The Independent Uganda: You get the Truth we Pay the Price
Genesis of the Ham Kiggundu-DTB case
The recent shock waves in the financial sector follows Kiggundu’s decision to petition court in August 2020, on the claim that Shs 85bn and Shs34 bn were deducted by DTB Uganda and DTB Kenya from two accounts of his companies, Ham Enterprises and Kiggs International Uganda Limited, “without his knowledge and consent.”
Court records show that between 2011 and 2016, Kiggundu through the two companies acquired loans totaling to Shs41bn from DTB Uganda and DTB Kenya to boost his real estate businesses on condition that he mortgage his properties in Makerere Hill, Kawuku, Kyadondo and Victoria Crescent Road among other plots of land.
However, last year, the banks reportedly served him with documents indicating that he had not met his loan obligation worth Shs 39bn as per their agreement. The banks threatened to attach his properties he had mortgaged.
Kiggundu ran to court arguing that the money that was withdrawn from his dollar and shillings accounts was excess yet he had also fully paid the loan. Kigundu accused Diamond Trust Bank (U) Ltd and Diamond Trust Bank (K) Ltd of unjustly and illegally debiting his bank accounts.
On Aug. 31, Justice Adonyo directed the Institution of Certified Public Accountants of Uganda to appoint an independent auditor to carry out account reconciliation of the financial transactions which were based on the credit facilities between Ham Enterprises and DTB.
However, Kiggundu’s lawyers asked the court to halt the auditing process pending the determination of another application, where Kiggundu raised questions of the illegality of Diamond Trust Bank (K) Ltd conduct of financial institutions business in Uganda without a license to do so under the Financial Institutions Act, 2004 (as amended).
Interestingly, through his lawyers, Muwema and Company Advocates, Kiggundu asked the court to declare that all the loans he obtained have since been paid and also issue an order of refund of the money obtained illegally in the aftermath.
Muwema told the Uganda Law Society-organized online dialogue that was arranged to discuss the legal, economic and political implications of the ruling that this particular complaint was the basis upon which the whole case was decided.
Muwema said there is no cause for alarm because there was no decision by the court outlawing syndicated loans by foreign lenders.
“The court only ruled that a loan from Kenya was illegal because Bank of Uganda did not approve it,” Muwema said, “The ruling does not in any way stop cross border lending; it is only fostering all forms of lending; it’s only asking for the compliance of the law.”
But Prof. Mugasha says while the case did not directly involve syndications; it has an impact on the general financial and business atmosphere in the country.
“Lenders and investors require a predictable environment for their business, thus, defenses such as additional taxes or injurious statements such as additional taxes or financial institutions are involved in an illegality—all these work against the interests of foreign investors or indeed any investor.”
However, experts say whichever direction the judgment will go; it will force Uganda to have a well regulated cross-border lending regime.
“I hope that at the end of day when the arguments are made and taken, the court will find that what’s good for the goose is good for the gander,” said Odera.
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As a journalist you should at least show some pretence of impartiality when reporting or feigning analysis & not merely regurgitating the talking points of oneside of a dispute i.e UBA,DTB etc.
The sustained media smear campaign against Justice Dr. Adonyo & Ham Kiggundu won’t substitute the need to appeal & provide compelling legal arguments for reversal of Justice Adonyo’s rulling i.e the illegal operations of DTB-Kenya on Ugandan territory.
Repeatedly quoting the Governor Bank of Uganda’s recent press release won’t change the facts that DTB-K was declared to be illegally operating on Ugandan territory.
And besides you miss the point that powers of interpretation of the law or the powers of declaring what is or isn’t illegal are a monopoly of the Judiciary hence the governor was merely sharing his layman opinions of legal matters.
As for the threats of Uganda being blocked from accessing kenyan capital, you do forget that most of the bank loans are denominated in Uganda shillings. Consequently if need be, Uganda Govt could print the needed capital (Uganda shillings) & lend it to the commercial banks or even Uganda Development Bank for onward lending negating the need for foreign capital.
As for demands that the East African court stops Ugandan courts from making further judgements on the dispute after DTB-K is declared the winner of the dispute, …….
DEAR BISASO, DO YOU EVEN KNOW THE IMPLICATION OF BOU /GOVERNMENT PRINTING MORE MONEY ON THE ECONOMY? LOOK BACK AT WHAT HAPPENED TO MUGABE’S REPUPLIC.
Congratulations Ronald Musoke on a well researched article.
You have collected and summarized opinions on the topic from educated stakeholders for your readers.