Like any central bank furbishes up new laws for steadier control of foreign exchange operations, the sector was last week hit by a US$1 million (about Ush1.8 billion) fraud.
The money transfer scam at Lanex Forex Bureau Ltd; was discovered after numerous complaints that led to the arrest of its manager, Mr. Roopesh Dhirajlat.
Now the central bank has suspended the licence and frozen all accounts of Lanex in Uganda and also closed accounts of Dhirajlal, the chief suspect in the scam where construction firm, Cementers Uganda Ltd allegedly lost $157,000 (Ush288 million) in shoddy transfers.
Speaking to the press on Wednesday, Mr. Tumusiime Mutebile, the central bank governor said that Lanex was also engaged in unlicensed deposit taking and whose lack of internal controls eased the manager’s intentions.
Although by law forex bureau transactions in Uganda are supposed to be done over the counter, some of the over 80 bureaus practice otherwise. Reports indicate that some of the defrauded funds are being held in various accounts with financial institutions in the country.
Mutebile, accompanied by his senior directors said that whilst the various transactions were not receipted, there are some documents bearing the stamp of the bureau and the handwriting of signature of the bureau’s manger.
Lanex, which had hitherto the scam enjoyed a warm relationship with Stanhope Finance Company Ltd where two of its directors also sit on the Lanex board, has also been threatened with expulsion from the Uganda Forex Bureau Association.
He argued that they don’t approve cross ownership of financial institutions and that the cross directorship was immaterial to the case. Earlier speculation had linked the two institutions in the fraud to which Stanhope and Bank of Uganda have said otherwise.
Stanhope has resolved to refund the monies of those with documented claims to protect its image after affected traders laid siege at the head office in central Kampala demanding for over Ush180 million in refunds after botched transactions.
The new law will revoke the Exchange Control Act of 1964 and the Forex Bureau Order of 1994 and give the central bank more powers and the mandate to apprehend and prosecute those who contravene these regulations.
Nonetheless, it will allow forex bureaus to transfer money directly instead of going through commercial banks and money changers will have to affiliate themselves to official players in the market like forex bureaus.
Items proposed in the law include penalties and fines on conviction of not less than Ush4 million ($2,185) or imprisonment not exceeding two years or both or even relinquishment of property to the State. Others include vetting proposed management and holding top officials personally liable for offences committed by their companies
BY Tanah Hadijah
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