Former staff pins Tropical Bank on loan given out by Prime Finance to IT Office U Ltd

The former staff of Tropical Bank Uganda who was unfairly sacked after signing an irrecoverable agreement /letter of undertaking binding the bank and their client IT Office [U] Limited to repay the loan the latter got from Prime Finance Company Limited has dismissed the allegations that the loan was acquired through fraud, and therefore the bank no obligation to repay it.

The former staff says the letter of undertaking was signed in line with the Board’s approved group limit to IT Office [U] Ltd within which management would approve requests without seeking further approval from the bank. This had been okay as the bank extended about Shs 6 billion to IT Office [U] Limited, the money borrowed at various intervals.

The former staff who served as executive director said the Shs 5.7 billion acquired by IT Office [U] Limited on March 13, 2020, at an interest of 5 percent per month for four months, before it accumulated to over Shs 21 billion due to non-payment, benefited Tropical Bank Uganda, after which the bank would agree to advance another loan of Shs 10 billion as requested by IT Office [U] Ltd which started to overdraw its accounts.

According to one of the officials, whose documents this reporter has seen, Tropical Bank Uganda utilised the Shs 5.7 billion to settle accrued income on the loan of about Shs 370 million and the balance utilised to settle the outstanding loan obligations for IT Office [U] Ltd. The official says the appropriation of these funds can be confirmed from the IT Office [U] Loan Statement,” the official says.

“The settlement of IT Office [U] Ltd’s loan obligations saved the bank from making loan loss provisions under the Bank of Uganda guidelines as this would have adversely affected the bank’s profitability and capital position which capital position was already impaired as of December 31, 2019. The bank reported a profit after tax for the period ended December 31, 2020, of Shs 3.5bn,” he says.

The former staff further says that IT Office [U] Ltd.’s loan having been regularized, it was reported in the recovery, credit, and risk reports to the board in March 2020 and June 2020, although, he says the current top official at the bank tried to conceal these reports.

The former staff also pins the bank on acting as if they didn’t know where the Shs 5.7 billion came from. The Bank received Shs 5.7 billion from Prime Finance Company Limited on 13th March 2020 and kept the funds in suspense account. A due diligence on the said funds was never conducted through which a suspicious transactions report would have been prepared and funds returned in case the funds were in question.

The former staff says much as the bank dismissed him over the loan issue, he did not personally benefit from the transaction. “ I didn’t personally accrue personal benefit from the funds received by the Bank as a result of signing the letter of undertaking. I signed the letter of undertaking as one of the Bank’s authorised signatories under Class A,” he said, adding that the bank has concealed a copy of authorised bank signatories despite the request that it be provided for scrutiny.

He says the bank filed a criminal case against him at the police investigations unit at Kireka, and according to him, the police investigated the matter and found he has no case to answer since it is the bank that benefited from the IT Office [U] loan from Prime Finance Company Limited. “The Managing Director acknowledged the benefit accrued from receipt of the funds by way of instructions to the Head of Credit to carry out investigations on the IT Office [U] Bank account as to why all the outstanding loans to IT [U] Limited were not recovered after receipt of funds,” he says.