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DFCU Bank in trouble as Ex-Crane Bank staff petition court over rights violation and unlawful layoff

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DFCU Bank is in trouble again after the High Court in Kampala granted permission to over 400 ex-employees of Crane Bank have petitioned the court seeking orders to compel the Bank to produce documents that were allegedly withheld after their dismissal.

The group was employed by Crane Bank Limited until October 2016 when the Bank of Uganda (BoU) announced its closure and later transferred its assets to DFCU Bank on grounds that it was undercapitalized. The Bank of Uganda Governor Emmanuel Tumusiime Mutebile said, in a statement that Crane Bank was incapacitated, and posed a systematic risk to the stability of the country’s financial system.

Following the takeover, DFCU Bank terminated contracts of the 400 staff formerly employed by Crane Bank for alleged incompetence that resulted in the collapse of Crane Bank. But former employees, represented by ten of their former workmates went to court demanding reinstatement, an order for payment of their wages and allowances among other benefits.

They argued that their dismissal was characterized by fraud, breach of duty, bad faith and negligence and that the takeover of the Bank hitherto owned by business mogul Sudhir Ruparellia was concealed to them and in the process, their employment rights were violated. However, the matter was referred for mediation, which yielded no results after the DFCU allegedly insisted that the termination of their contracts was done fairly.

Now they have returned to the Civil Division of the High Court in Kampala seeking orders compelling DFCU Bank to produce and permit them to inspect and make copies of 20 documents before the hearing of the matter can commence.

The documents include the purchase of Assets and Assumption of Liabilities Agreement between Bank of Uganda and DFCU Bank, written notices of resignation letters by the staff in question, contracts by employees retained by DFCU Vabk that were revised to ensure pay and benefits parity with the bank’s employees and  documents to show that DFCU didn’t underpay those picked from Crane Bank compared to their pre-existing employees.

The other documents include the list of employees allegedly laid off for incompetence, termination letters, documents to show that they were paid appropriate termination packages including re-allocation allowances,  among others.

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According to lawyer Isaac  Ssemakadde who is representing the former employees, that the discovery of the mentioned documents is a process that helps them to prepare properly for the trial.

In the aftermath of the takeover, Crane Bank Chairperson Joseph Briribonwa accused BoU of premeditating the closure and sale of Crane Bank. He said that while the bank was faced with a liquidity crisis that was caused by the economic downturn in 2014/2015, its shareholders had raised capital amounting to USD 8 million which funds were with-held by BoU. He added that the central bank frustrated all the efforts of Crane Bank to sort out its liquidity crisis and instead sold it to the preferred bank.

Meanwhile, Sudhir Ruparelia has also demanded that the Central Bank returns the closed bank’s bad loan book which he said is valued at 570 billion Shillings. Sudhir said that the impression from BoU that DFCU bank paid for the bad loan book at 200 billion Shillings is false.

Sudhir is also seeking a market valuation of assets and liabilities sold to DFCU as well as a valuation of the goodwill that DFCU benefited from taking over Crane bank’s branches. 

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