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HAM vs DTB: Bank of Uganda withdraws from case, leaves DTB to carry own cross

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The Bank of Uganda has withdrawn from the case in which Diamond Trust Bank (DTB) seeks to overturn a high court ruling which faulted Diamond Trust Bank-Uganda for collecting debts on behalf of its parent company DTB-Kenya.

The judgement stemmed from a case filed by Ham Kiggundu and his two companies Ham Enterprise Limited and Kiggs International (U) Limited against DTB-Uganda and DTB-Kenya in March last year, accusing them of fraudulently siphoning more than 120 billion Shillings from his accounts without his knowledge and consent.

Kiggundu said that between February 2011 and August 2018, he was offered credit facilities by the banks to develop commercial properties in Uganda. But as he continued servicing them, he learnt that the banks were taking out money from his accounts. He also asked the court to declare DTB Kenya demands for payment illegal, since it was not registered to carry out business in Uganda.

The high court then stopped DTB from taking out money from Ham’s accounts, refund about 120 billion Shillings that DTB had already taken out, and release all securities belonging to Ham. DTB successfully secured a stay of execution of the judgement orders in November, and also appealed the judgement.

At the hearing of the appeal, the Bank of Uganda had requested to be considered a Friend of the Court in order to assist the court with information in the consideration of the matter. A Friend of the Court is a neutral party who assists a court by offering information, expertise, or insight that has a bearing on the issues in the case.

But the Court of Appeal judges led by Richard Buteera, Kenneth Kakuru and Christopher Madrama ruled that the Central Bank could not claim to be a ‘friend of the court’ because it already opposed the high court ruling by Justice Henry Peter Adonyo. The judges made reference to a statement issued by the Central Bank immediately after the high court ruling, in support of Diamond Trust, and indicating that the decision would affect the whole banking industry.

The Judges advised the bank’s lawyers to formally apply to be a party to the case by Monday, February 1, 2021, and serve the respondents, Ham Enterprises and two others by the same date to which the lawyers agreed. Lawyer David Mpanga says that they have now written to the court indicating that the Central Bank was not interested in being added to the main suit as an interested party.

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“We have consulted our client regarding the court’s ruling. Our client has informed us that he is not willing/interested in being added to the suit as an interested party,” says the statement from BoU counsel David Mpanga. “Accordingly, we write to the same court informing it of the same,” Mpanga said. This application was due for hearing on February 24.

It is not clear why BoU withdrew from the case despite its clear intentions to support DTB. BoU led the banking sector in criticizing the ruling of the high court which they feared would affect the loan synchronization business in Uganda, which is currently valued at about 5.7 trillion Shillings.

DTB Uganda had teamed up with DTB Kenya to meet the credit requests by Ham Enterprises Ltd and Kiggs International. However, several experts said the credits were not mobilized under the known procedures of synchronization.

The main contention is whether DTB was right to take money out of Kiggundu’s bank accounts to clear the loans without his consent or knowledge. The high court agreed with Kiggundu that it was illegal and that the money should be refunded. Hearing of the petition will now resume without the Central bank when the Court of Appeal reconvenes on March 17, 2021.

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