Many Ugandans respected Ugandan businessmen Patrick Bitature of Simba Group of companies and Hamis Kiggundu of Ham Enterprises until financial scandals surfaced, pinning the two businessmen who don’t want to pay their loans, based on the available unclear law.
Kiggundu is in cattle battling Diamond Trust Bank Uganda (DTB-U) and Diamond Trust Bank Kenya (DTB-K). Kiggundu borrowed Shs120 billion from the two sister institution but claimed that DTB-K is not registered to do money lending business in Uganda.
The Uganda Bankers’ Association and other regional financial groups have castigated Kiggundu and those who support him on this matter.
However, as the world castigated Kiggundu for not wanting to pay his loan, little did we know that another Ugandan businessman, who sits on the boards of reputable agencies like UMEME is involved in the similar financial scandal where he does not want to pay his debts, even though he borrowed the money willingly.
In his case filed at the High Court Commercial Division and won before it was quashed by the Court of Appeal, averred then that DTB fraudulently withdrew Shs 29,035,682,682 billion from a shillings account and 22,938,528.29 million from a United States Dollar account as per the account statements for a 10-year banking relationship that they had operated those accounts, without consulting or notifying him.
DTB-U on the other argued it was retrieving its loan as Kiggundu was unwilling to pay despite several reminders.
Kiggundu’s lawyer Fred Muwema of Muwema & Co. Advocates, together with Arnold Norgan Kimara of Kimara Advocates and Consultants, argued then that “ illegalities” of withdrawing money from his client’s accounts amounted to felonies punishable by a term of three years imprisonment of the offending Bank officials.
Muwema argued that DTB Kenya issued credit facilities in Kenya to Ugandan entities without the approval of the Bank of Uganda (BOU). DTB Kenya and DTB Uganda committed illegalities when money facilities were availed by DTB Kenya to the Borrowers without prior authorization of BOU even if such funds were availed outside Uganda.
Section 117 of the Financial Institutions Act, 2004 requires a foreign bank to seek the authorisation of BOU before it can engage in activities such as lending and extending credit facilities.
It was illegal for any person to lend any money held on deposit whether within Uganda or outside Uganda without a licence, Muwema argued.
He went ahead to argue that DTB Uganda illegally acted as agent of DTB Kenya and conducted financial institutions business on behalf of DTB Kenya without a licence issued by BOU as required under the FIA and the Financial Institutions (Agent Banking) Regulations 2017 (Agent Banking Regulations).
And that DTB Kenya acted illegally when it failed to obtain BOU’s authorisation before establishing a representative office in Uganda.
However BoU in a statement published by the late Governor Tumusiime Mutebile said there was nothing illegal concerning the loan business that the two parties had entered into.
The Ministry of Finance would also come to castigate Kiggundu, saying his actions tainted Uganda’s image as an investment destination.
Remember that Kiggundu faulted the Principal Judge after the latter pushed the case to the Court of Appeal where he was defeated by DTB-U and DTB-K. He accused the judge of being biased, even though the judge said the businessman sent emissaries to bribe him so that he determine the case in his favour.
Interestingly it is the same lawyer Muwema now representing Bitature who doesn’t want to pay his lender Vantage Mezzanine Fund 11 that gave him USD 30 million in 2014. He doesn’t want to pay, which resulted in advert seeking to attach his properties.
His lawyer Muwema insists Bitature is not a bad guy who should take the money for free. The same man who asked Uganda Registration Services Bureau (URSB) not to register the South African company as a body corporate in Uganda. Bitature was after something, and it has now come to light that from the time he met the South Africans, he intended to con them of their dollars.
Remember Justice Musa Ssekaana in his ruling faulted URSB for declining to register Mezzanine Fund 11, saying that the case in court did not in a way have any attachment with registering Mezzanine Fund 11. We now know that URSB was being stopped to the rightful thing.
Bitature’s case is a bad one to Uganda because he is known regionally. He has held some responsibilities on behalf of government. That he sits on UMEME board of directors is not a simple feat. But now with the on-going scandal, it would be good for Bitature to resign from UMEME board, whose majority shareholder is the NSSF.
However, we know that UMEME has been cheating Ugandans, to the extent that President Museveni is not happy with the company’s 25-year concession.
A member of Uganda Bankers’ Association said Uganda soon will be isolated financially in terms of attracting foreign financiers. “What do you expect when investors in other countries hear Ugandans don’t want to pay back the loans,” he said, arguing that Bitature should be a gentleman and pay his debt.