Centenary Bank, a prominent Catholic-based financial institution in Uganda, was struck by two massive unreported fraud scandals totalling to Ugx 5.51 billion shillings in less than a year. The bank’s internal controls and risk management practices were questioned, raising concerns about transparency, accountability, justice and academic forgery.
The first Fraud of 3.56 billion shillings occurred on October 4, 2023, through the Utilities payment system, with transactions ranging from Ugx 80 million shillings to Ugx 99 million shillings posted on 31 MTN registered agent lines posted from Kabale Branch with the imbalance affecting Mapeera Branch.
The Second Fraud of Ugx 1.95 billion shillings hit the bank on August 1, 2024, affecting the agent banking platform, with transactions of Ugx 50 million shillings posted to different float accounts from the Kawempe-Bwaise Branch also the imbalance affecting Mapeera Branch.
This publication discovered that the root causes of these frauds were mainly related to Banking System vulnerabilities, incompetency, and non-compliance to regulatory standards of Anti-Money Laundering. In addition, the department of compliance which ensures all fraudulent transactions are monitored and reported to the regulatory Authorities like Financial Intelligence Authority and Bank of Uganda as it controls the Bank’s Anti-Money Laundering System, was marred with irregularities, lack of transparency, and top management’s forgery of academic papers. In particular, the Chief Manager Anti-Money Laundering and Compliance called Mr. Chemutai Samuel allegedly forged his academic papers from Kampala International University.
The publication discovered discrepancies on both results submitted for employment and those held at the University. On reaching out the University Administration, they confirmed that he had pending issues to clear with the University about his results which signified that his admittance to a graduation list was a mere forgery. In addition, his record in a graduation book reflected a Lower Class of Degree in Computer science yet he alleged to have graduated with a First-Class Degree.
Furthermore, weak Human Resources Vetting Processes allowed unqualified individuals with forged academic documents to hold critical positions in the Bank. The publication further discovered that the Internal Investigations lacked capacity to establish the root causes of the frauds and instead implicated innocent IT staff and dismissed them further creating suspicion on the motive of the Investigators since all these innocent staff were lower ranking officers and some with limited privileges in the Bank’s IT infrastructure. Shockingly, the affected tellers whose login credentials were used were protected and the Forensic company was denied access to the Core Banking System during investigations, which was very crucial to ascertain who unlawfully accessed the Teller profiles.
The cases were reported to Kampala Metropolitan Police Station but the external investigations didn’t yield any fruits, no recipient of the stolen funds were prosecuted and neither did Centenary Bank follow up the matters for recovery of the stolen funds.
This publication further debunked that, Centenary Bank’s Board grappled with corporate governance issues like board independence, accountability, compliance, transparency and fairness in order to thoroughly investigate top management’s involvement in these heists, address lapses in internal investigation processes, protect innocent staff from unfair dismissals and recover the lost funds.
With such serious lapses in commercial banks, there’s a need to strengthen statutory and regulatory frameworks and effective supervision by Bank of Uganda in order to protect customer deposits to save the financial sector and build trust in Customers and other stakeholders.
Fabian Kasi the Managing Director of Centenary Bank could not be reached for comment on the issues affecting his bank.
