Analysis

ANALYSIS: Is Simbamanyo’s Peter Kamya an innocent victim or a dishonest businessman trying to cheat Equity Bank? Did he also lie to Museveni to arm-twist the banks?

Last week a letter from President Yoweri Kaguta Museveni directing the Bank of Uganda Governor, Prof. Emmanuel Tumusiime Mutebile, to investigate the foreclosing of properties, belonging to Architect Peter Kamya of Simbamanyo Estates Ltd surfaced on social media.

In the 3rd September 2021 letter (Reference No. PO/19), titled “Claims Of Illegal Sale Of Simbamanyo House And Afrique Suites”, the President informs the Governor that Mr. Peter Kamya and Dr. Margaret Muganwa, his wife, had appealed to him to intervene in the matters regarding the sale of his Sibamanyo House and Afrique Suites by Equity Bank.

“They (Mr & Mrs Kamya) state that, whereas Bank of Uganda directed that there should be no foreclosure of mortgaged properties by Banks during the COVID-19 pandemic, Equity Bank went ahead and sold their properties at very low prices. That they had even offered to get their own buyers but all their attempts were frustrated. This is, therefore, to direct that you expeditiously investigate the matter and report back within one week,” President Museveni wrote to the Central Bank Governor.

The letter was copied to Mr. Peter Kamya and Dr. Margaret Muganwa.

This is the latest effort by the troubled businessman, to claw back his foreclosed properties since they were sold off by Equity Bank in October 2020, over failure to pay back USD10.8 million in principle and accumulated interest.

The court-sanctioned sale followed a lengthy 4-year court battle that started in 2016. During this time, however, documents show, the businessman has been collecting rent from the building but never paid a single coin on his loan obligations. He instead resorted to incessant lawyering over the debt.

For example, in 2016, faced with demands to repay, he instead went to court claiming that rather it was the bank that had wrongly debited his accounts. An independent audit by Ernst & Young showed that there was a discrepancy of just USD 442. Regardless, Peter Kamya and his Simbamanyo dug in and refused to pay, forcing Equity Bank to commence foreclosure proceedings.

Faced with foreclosure proceedings, Simbamanyo filed Miscellaneous Application No.1159 of 2017 seeking a temporary injunction stopping the bank from foreclosing and selling the mortgaged property. An October 2017 by Justice Billy Kainamura ordered Simbamanyo to, in line with Mortgage Act to deposit 30% of the outstanding loan before the case could take off, otherwise, the bank would be at liberty to sell the mortgaged properties.

Simbamanyo did not appeal against the ruling of Justice Kainamura but instead filed a Constitutional Petition No. 42 of 2017 Simbamanyo vs Attorney General and Equity Bank Uganda Ltd before the Constitutional Court challenging the legality of Rule 13 of the Mortgage Regulations 2013 – the regulation which requires defaulting mortgagors to deposit 30% of the outstanding loan before they can stop a public auction of the securities. The said Constitutional Petition is still ongoing before the Constitutional Court. Both parties have filed written submissions and al awaiting the ruling of the Constitutional Court.

On 7th September 2020, following several consecutive failed court applications, the High Court upheld earlier rulings that Simbamanyo, needed to pay 30% of the outstanding loan amount on or before 7th October 2020 to have its application heard. Following the failure to pay the 30%, on 8th October 2020, in the absence of any further orders from any Court stopping the auction, the Mortgaged Properties were sold after a public auction, in accordance with the provisions of the Mortgage Act and The Mortgage Regulations, to the highest bidders.

Meera Investments Limited bought Simbamanyo House for USD 5,000,000 and Luwaluwa Investments Ltd bought Afrique Suites for USD 4,350,000.

Did Simbamanyo deliberately mislead the President to obtain favour?

An investigation by this website and documents that have surfaced since the president’s letter to BoU, show that the troubled businessman could have misrepresented the true state of his affairs to the president, so as to get the president to put pressure on the central bank to in turn prevail upon the banks to reconsider their positions on the matter.

First of all, from the president’s letter, it appears, the Kamyas deliberately misled the president over an alleged order by the Central Bank to all banks barring all foreclosures on all mortgaged properties, yet it is not true.

What is true is that whereon April 06, 2020, the Bank of Uganda (BoU) announced a set of Credit Relief Measures to mitigate the Economic Impact of COVID-19 and safeguard Financial Stability, further clarification was provided by the Central Bank on April 14, 2020, made it very clear that the credit relief measures didn’t take away or extinguish the obligation of a borrower to repay the lender and nor was it a blanket relief. The Central Bank also made it very clear that to benefit from the credit relief one had to apply for the relief measures, and it was up to the specific financial institution to accept or decline to grant the relief.

“This is not a blanket relief for all borrowers. Supervised Financial Institutions (SFIs) will extend debt relief to their borrowers on a case-by-case basis, at their discretion, based on an assessment of the economic and financial conditions of individual borrowers. The decision to grant any restructuring of credit facilities during the pandemic lies with the respective SFI,” the then Acting Bank of Uganda Deputy Governor, Dr. Adam Mugume clarified, on April 14, 2020, public announcement.

In the same announcement, the Central Bank also said that it had not ordered, but rather “provided guidelines that SFIs will follow to restructure loans and provide credit relief to customers affected by the COVID-19 pandemic.”

Whereas the Central Bank guided that payment of arrears as a precondition for restructuring was temporarily suspended, it was very clear that to benefit from the relief measures, one had to first apply, and it was purely on the discretion of the bank to grant and or decline the sought-for relief measures.

Instead, rather than apply to Equity Bank for the relevant credit relief measures, Simbamanyo’s Kamya instead opted to lodge suit after suit in court- suits that he either has lost or voluntarily pulled out of.

For example the latest in about 10 cost applications that he has lost, on July 31st 2021, High Court Judge, Hon. Lady Justice Susan Abinyo dismissed an appeal by the overturn the foreclosure over his lawyers’ failure to present written instructions to represent the businessman, as is required by law.

“In the result, I find that this appeal is incompetent and not proper before this honourable court as the defective affidavits render the appeal incompetent,” the judge ruled.

Despite severally shuffling lawyers, this was the third time the businessman was failing to overturn the sale, sinking him further in legal costs and court costs awards to his adversaries.

Following the several failed court cases, it appears, now the businessman decided to turn to political lobbying to rob the banks of justice and their money.

If the available evidence that is being sent to the president is to be relied on, he is about to lose this direction too- robbing him of not only money, but reputation too or whatever is left of it.

For example, another misrepresentation to the president is that the properties were sold below market rates, yet he is aware that before the auction, per the Mortgage Act 2009, an independent valuation firm of the properties had valued Simbamanyo House at USD4,600,000 and Afrique Suites at USD4,000,000, which valuations were never contested at all in court.

Meera Investments Limited bought Simbamanyo House for USD 5,000,000 while Luwaluwa Investments Ltd paid USD4,350,000 for Afrique Suites.

Businessman in more property mess

The Bank of Uganda report on the matter is yet to reach the president, but it remains to be seen, what the reaction of the president will be after learning that the distressed businessman did not tell him the whole truth.

Besides Equity Bank, the businessman is also struggling with another court case in which he has been ordered by Hon. Justice David Wangutusi of the High Court’s Commercial Division to refund UGX1.3 billion that he received for selling land to a company called Bahamas Investments Limited, which land he failed to transfer as per agreement.

Court has now ordered him to refund the money with a 25% interest per annum since October 2016- an additional UGX1.6 billion, leaving him with a humongous debt of UGX2.9 billion.

The case stems from a 2016 sale agreement of land by Mr. Kamya to Bahamas Investments at an agreed UGX 5,090,000,000/= The buyer was to pay UGX 1,300,000,000/= on signing the agreement, which they did. Upon the advance payment, Kamya was to deposit the Certificate of Title with Equity Bank which would release the balance of UGX 3,790,000,000/= to him.

However, upon getting the UGX1.3 billion, Mr. Kamya did not deposit the title with Equity Bank and did not return the money. Bahamas would later attempt to pay him the balance of UGX 3,790,000,000 in cash, provided that he deposited the certificate of title with the Bank or a neutral lawyer.

Kamya refused and instead on October 20th, 2016, opted to terminate the sale agreement, under the pretext that the buyer had not paid within the stipulated 90 days, prompting Bahamas to sue.

The court ruled that since Kamya had reneged on his contractual undertakings to deposit the title in the bank but also continued to withhold the money that he had received as part payment, he was liable for breaching the contract.

“In conclusion, the court finds in favour of Bahamas Investment as follows: Kamya breached the agreement; Kamya to pay 25% pay interest on the UGX 1,300,000,000/= (already awarded) from 10th October 2016 date of termination till payment in full and interest of 6% pa on General damages from the date of judgment till payment in full,” ruled Justice Wangutusi.

Interest of 25% on UGX1,300,000,000 for 5 years is equivalent to UGX1.6 trillion. Mr. Kamya is also to pay the costs of the suit, reads the 26th of February 2021 suit.

As adapted from The CEO Magazine

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