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Discovery of crucial documents, emails await DFCU bosses as Crane Bank claims $500 in the UK legal battle

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They must now file their defences within 21 days as court awaits to discover sensitive documents and emails regarding the transaction whose former MD and a key witness Juma Kisaame said was conducted without documents.

The UK Supreme Court has ordered that DFCU, Juma Kisaame, William Sekabembe and Jimmy Mugerwa must stand trial in the UK court for their role in the January 2017 fraudulent acquisition of the assets of Crane Bank Limited (CBL) from Bank of Uganda (BoU).

DFCU and its former directors had sought to avoid accountability in this case by presenting a jurisdiction challenge, arguing that the corrupt sale of the assets of Crane Bank Limited to DFCU by Bank of Uganda was an act of state by the Government of Uganda, and that UK courts had no jurisdiction to hear the case. This argument was rejected by the UK Court of Appeal, and they were ordered to file their defences and proceed to trial in the UK High Court.

They then sought leave of the UK Court of Appeal to appeal this decision to the UK Supreme Court, which leave was denied. They then filed another application seeking the leave to appeal from the UK Supreme Court. This application has also been refused as the UK Supreme Court found no merit in their application. They have been ordered to pay costs and must now file their defences within 21 days.

Crane Bank will then respond and seek for discovery of details of the transaction by asking for emails, whatsup chats, correspondences among key information on how the whole deal was sealed.

DFCU Limited, DFCU Bank Limited, Jimmy Mugerwa, Juma Kisaame, William Sekabembe, CDC Group PLC, Norfinance AS, Rabo Partnership B.V., Arise B.V., Stephen Caley, Michael Alan Turner, Albert Jonkergouw, Willem Cramer, Ola Rinnan and Deepak Malik have all been sued in the UK in a case where Crane Bank Limited is seeking the recovery of over $220 million, before assessment of additional damages, which experts believe will raise the amount to be recovered to over $500 million.

In the written ruling delivered on January 8, 2024, Court held: “After consideration of the application filed on behalf of Applicants seeking permission to appeal the order made by the Court of Appeal on 26 July 2023 and of the notices of the objection filed by the Respondents [Crane Bank Limited and others], the Court ordered that permission to appeal be refused because the applications don not raise an arguable point of law which the court should consider at this time…i.e before trial. In each application the Applicants pay the Respondents costs, the amount of those costs be assessed if not agreed.”

Background

On October 20, 2016, BoU took over Crane Bank Limited, claiming the lender was undercapitalised, and mismanaged. BoU’s decision to take over the lender surprised Ugandans, given that the Central Bank had earlier announced the lender as the best-performing bank in the country.

On January 25, 2017, BoU in a questionable transaction transferred the assets of Crane Bank Limited to the rival DFCU Bank at Shs200 million, moreover paid in installments, yet the Central Bank had earlier claimed it injected Shs478.8 billion in Crane Bank Limited before the transaction took place.

A parliamentary inquiry into BoU’s closure of Crane Bank Limited and other commercial banks confirmed the Auditor General’s report that BoU closed Crane Bank Limited without following the known procedures and processes, such as the valuation of its assets and liabilities.

In his August 2017 special audit report on seven defunct commercial banks the Auditor General held: “

I noted that BoU did not carry out a valuation of the assets and liabilities of CBL in a transaction initiated by BoU officials over phone. In the absence of the valuation, I could not establish how the terms of transfer of the assets and liabilities in the Purchase of Assets and Assumption of Liabilities were determined.”

In its 2017 half-year results, DFCU Bank disclosed an after-tax profit of Shs114 billion, compared to Shs23 billion earned over the same period in 2016. DFCU attributed its sharp rise in profits to the acquisition of assets and liabilities of CBL.

 It is also believed that the over Shs100 billion that was deposited on the account of one of the listed former Managing Directors could have been part of the money which was swindled from BoU in the pretext takeover by BoU.

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