Court dismisses with costs Tycoon Nzeyi’s case against Dr. Sudhir, BOU over NBC takeover

Court in Kampala has today dismissed with costs the controversial case in which city businessman Humprey Nzeyi’s had filed against tycoon Sudhir Ruparelia and the Bank of Uganda (BOU) accusing them of illegally selling his bank (NBC Bank) to Crane Bank that was also later closed ‘dubiously’ by BoU.

In a 25-page lawsuit, businessman Humphrey Nzeyi, sued businessman Sudhir Ruparelia (former owner of Crane Bank), his business partner Raskillal Chhotalala Kantaria and Crane bank, which was taken over by Dfcu bank.

In the suit, Nzeyi claims BOU’s decision to take over and sell NBC’s assets to Crane bank within what he said took only six hours on September 27, 2012, was in breach of the Financial Institutions Act 2004.

Through Muwema and Company Advocates, Nzeyi alleged that he decided to go to court after learning recently that BOU sued Sudhir and his Meera Investments seeking to recover over Shs 397bn, money he allegedly stole from Crane bank.

“The plaintiffs maintain that the highend dishonesty and fraud said to be committed by the third defendant [Sudhir] against his bank and said to be acquiesced to by the fourth defendant [Kantaria], is the same species of dishonesty and fraud whose contours were extended to NBC with the supervision and approval of the first defendant [BOU],” the plaint said, adding that the fraud and irregularities BOU complains about in its case against Sudhir were capable of being detected earlier but because of its regulatory lapses, they went on unabated.

According to Nzeyi, by the time of the takeover, winding up, liquidation, closure and sale of NBC by BOU, it was not an insolvent financial institution since the bank had just undertaken an expansion programme – acquired and refurbished its new headquarters on Yusuf Lule Road in Kampala for about $1.8 million.

That after the closure of NBC by BOU, Nzeyi said, an injunction was issued by the Constitutional court on September 28, 2012, restraining the Central bank and its agents from taking further steps to wind up, liquidate and sell NBC. Nzeyi previously also said the Constitutional court order was ignored by both BOU and Crane bank and all attempts to hear the main constitutional petition had since proven futile for the last five years.

In the suit, Nzeyi also said between 2007 and 2016, Sudhir as the shareholder of Crane bank, actuated a litany of dishonest dealings and extensive bank fraud involving the diversion of colossal sums as BOU admitted in its suit.

That though NBC was summarily closed without being accorded any financial support, Nzeyi said, it had been reported that BOU was forced to intervene in Crane bank’s financial debacle by injecting about Shs 400bn of public funds to stave off the systemic risk caused by the bank’s insolvency.

It is against the above allegations that Nzeyi run to court asking it to declare that the takeover, closure and sale of NBC assets to Crane bank was in bad faith and in breach of Uganda’s financial laws.