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Latest court ruling: Fraudulent purchase of Crane Bank Limited continues to bite Dfcu

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When Dfcu bank fraudulently purchased former Crane Bank Limited (CBL) in January 2017 at Shs200 million and immediately announced huge profits arising from the acquisition of the assets of its former competitor, Dfcu Bank did not anticipate that the controversial transaction would later haunt it consistently.

As it purchased CBL, Dfcu, because of greed for easy profit, did not take keen interest in establishing whether the 48 properties in which CBL was operating its branches actually belonged to it, or it was just renting from another entity, which belongs to Ruparelia Group of Companies -Meera Investments Limited, which has been awarded Shs2.4 billion in general damages, which carries interest of 8% from date of judgement. Meera Investments Limited was also awarded costs of the suit against Dfcu bank and the Commissioner for Land Registration.

The ruling on October 24, by Justice Tadeo Asiimwe of the High Court in which he stated that Dfcu bank takeover of the properties of Meera Investments Limited was illegal and invalid is another bitter pill for Dfcu bank to swallow, with judge agreeing with Meera Investments Limited that the takeover of its 48 properties was done without its consent and was tainted with illegality and fraud.

Upon taking of CBL, Dfcu hurriedly registered the 48 properties in its name, which court also said was illegal. Even if Dfcu bank claims it had vacated the premises, the judge said it must vacate after restoring the facilities to the tenantable position. In otherwise, Dfcu bank must rehabilitate the properties before new tenants can occupy them. Analysts say this could Dfcu billions of shillings.

The same ruling orders the Commissioner of Land Registration to cancel the registration of Dfcu bank as the proprietor of the leasehold interests in respect of all the suit properties as well as canceling their leasehold titles, and cancel the entry of the suit leases, lease variations, and lease registered as encumbrances on the mailo and freehold titles of Meera Investments Limited.

Legal experts have welcomed this ruling and blamed Dfcu bank and its lawyers who handled the CBL transaction on January 25, 2017, saying they did not do due diligence on the 48 properties when the Bank of Uganda convinced them the properties belonged to CBL. Now Dfcu is paying for the recklessness and greed.

That aside, the shareholders of CBL, a sister company of Meera Investments Limited have not given up on bring bringing their bank back to life. CBL and the Bank of Uganda could be made to pay for the controversial transaction that was identified by the Auditor General and confirmed by Parliament’s Public Accounts Committee (OPAC) and Commissions, Statutory Authorities, and State Enterprises (COSASE).

CBL case in England

In July 2023, The UK Court of Appeal ruled that the Crane Bank-Dfcu dispute over assets can be tried in the UK, stating some acts are commercial in nature can be tried by a court in England.

This is after UK High Court earlier dismissed CBL claim on grounds that it was based on actions exercised by Bank of Uganda and therefore, considered acts of the State of Uganda. CBL filed a claim in the English courts in December 2020 challenging the transaction in relation to the sale of some of the assets and assumption of some of the liabilities of CBL to Dfcu bank limited by Bank of Uganda.

Bank loses case against Sudhir

The Bank of Uganda in February 2022 lost the Shs397 billion case against Sudhir Ruparelia in the Supreme Court even though it had earlier lost the case in the High Court and Court of Appeal respectively.  The Central Bank had sought the recovery of Shs397 billion belonging to CBL and allegedly swindled by Sudhir which instead had been shared at Bank of Uganda between bank officials and conflicted lawyers.

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