The Shs397b BoU versus Sudhir case: The issues of contention court is likely to consider in ruling

The Head of Commercial Court, Justice David Wangutusi has set August 26 as the date on which he will deliver his ruling on the case in which the Bank of Uganda (BoU) /Crane Bank in receivership sued Sudhir Ruparelia and Meera Investments Limited of fleecing former Crane Bank of Shs397 billion.

Backwards: On June 30, 2017, BOU filed a suit against Sudhir in court, which the businessman says was in breach of clause 12 of the Confidential Settlement and Release Agreement (CSRA) that was reached by both parties after BoU closed and liquidated Crane Bank Limited.

The clause stipulates that, “Without prejudice to the immediate forging should any legal or administrative proceeding of any kind ensue against SR [Sudhir Ruparelia] as defined in the agreement, the agreement stands voided and BOU shall immediately return to SR the value of the settlement.”

In a counter claim, Sudhir wants BoU to pay him US$8 million (about Shs28.8 billion).

Sudhir claims that on January 25, 2017, BoU sold, at an undisclosed sum, assets of Crane Bank to Dfcu bank Limited yet by mid-January 2017, the central bank had approached and urged him to settle the dispute.

He says that between January 29 and March 20, the parties held a series of meetings meant to amicably resolve the dispute. He adds that under clause 3.1 of the CSRA, they agreed that he pays US$60m in part cash and property.

In return for the above payments, Sudhir says they agreed that BOU would assign a number of loans totaling to Shs 63.6 billion to him, release all securities of those loans, and remove Crane bank from receivership.

On April 4, 2017, Sudhir says that David Mpanga, one of BoU’s lawyers, wrote on behalf of himself and MMAKS, the other BoU lawyers, setting out the implementation timeline of the CSRA, clearly spelling out what each party was required to do in the said agreement.

In the letter, Mpanga said Sudhir was to provide the property list with an aggregate fair market value of US$42 million and that BOU would avail the assigned deed and loan statements to Sudhir with respect to the agreed loan.

That upon receiving the first installments, Mpanga wrote that BoU would release securities of loans worth about US$ 8million on the account of Sunbury Investments (U) Ltd and Main Freight ICD Limited. That upon receipt of the balance of US$10 million, Mpanga wrote that BoU would release the securities of the remaining portion of the agreed loans.

“A joint valuation team would determine the value of the properties and would compile a list that would constitute the settlement titles,” reads Mpanga’s letter, which is copied to BoU governor Emmanuel Tumusiime-Mutebile, and Justine Bagyenda, the BoU executive director for supervision.

Sudhir claims he went ahead to implement the agreement by giving up his properties to BoU, which included titles for land found in FRV 130 folio 18 plot M418 Nakawa Industrial Area and LRV 1239 folio 2 plot 7 Parliamentary avenue Kampala.

On April 19, 2017, Sudhir claims, BoU acknowledged receipt of US$1.1 million as payment towards the agreed loans and informed him that his deficit on the first installment of US$8 million was $6.9m, which they demanded he must pay that very day.

On April 20, 2017, Sudhir says he paid BoU US$6.9 million. That meant he paid a total of US$8 million on the same day. Despite paying the said money, he said, BoU never released securities of loans representing a total value of approximately $8m on the account of Sunbury Investments, Main Freight and also the central bank did not return his land titles.

That, Sudhir says, was a total breach of the CSRA. In compliance with the agreement, Sudhir says, he had supplied a list of titles, 10 of which were in the names of Mahmoud Bharwani, who had agreed to surrender his titles to settle his indebtedness to Crane bank.

Earlier on April 7, 2017, he said he arranged a meeting between Mpanga and Bharwani after BoU raised a number of issues in regard to Bharwani’s land titles and that it’s Mpanga who wrote the minutes.

“Mr Mpanga’s minutes indicated that the professional valuer conducts the joint valuation to avoid unilateral conclusion by one party. Any defect in title would be established in the joint valuation process,” Sudhir claims.

He said he put an additional eight titles to the property list to give BoU comfort. Nevertheless, Sudhir says, BoU in further breach of the CSRA implementation agreement and the Bharwani meeting, backtracked on the joint valuation.

As if that was not enough, Sudhir says that BOU threatened criminal prosecution if he did not agree with their demands, which were not in accordance with the CSRA.

On June 28, 2017, he says, Mpanga sent him an email with a notice to sue, demanding that by close of business on June 29, he unequivocally undertakes in writing to pay the balance of $52 million and that the payment must be made in cash by July 15.

He said that on June 30, BoU filed a suit against him in court, which was in breach of clause seven of the CSRA.

On October 20, 2016, BoU closed Crane Bank Limited on account of undercapitalization before selling some of its assets to Dfcu  bank in Shs200 billion deal in January 2017. Dfcu bank. Dfcu bank would in first half of 2017 post 114 billion, with a great percentage of the profits attribute to acquisition of Crane Bank Limited.