owned by lawyers Timothy K. Masembe, Apollo N. Makubuya, Moses J. Adriko, Mathias V. Ssekatawa, Ernest S. Kaggwa, Isaac Walukagga, Fiona N. Magona and Stephen Zimula.