Mr. Sudhir Ruparelia

 

 

Currently, Uganda’s central bank, the Bank of Uganda (BoU)/Crane Bank In Receivership is trending for losing a case to city businessman Sudhir Ruparelia who had filed an application in court challenging the legality of Crane Bank In Receivership to sue him and his Meera Investments Limited for Shs397 billion allegedly drawn from former Crane Bank through fraudulently transactions between the two.

Head of Commercial Court, Justice David Kutosi Wangutusi who ruled in Sudhir’s favour last Monday also awarded costs of the application to Sudhir, which simply means Ugandan taxpayers will pay billions to Sudhir and Meera Investments Limited, respectively. BoU on Tuesday said it would appeal against the ruling. But Grapevine has it that Sudhir will ask Court of Appeal for a raise in the costs awarded; from Shs74 billion supposed to be paid by BoU in High Court to about Shs120 billion should the case proceed in Court of Appeal.

Backwards: Between 1993-2016, BoU closed seven commercial banks that included; Teefe Trust Bank, International Credit Bank, Cooperative Bank, Greenland Bank, Global Trust Bank Uganda, National Bank of Commerce and Crane Bank Limited, with majority of the banks closed because of being undercapitalised.

However, BoU closing down the affected commercial banks, BoU officials failed to follow the established laws and guidelines, as was put by the Auditor General John Muwanga in his special audit report of BoU on defunct banks. BoU didn’t envisage or some officials knew that by ignoring the proper procedures, the Ugandan taxpayer would cover the costs for their misdeeds.

Creating situation for demands of compensation

And indeed when MPs on parliament’s committee on Commissions, State Authorities and State Enterprises (COSASE), invited former shareholders of defunct banks during the BoU probe that happened between later October 2018 to late February 2019, most of the former owners   demanded for compensation, whose total could be in trillions of shillings. Worse still, some have considered legal options against BoU.

For instance, former shareholders of National Bank of Commerce, Greenland Bank and Global Trust Bank Uganda want compensation of Shs295 billion, over Shs100 billion and Shs315 billion respectively, saying their banks were illegally closed by BoU. If the demands for compensation is accepted, it will be the Ugandan taxpayers to pay; moreover some shareholders want interest paid as well. The Ugandan taxpayer will also meet costs of legal fees should the battles be taken to court. This is the situation in which BoU has put Ugandans.

Sale of Crane Bank to DFCU Bank at Shs200 billion

The case where Ugandan taxpayers have already lost money is that of the close and sale of Crane Bank’s assets to its rival Dfcu bank in late January 2017. Many Ugandans still cannot believe BoU’s claims that it spent about Shs478 billion as liquidity support to Crane Bank in Receivership, yet at the end of it transferred its assets at Shs200 billion, paid in installed, moreover at no interest at all. During COSASE probe BoU officials could not account for Shs290 billions of this money and yet want former shareholders of Crane Bank to pay the missing money that they never received.

Exorbitant legal fees paid to MMKAS Advocates

MMAKS Advocates were paid Shs914 billion for legal advice during CBL intervention, resolution and advice on the sale of CBL assets and assumption of liabilities. The firm would further be paid extra Shs3 billion as 5 percent commission monies recovered from CBL shareholders. The COSASE MPs said that those payments to MMAKS Advocates were exaggerated to benefit some BoU senior staff involved in the sale of CBL. There were no records or minutes from meetings between MMAKS Advocates and BoU which culminated to disbursement of such monies.

“How can Shs4.2 billion of taxpayers’ money be given for a legal advice without any minutes?” MP Odonga Otto asked during the COSASE probe. COSASE Chairman Abdu Katuntu, a lawyer as well, also found it strange that BoU paid all that money to MMAKS without any minutes or reference. What the MPs were concerned about was the loss Ugandan taxpayers had incurred under unclear transactions between BoU and MMKAS Advocates.

Hiring of conflicted AFK Mpanga Advocates and MMAKS Advocates in Shs397 case

On December 2017, court ruled in the favour Sudhir against a case he filed against law firms; MMAKS advocates and AFK Mpanga Advocates, to bar them from representing BoU in Shs397 case over conflict of interest. Court ruled that David Mpanga and Kanyerezi Masembe who were Sudhir’s lawyers over time were privy to confidential information regarding Sudhir and Crane Bank which was a disadvantage to him and against the law of legal practice. Here taxpayers lost money because of BoU’s failure to do due diligence on the two law firms as regards their relationship with Sudhir, the Chairman of Ruparelia Group that runs several companies. Additionally, BoU had to spend more money on hiring a new lawyer Joseph Byamugisha of J. B. Byamugisha Advocates to carry on with the case.

BoU’s appealing Shs397b case dismissed on Monday

BoU on Tuesday evening without considering the taxpayers continued losses, said it appealed against the ruling of Justice Wangutusi, who dismissed a commercial dispute against Sudhir that had been filed by Crane Bank-In-Receivership two years ago.

According to a press release sent out by the BoU’s director of communications, Charity Mugumya, BoU vowed to appeal the dismissed commercial dispute and have it prosecuted to its logical conclusion.

“While Hon. Justice David Wangutusi dismissed the Shs397b case against Mr Sudhir on technicality, alleging that Crane Bank-in-receivership lost its powers to ‘sue’ or to be ‘sued’ thus rendering its suit a nullity, Crane Bank in receivership maintains that receivership is a management situation and hence no legal change as capacity to sue or to be sued,” reads the BoU statement in part.

The latest maneuver shows that BoU seems to be so determined to save its image as it wastes taxpayers’ money in effort to save its officials who were singled out as causing the mess in the closure of banks without following the procedures and guidelines. They appear to be acting alone without seeking for Attorney General’s advice on the matter.

The law states that the lawyer’s legal fees amounts to 10 per cent of the value of the case before the court.

 legal sources say Sudhir could have used up to US $5 million ( Shs18.4 billion), while Meera Investments is also estimated to have used US $5 million (Shs18.4 billion) while cost of the High Court award is US $10 million  about (Shs36.86 billion).

sources further say that should BoU go ahead a appeal the High Court ruling  and lose it, Sudhir and Meera Investment each are likely to increase their stakes and each will ask for US $10 million about (Shs73.72 billion). So at the end of the case, Sudhir will be paid US $30 million.