Bank of Uganda head office in Kampala

The Board of Bank of Uganda (BoU) has told Dfcu Bank that they should sue their lawyers for misleading them into taking over Meera Investment properties instead of asking for Shs47 billion.

Dfcu bank recently returned the branches to BoU but is demanding Shs47 billion and yet the same bank undervalued same properties and paid only Shs10 billion to BoU and hardly two years down the road, they are demanding Shs47 billion.

BoU board held a meeting last week and on its agenda was the issue of Meera Investment properties and the Shs47 billion as demanded by Dfcu and the recent court ruling at Commercial Court.

Stories Continues after ad

However, sources that attended the meeting told Eagle Online that the Governor, Emmanuel Tumusiime Mutebile refused such demands from Dfcu bank stating that he can never effect such dubious payment given the fact that the transaction involving Meera Investment properties was ‘suspect’ and therefore, a matter before courts of law.

“I am the chairman of the board and also the governor of this great institution called Bank of Uganda. I don’t remember ever sanctioning this transaction and why is it that Dfcu is returning these branches at this time when there is an ongoing case? ladies and gentlemen, let us not be used as shields to cover up for others. I propose we wait for the case in court” Governor Mutebile is quoted scoffing at the meeting.

It should be remembered that on October 20, 2016, BoU closed CBL and made itself a receiver of the bank. It would on January 25, 2017 transfer some of CBL’s assets to Dfcu Bank at Shs200 billion, paid in installments, without interest on top.

It is said Sebalu & Lule Advocates convinced Dfcu bank that it could take over the properties it recently realised it could not takeover and instead demanded that BoU pays it Shs47 billion of the same properties it had valued at Shs10 billion.

In 2017, evidence came out to the effect that Dfcu bank was misled by Kampala Law firm Sebalu & Lule Advocates to illegally transfer title properties that belong to Meera Investment Limited and Crane Bank Limited Meera Investment Limited.

According to a leaked memorandum of May 8, 2017,  Sebalu & Lule Advocates who were in April that very year barred by the High Court from representing the same bank against businessman tycoon Sudhir Ruparelia for being conflicted misled Dfcu bank to transfer leasehold titles from Crane Bank Limited during the controversial takeover two years ago. Meera Investments Limited is a company under the Ruparelia Group whose Chairman is Sudhir Ruparelia and whose Crane Bank Limited was controversially closed three years ago.

In a leaked document titled, “ Transfer of former Crane Bank household properties’, “the law firm skipped important aspects of the law including the fact that banks are not allowed to invest in business for fear of conflict of interest with their clients, apart from their main premises.

“Our opinion is that although the proposed approach of registering caveats provides Dfcu with some level of legal protection, its indisputable title to the leasehold properties can only be guaranteed through the registration of transfers executed by BoU in favour of Dfcu. Accordingly, in light of the length of time between the completion  date and when Dfcu can validly exercise the option to rescind the purchase of the leasehold properties  our recommendation is that transfers be registered immediately,” the law firm advised.

Bank of Uganda in its 2018/ 2019 Annual Report had earlier confirmed that Dfcu bank would be leaving 48 properties that the defunct Crane Bank Limited (CBL) was operating its branches before it was taken over by its rival in January 2017 in a Shs200 billion transaction.

“Following the Court’s ruling … Dfcu Bank Limited in a letter dated September 12, 2019 communicated to BoU its decision to exercise its option to rescind its interest in purchasing the 48 properties pursuant to clause 8.7 of the Agreement,” BoU says in its latest annual report.

The report adds that as part of the rescinding of this purchase, Dfcu will return to BoU Certificates of title for Meera Investments Limited ‘and requires Bank of Uganda to pay Dfcu the new book value of properties recorded in the assets and inventory compilation as October 20, 2016.’

However, what is shocking to BoU board is the turn around of Dfcu to ask for Shs47 billion and yet they paid Shs10 billion.

But the latest development has confirmed fears that BoU and Dfcu Bank will develop a bad relationship over Shs47 billion payment for loss Meera Investment properties. Dfcu Bank was the first to write to BoU, requesting for fast payment of the money after realising that the case in court is likely to take a long period of time and therefore would not match with the bank’s financial objectives.

Website | + posts