A former staff member of Tropical Bank Uganda, who was dismissed after signing an irrevocable agreement/letter of undertaking binding the bank and their client, IT Office [U] Limited, to repay a loan from Prime Finance Company Limited, has refuted allegations of fraud. The ex-employee asserts that the bank is not obligated to repay the loan.
According to the former executive director, the letter of undertaking was signed by the board’s approved group limit for IT Office [U] Ltd. Under this limit, management was authorised to approve requests without seeking further board approval. As part of this arrangement, Tropical Bank extended about Shs 6 billion to IT Office [U] Ltd at various intervals.
The former staff member explained that IT Office [U] Ltd acquired Shs 5.7 billion on March 13, 2020, at an interest rate of 5% per month for four months. Due to non-payment, the amount eventually grew to over Shs 21 billion.
Despite this, Tropical Bank benefited from the transaction and later agreed to advance another Shs 10 billion to IT Office [U] Ltd, which had begun to overdraw its accounts.
One official, whose documents were seen by this reporter, confirmed that Tropical Bank used the Shs 5.7 billion to settle accrued income on the loan (around Shs 370 million) and used the balance to settle IT Office [U] Ltd’s outstanding loan obligations.
The official stated, “The settlement of IT Office [U] Ltd’s loan obligations saved the bank from making loan loss provisions under Bank of Uganda guidelines, which would have negatively impacted the bank’s profitability and capital position. The bank reported a profit after tax of Shs 3.5 billion for the period ending December 31, 2020.”
The former staff member also revealed that IT Office [U] Ltd’s loan was regularised and reported in recovery, credit, and risk reports to the board in March and June 2020.
However, the current top officials at the bank, led by Acting Executive Director Mrs. Joweria Mukalazi, allegedly tried to conceal these reports.
Furthermore, the former employee criticised the bank for acting as if they were unaware of the origin of the Shs 5.7 billion. The funds were received from Prime Finance Company Limited on March 13, 2020, and kept in a suspense account. No due diligence was conducted, and a suspicious transactions report was not prepared.
While the bank dismissed him over the loan issue, the former staff member emphasised that he did not personally benefit from the transaction. “I didn’t personally gain from the funds received by the bank as a result of signing the letter of undertaking. I signed the letter as one of the bank’s authorised signatories under Class A,” he explained. He also accused the bank of concealing a copy of the authorised bank signatories, despite requests for its disclosure.
The former employee added that the bank filed a criminal case against him with the Police Investigations Unit in Kireka. However, police investigations cleared him of wrongdoing, as it was the bank that benefited from IT Office [U] Ltd’s loan.
He noted that the Managing Director acknowledged the bank’s benefit by instructing the Head of Credit to investigate why all outstanding loans to IT Office [U] Ltd were not recovered after receiving the funds.
