Baptism of fire awaits BoU, dfcu in London

DFCU Headquarters in Nakasero Kampala

The ruling issued by a panel of three respected Justices of London’s apex court, emphasizes that justice, not unwarranted manipulation of procedural technicalities, is of paramount importance in this matter.

dfcu’s notion that a foreign bank couldn’t hear the case since CB was closed by Bank of Uganda vested with sovereignty powers to do what it did, was dismissed by both the Court of Appeal and the Supreme Court in London, potentially attesting to the London courts determination to serve the ends of justice in these matters.

Crucially, the Supreme Court’s ruling potentially sets the stage for BoU and dfcu’s baptism of fire given how the two parties executed the deal in a manner it’s shareholders contend, was marred by corruption, bad faith and illegalities.

The ruling implies that CB’s deeply impugned closure and sale by BoU to dfcu is now set for a thorough review by the High Court in London.

It’s fair to point out that BoU justified CB’s closure and sale on grounds that the bank had lost fifty percent of it’s core capital, posing a systematic danger to the economy of the country itself.

But much as that justification could have been true, the manner in which BoU executed the said transactions was what has rendered the whole processes untenable and therefore irregular and likely illegal.

You need to be reminded that the London’s Supreme Court’s ruling arrives at the back of earlier damning verdicts issued by the courts in Uganda starting with the High Court all through to the Supreme Court, condemning BoU over the manner in which it closed and sold off CB.

Based on irregularities plus irregularities characterized by these transactions, notably, the Supreme Court of Uganda has since cancelled CB’s liquidation, returning the bank to it’s shareholders.

While the return of CB to it’s shareholders is symbolic considering that the same doesn’t imply CB can resume banking operations, it’s one piece of very critical testimony which goes to show and prove how the transactions were mired in legal controversies, opening a window of opportunity for the shareholders to to sue for redress which is what they are currently arleady doing in London.

Notably, Parliament of Uganda has since also launched its own investigation into the matter, resultantly condemning BoU over how it and dfcu executed this piece of business.

During the said investigation process, Finance Minister Matia Kasaija, whose docket includes thhe central bank, washed his hands clean of all those impugned transactions.

He told the Committee on Commissions, Statutory Authorities and State Enterprises, (COSASE), about how BoU never consulted him at all as and when they were negotiating and concluding those deeply disputed businesses.

This ostensibly implies that BoU likely had something probably fishy to hide from it’s very own line Minister.

Relatedly, esteemed veteran banker, Katimbo Mugwanya, appointed by BoU to serve as CB’s statutory manager , was never informed by BoU prior to BoU’s sale of CB to dfcu’s.

BoU timed Katimbo’s absence while away on his farm, to dispose of CB. Katimbo only learned of the sale from the media.

dfcu’s then MD , Juma Kisaame, was casually contacted via the phone for purposes of introducing this deal to him, implying there was no solicitation for other bidders carried out by BoU prior to the final declaration of dfcu as the successful bidder.

Puzzlingly, dfcu set the UGX200Bn price it bought CB for with the authorization and approval of BoU. Those funds were supposed to be paid by dfcu in installments with BoU’s authorization and approval.

Conversely, to arrive at that price, BoU asked dfcu itself to carry out the valuation of CB to determine CB’s worth, attesting to a clear abdication of official duties on part of BoU.

For that consideration fixed by the buyer itself, BoU ended up giving away CB to dfcu. Also given away was CB’s depositors savings worth 1.3 Trillion shillings. On top of 48 buildings formerly housing CB’s network of branches plus the entire recently acquired CB’s ATM system.

The courts in Uganda have since removed the buildings from dfcu following a case filed by Meera Investments, the owners of the properties, formerly renting them out to CB.

What that implies is that BoU sold air, exposing the regulator( read the poor taxpayer) to damages awarded to Meera Investments for illegal seizure and give away of it’s properties.

The debacle attests to BoU’s failure to carry out a diligent search with the land’s registry which would have assisted them to establish the ownership of the properties, sparing the regulator from the eventual embarrassment of being paraded in courts as sellers of air, followed by indemnification of Meera Investments for damages suffered.

Six months down the road, following CB’s acquisition, dfcu’s profits would soar to a record UGX144Bn down from UGX25Bn previously posted and recorded by dfcu.

That unprecedented feat would catapult dfcu to Uganda’s biggest bank at the back of it’s acquisition of CB, yet earlier closed and sold off by BoU on account of being an insolvent financial account.

Notably, the unprecedented profits made by dfcu serves to justify BoU’s own admission that by the time of it’s closure, CB was the third leading Ugandan financial institution.

Additionally, the sale of CB happened at the same time as BoU had authorized it’s shareholders to mobilize funds to recapitalize the bank. The shareholders led by Sudhir Ruparelia had mobilized UGX84BN by the time of the sale.

The UGX84Bn has since triggered a bitter row between the shareholders of CB and BoU sparked by BoU’s confiscation of the funds even after the regulator had sold off CB.

Before then, the shareholders had asked BoU for UGX170Bn for recapitalization of CB. But BoU would later on claim how it had instead injected UGX478Bn in CB and, moreover, in absence of proper accountability to show for it.

Curiously, while the shareholders of CB had asked for the funds, the final agreement indicated BoU to be the lender and borrower of the same funds and at the same time and all in one.

BoU’s then Deputy Governor, Louis Kasekende explained it wasn’t necessary for the shareholders of CB to appear on the loa hin agreement since BoU appeared there as the representatives of the depositors of CB.

But despite the above-mentioned clear explanation Kasekende had earlier offered, BoU would again end up demanding for a refund of the said funds from the shareholders of CB.

Yet in light of the earlier stated admission by Kasekende about the regulator had omitted the shareholders of CB from the loan agreement, and, had not, again, moreover, handed the funds in issue to the shareholders of CB in the first place.

President Yoweri Museveni, pissed by the blatant irregularities, lack of integrity, lack of ethics and lack of professionalism attested to by how those transactions were excuted, has since fired Louis Kasekende and Justine Bagyenda from the jobs of Deputy Governor and Supervisor of Commercial Banks respectively.

The pair were deeply involved in those impugned transactions, subjecting BoU (read the poor taxpayer) to the huge dilemma of forking out hundreds of billions of shillings to CB’s shareholders issued by the courts in Uganda ,starting with the High Court to the Supreme Court.

Whereas the President spared BoU’s Governor then, Emmanuel Tumusiime (RIP) after the Head of State ostensibly established the deceased Governor had been merely trapped into these dubious, the fact and record remains that Mutebile is the one who finally personally signed, giving CB to dfcu.

One carefully reading and analysing all what I have been laboring to present above, can predictably go away with the impression that dfcu and BoU, though the regulator isn’t being personally sued in London, are both potentially set for a baptism of fire come the hearing of these issues.

For there is no way the name of BoU is not going to end up coming up one way or the other during the hearing of these issues considering the critical role the regulator played on the way to CB’s to disposal of to dfcu.

Judging from how the courts in Uganda have handled these matters ,and, how those courts have ended up faulting BoU and dfcu, it can be potentially assumed that what has happened in Uganda is what is also likely going to happen in London.

We rest our case and leave it to time to prove us either wrong or right.

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