An Auditor General’s report to a parliamentary Public Accounts Committee on Commissions, State Authorities and State Enterprises (PAC – COSASE) investigating the closure of the defunct banks found that JN Kirkland, through a number of companies, many of which are suspected of being façades and fronts for Bank of Uganda officials, sold financial assets worth UGX135bn for a mere UGX8.9bn- a 93% discount! According to the Auditor General’s report, the assets included UGX34bn of loans that had valid, legal and equitable mortgage supported by proper legal documentation.
According to the AG, the UGX8.9bn sale price, represented 26% of the total secured loan portfolio and 7% of the total loan portfolio!
All this happened between 2005 and 2011 while Kirunda, was a Senior Legal Associate at JN Kirkland.
So when this reporter, asked Robert Kirunda on Twitter, to clarify on whether he had a role to play in this shadowy deal- Kirunda played dumb, now for 5 days, despite the fact that he has been active on twitter.
Kirunda who is known to have very strong views on government corruption also declined to respond to this reporters inquiries sent to his official email address, as well as his known Whatsapp and Twitter messaging inboxes. This reporter, asked Kirunda, who during the parliamentary probe, represented Justine Bagyenda, if, assuming he had any role to play in the deal, he had ever interacted with Bagyenda and Benedict Sekabira- the BoU Officials various named by a parliamentary probe on the matter for the mismanaging the particular assets sale.
He also declined to respond to this, regardless of a reminder.
Details: How JN Kirkland is believed to have conspired with BoU officials to profit from defunct banks’ asset sale.
According to investigations by this magazine and according to details available from the that in or around 2006, Bank of Uganda officials- mainly Justine Bagyenda and Benedict Sekabira hired JN Kirkland to advise them on how to dispose of assets of the defunct International Credit Bank (ICB), Greenland Bank and Cooperative Bank. It is not clear how BoU arrived at JN Kirkland, a firm founded in 2005, but accordingly, it is JN Kirkland, acting as an exit strategy external consultant for the central bank that identified a US company, Octavian Advisors, a US hedge fund, said to be specializing in distressed investments; itself founded in 2005, who agreed to buy the bad loan book.
Octavian Advisors would incorporate a company known as M/S Nile River Acquisition Company (NRAC)- in Mauritius on the 26th September 2007- just two months before they acquired the assets, on 24th November 2007 from Bank of Uganda.
The assets amounting to UGX135 billion at $5.25m- UGX8.9bn at the time (USD1= UGX1,710 in November 2007).
According to the Auditor General’s report, this transaction, occasioned the shareholders of the defunct banks, up to UGX126 billion in losses. Although Bagyenda tried to justify the sale price saying that many of the assets were bad, the Auditor General said that the UGX135bn, included UGX34 bn of loans that had valid, legal and equitable mortgage supported by proper legal documentation and concluded that the UGX8.9bn sale price, represented 26% of the total secured loan portfolio and 7% of the total loan portfolio.
But perhaps, the sale price is not the biggest problem- the problem lies in the details of how the transaction was layered- ultimately ending back at the doorsteps of JN Kirkland as a beneficiary from the very same transaction they were hired to advise on, for the owners of the law firm and companies linked to them would later be found in possession of land titles, previously used as collateral on some of the bad loans.
First of all, the details of how BoU reached at NRAC as a final buyer are shadowy and so was the valuation of the assets before sale. Bagyenda the sacked former Executive Director of Bank Supervision under whose regime most of the dirty selling happened, would later tell parliament that the price was reached at after what she called “desk estimation”!
In what appears to be a carefully constructed scheme, immediately after acquiring the assets at a give-away price, on 31st of December 2007, NRAC executed a power of attorney to M/S SIL Investments – a company only registered in Uganda just a month before, on 16th November 2007, to collect debts on its behalf!
More suspiciously, the registered physical address for SIL Investments was Greenland Towers, the then registered offices for JN Kirkland & Associates.
During an earlier investigation into the matter, by this reporter, one of the lawyers who represented SIL Investments on several of the loan recovery cases, intimated to this reporter that all legal instructions from SIL originated from JN Kirkland & Associates’ founding partner, a one Kakembo Katende.
At the time, Kakembo, the Robert Kirunda’s boss, did not pick up our calls and declined to respond to Whatsapp inquiries on the matter, despite having read them.
Interestingly, Octavian Advisors closed in 2012, over what it said was a difficult operating environment. Nonetheless SIL investments continued recovering the bad loans.
Octavian deal murky, SIL-NRAC deal fraudulent
The parliamentary probe into o the closure of defunct banks concluded that “the transaction between Bank of Uganda and Miss Octavian Advisors Plc. and her agents lacked transparency and officers involved should be held responsible for commissions and/or omissions which resulted in not marshalling the greatest amount of the assets of the distressed financial institutions.”
The committee further recommended that “the officers involved should be held responsible for conflict of interest,” and more importantly, the “fraudulent business activities being conducted by M/s SIL Investment on behalf of a non-existent Nile River Acquisition Company (NRAC) should immediately cease.”
“The Inspector General of Police is required immediately, on adoption of this report, to seize all the land titles in possession of Mr. Kakembo Katende of JN Kirkland and Associates and M/s SIL Investment arising from their management of the loan portfolio sold to Nile River Acquisition Company by Bank of Uganda,” ordered the committee.
“M/s SIL Investments and Mr Kakembo Katende should render an account to the public trustee of all monies received from the time Nile River Acquisition Company ceased” and that “the agency of M/s SIL Investments Limited cannot legally exist upon dissolution of the principal – that is Nile River Acquisition Company,” further concluded the committee.
Was Kirunda an innocent employee or is he playing Omerta-code silence?
Robert Kirunda has since left JN Kirkland and is a co-founding Partner at Kirunda & Wasige Advocates of the firm through whom he represents Bagyenda.
Robert Kirunda has since left JN Kirkland and is a co-founding Partner at Kirunda & Wasige Advocates of the firm through whom he represents Bagyenda. It is also likely that, he possibly did not know much about this deal and his representation of Bagyenda was merely coincidental, but he won’t say nothing, preferring to keep an Omerta-code silence.
Even when we asked him whether he found a moral dilemma and or conflict of interest in representing Bagyenda over a matter in which he, was likely party to by virtue of his former employment, he did not respond.
Neither did he respond to our question in regard to the fact that following the parliamentary probe and the Auditor General’s report that revealed that the assets of the three banks had been grossly undervalued to the detriment of the shareholders, if he had any regret, he did not respond as well.
Nearly a year has gone by since parliament promised to take action on parliament’s report and nothing has happened, in which case we are likely to never know the full truth and major questions will still linger.
For example, did JN Kirkland actually buy the bad assets for themselves through Sil Investments, but used Octavian Advisors and NRAC Company as mere smokescreens? If so, was JN Kirkland working on its own or was it representing some powers that be in Bank of Uganda. If yes, who are these people? Did the officials at BoU, then deliberately under-price the bad assets of the failed banks so as to privately benefit once the recovery had been done?
Robert Kirunda, as a former Senior Legal Associate at JN Kirkland surely has some of these answers to these questions. And he, just like his former boss, will possibly not respond ever to our inquiries, or will like most lawyers prefer to do, respond with threats to sue this publication and could actually go ahead and sue and life will move on for the former shareholders of the defunct banks.
The sun will rise and set and it will be another day of justice delayed.
