DFCU pays Ernst &Young 150m for a beautiful piece of shoddy work

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By Andrew Muhimbise
There is a saying that goes: if you want to hide something precious from a Ugandan, put it in a book [ writing] . Aware that most Ugandans don’t read, some companies have made it a habit to write ‘nothing’ and pass on the same to Ugandans to ‘read’. This is exactly what dfcu bank has done with the dfcu Information Memorandum. It is an excuse of document.

The obese document, it is alleged is an information memorandum (IM). Unfortunately, there is no sufficient current financial information. 92 pages out of the 210 pages carries old financial statements (2012-2016) which are already in our possession and are irrelevant to the Crane Bankdfcu deal.
The IM release date is 31st August 2017 a cool 60 days after the second quarter whose interim results are already out. In there are first quarter financials of 2017 with an excuse of a detail and the reporting accountant one Ernst & Young was paid Ugx. 150 million for this beautiful piece of shoddy work.
The risk factors are at best generic, when by now we know why Crane Bank collapsed and part of that collapse is in the dfcu’s belly! Amazing stuff.

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The smoking gun
The dfcu with Capital Markets Authority (CMA), approval, has denied shareholders full half year financials to fully understand the dfcu-Crane bank deal.
The March 2017 skeletal results show a net profit of Ugx. 104b and half year put it at Ugx. 114b; Only 10 billion was added in the months April-May-June. In there, could be something the CMA is avoiding in its role of protecting investors that it gave African Alliance the lee-way to do as it wishes.

For the record, I have asked for and dfcu has failed to share with me the detailed half year results even if when they released them, it was written in fine ink that the detailed books were available upon request, I put in my request two weeks ago; maybe CMA could interest herself in this as well
Renunciation! is the SCD System Stupid?
I read an article in the Wednesday Observer where the Lead broker is boastful about zero renunciations.
I will say we are there, but the systems aren’t allowing us to renounce; first of all, my personal rights of 20,000 are not in the SCD system yet contrary to the promise in the IM.

Secondly, I tried selling for a company and the broker said the system has set a price of 1/= (we even joked and laughed about it as it resembled Chebukati’s 11%)
Three days have passed the sale of renounced rights deadline is 15th September and no one cares. It seems the CMA is going to let the USE and SCD frustrate by mercilessly punishing those who want out
The smoking gun
This is how markets fail, confidence is lost due to vested interests trying to control the outcome of results at any cost for short term gains.
You will have to unlock whatever locks were put in the system and reflect all shareholders rights in the system. You say they are just 900 SCD accounts after all; the CMA was paid Ugx 45m to approve such faulty system and the Uganda Securities Exchange (USE) was equally paid Ugx. 254m, for what?

Food for thought
Don’t forget that Arise is stuck, it already put the money and if things are so bad it simply wants us to join in; the rights money for them will simply be a swap as its explained in “The Letter from the Chairman” in the IM.
The market cannot be fooled, when African Alliance plays the smartest guy by giving a reverse right, it is worthwhile to reflect on the previous rights issues which have decimated shareholder value and NSSF here is my witness and the hardest hit shareholder after its New Vision adventure.

When you allow conmen and journey to create avoidable havoc in a young market by failing to do your CMA and USE jobs, you also lose existing and future clients; saying Ugandans don’t understand this stuff is not the reason for slow uptake; it is mostly you don’t do the job you are supposed to by focusing on small term personal gains as opposed to building the market.

READ: dfcu Bank; build-up of failed banks?

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