You won’t beat businessman Sudhir in Supreme Court- former COSASE Chairman Abdu Katuntu taunts BoU

By George Mangula

As Bank of Uganda (BoU) and Kampala businessman Sudhir Ruparelia continue to tarnish each other’s image  in the media over the closure of Crane Bank Limited (CBL), veteran lawyer Abdu Katuntu, who is also a Member of Parliament and former Chairman of Parliament’s Committee on Commissions State Authorities and State Enterprises (COSASE), says BoU has is unlikey to beat businessman Sudhir Rupelia and his Meera Investments Limited in a case where BoU wants the defendants to pay about Shs397 billion which they allegedly swindled from former CBL.

Katuntu last weekend said that the law bars CBL in receivership to sue as it has no address and that BoU has failed to account for about Shs466 billion of the taxpayers’ money allegedly paid to the depositors of CBL as it was closed and later sold to DFCU Bank in 2017 at only Shs200 billion, paid in installments. BoU says it intends to go to the Supreme Court after losing in the High Court and Court of Appeal.

Katuntu said that BoU closed CBL and other six banks with carelessness and impunity even though the lending institutions had weaknesses in running their businesses.  He said by running to the media platforms, both parties are seeking for public sympathy and “playing to the gallery’ and instead has advised them to sort out their issues in courts of law.

The legislator also blamed BoU for closing National Bank of Commerce (NBC) in 2012 even though the former lender had raised the required capital. It was owned among others by businessman Amos Nzeyi, former Prime Minister Amama Mbabazi among others like current Prime Minister Dr Ruhakana Rugunda. COSASE probe under Katuntu established that BoU did not follow the established guidelines and procedures in closing the banks and that corruption took place in the process.

However, on October 20 2016, BoU said it had put CBL under receivership “upon discovering that it had significant and increasing liquidity problems that could not be resolved without the Central Bank’s intervention given that Crane Bank had failed to obtain credit from anywhere else.” That caused closure caused alarm in the public as CBL had been praised by BoU as being one of the best performing banks.

BoU in the on-going suit claims that Sudhir Ruparelia illegally and secretly owned 100 percent share holding in CBL in breach of the Financial Institutions Act, 2004.

“Using that position of control, Sudhir Ruparelia wrongfully and illegally extracted from Crane Bank amounts totaling to USD 92,830,172 and UGX 8,277,000,000,” BoU continues to aver in the case that it was dismissed in the High Court and Court of Appeal where the judges in the High Court and the Court of Appeal agreed with Sudhir Ruparelia and Meera Investments Limited that CBL had no capacity to sue them while in receivership and that upon transfer of some of its assets to DFCU Bank, CBL ceased to exist. The transfer of CBL assets to rival DFCU Bank was also controversial as COSASE found out.

Further BoU claims that Sudhir transferred freehold property “beneficially owned by Crane Bank into the names of Meera Investments Limited in which he and his family are the majority shareholders, without giving value to Crane Bank and rendering the bank a tenant on its own property with a liability to pay rent to pay rent to Meera Investments Limited.”

But the defendants argue that CBL being a foreign entity is not allowed by law to own such properties in Uganda and that Meera Investments Limited, which is a local company, is the rightful owner of the former CBL branches that were illegally transferred to DFCU Bank. Meera Investments Limited has repossessed the branches following the court’s ruling in another case.

Despite being defeated twice, BoU still maintains that receivership does not take away the corporate personality of a company which includes the right to trace and recover assets and the right to sue for those assets.

The Senior Presidential Advisor, Moses Byaruhanga, while commenting on the current media wars between BoU and defendants said that the mistakes in the affected banks were occasioned by BoU’s weaknesses in the supervision of the industry. “BoU Supervision Department was watching as banks were making mistakes. Therefore BoU must own mistakes and do better in the future,” he said, adding that the two parties should not involve president Museveni in their wars.