In the year 2007, Crane Bank Limited announced that it was planning to expand into the neighboring countries and yes this dream was fulfilled and officially launched operations in 2014, but shortly after greedy Bank of Uganda (BoU) mafias swung into action with all sorts of dirty games to shut this development.
The above step made Crane Bank the first indigenous bank in Uganda to spread into foreign markets after the demise of the former Greenland Bank.
Bank proprietor Sudhir Ruparelia 2013 said the bank also planned to move into South Sudan and the Democratic Republic of Congo.
”The bank’s expansion into the neighboring markets would be a huge plus to businessmen who operate in the region especially those in South Sudan and Rwanda since it would give them an easier and faster way to save and access money whenever they need,” said Sudhir then.
This Rwanda development came after in 2012, Sudhir’s bank had continued to cement its position as the most profitable indigenous bank, registering Shs 80bn profit in 2012, up from Shs 66bn a year earlier. The bank’s asset base grew by 21% to Shs 1.1tn in December 2012, up from Shs 962bn the year before. Total customer deposits also jumped to Shs 841.5bn in 2012, up from 684.7bn the previous year.
Dreams Cut Short
In January 2017, Dfcu Bank dubiously and shamelessly acquired liabilities and assets of Crane Bank from the Bank of Uganda (BoU) for an undisclosed fee. The acquisition included the Crane Bank Rwanda.
It was said that Dfcu Bank did not have any interest in retaining the Crane Bank Rwanda assets on its books.
Having illegally declared Crane Bank shareholders not to be “fit and proper” to own and operate a bank, BoU connived with Dfcu to sell Crane Bank Rwanda to Kenya’s Commercial Bank of Africa (CBA).
Dreams Revived By Court
Sudhir’s dream of making Crane bank a leading bank in the East was revived in February of this year when the Supreme Court ruling ordered the Bank of Uganda to ‘vomit’ his Bank but also cough to him billions of all the charges he has incurred in the last five years of endless legal battles….of course after BoU implementing the above orders, be ready to see tycoon Sudhir back on the push for his banking dreams, if he still has interest anyway!
Uganda Supreme Court ruled that: -(i) That the Judgments of the lower courts stood. The lower courts found that the receivership of Crane Bank Ltd. ended on January 20, 2018, it was a closed financial institution and was non-existent.
(i) That upon withdrawal of the appeal by Crane Bank Ltd (In Receivership) and objection by Sudhir Ruparelia and Meera Investments Ltd on September 20, 2021, the Appeal stood dismissed and the only issue to be determined was on costs and who should pay. However, the dismissal would take effect on the date of endorsement of the ruling (February 11, 2022).
(ii) That Bank of Uganda should pay the costs of the suit because it was aware at the time of taking over that Crane Bank Ld was financially distressed, incapacitated and could not be expected to pay costs. That it is not logical to expect a shareholder of Crane Bank Ltd. (ln Receivership) who is entitled to costs of an action to pay costs to himself.
Also, the Supreme Court noted that the implication of the finding that the receivership of the Appellant had ended was that the management of the Appellant reverted to the shareholders after the 20th of January 2018.
Summary Of Crane Bank Saga
For starters, after the dubious sale of tycoon Sudhir’s Bank assets to Dfcu, Bank of Uganda through Crane Bank (in receivership) filed a suit against Sudhir and Meera Investments seeking to recover over Shs400 billion and 48 land titles.
However, BoU’s case was dismissed by High Court with costs on grounds that a bank under receivership cannot sue. In fact, receivership had ended and Crane Bank was a non-citizen company that could not hold freehold titles.
“The 1st respondent was closed as a financial institution and placed under receivership. Upon closer, it ceased being a financial institution under the Act and it could, therefore, not be progressed to liquidation. The 2nd respondent’s act therefore of moving the 1st respondent to liquidation are contrary to the above clear provisions of the law and the same cannot be sanctioned by this court,” states part of the ruling.
Because it was not satisfied, BoU filed an appeal to the Court of Appeal which didn’t waste its time but upheld the findings of the High Court thus pushing it to the Supreme Court that has today ruled in favor of Sudhir…just like the previous court rulings.
You may actually remember that in all legal battles, Courts of law have been ordering the Bank of Uganda to pay costs to Sudhir who has floored them multiple times.
Hint On Previous Rulings
In previous court rulings, BoU said that the decision of shutting Crane Bank was necessary upon discovering that it had significant and increasing liquidity problems that could not be resolved without the Central Bank’s intervention, given that Crane Bank had failed to obtain credit from anywhere else.
“An inventory by external auditors found that the assets of Crane Bank were significantly less than its liabilities. In order to protect the financial system and prevent loss to the depositors of Crane Bank, Bank of Uganda had to spend public funds to pay Crane Bank’s depositors,” BoU governor, late Tumusime Mutebile said then.
However, tycoon Sudhir denied the allegation thus counter-suing BoU, seeking compensation of $8m (Shs28 billion) in damages for breach of contract.
He asked the High Court to dismiss the case arguing that the Central Bank overstepped its mandate in commencing court proceedings against him and his Meera Investments Company.
Presenting an objection against BoU, Sudhir through his lawyers Kampala Associated Advocates, told Justice Wangutusi that when dissolving a bank, BoU had three options including putting someone else in its management – what is termed as statutory management, receivership or liquidation.
Counsel Elison Karuhanga a lawyer at Kampala Associated Advocates, argued that however, BoU chose to go for receivership yet under the law, specifically only the manager and the liquidator of the said bank is mandated to file a suit and not a Receiver.
He further explained that BoU as a Receiver could only dissolve or sell Crane Bank within 12 months but not sue its managers.
To you our first-time reader, all these stem from June 30, 2017, when Crane Bank Limited (in Receivership) took Mr. Sudhir Ruparelia and his Meera Investments Ltd. to court for causing financial loss amounting to UGX 397 billion to Crane Bank in fraudulent transactions and land title transfers.
Crane Bank (in receivership) in its Civil Suit No. 493 of 2017 sought High Court to compel Mr. Ruparelia to pay back the US$80,000,000, US$9,270,172.00, US $ 3,560,000.00, US$990,000.00 and UGX 52,083,995.00 as compensation for breach of fiduciary duty.
While Justice Wangutusi dismissed the UGX397 billion case against Mr. Ruperalia on a technicality, alleging that Crane Bank (in Receivership) lost its powers to “sue” and to “be sued”, thus rendering its suit a nullity, Crane Bank (in Receivership) maintaining that receivership is a management situation, and hence no legal change as to the capacity of a company to sue and be sued which ruling BoU disagreed with and instead kept on appealing till the last court losing at all levels to the tycoon.
On Friday July 1, 2022, the Supreme Court in Kampala ordered Bank of Uganda (BoU) to pay dispute costs after losing yet again in the aftermath of the closure and liquidation of Crane Bank Ltd
In a ruling delivered on Friday, July 1, a panel of three judges led by Justice Prof. Lillian Tibatemwa-Ekirikubinza unanimously dismissed with costs the latest appeal filed by Bank of Uganda against Dr. Sudhir and his real estate arm Meera Investments in which the bank regulator sought to overturn the decision by Court of Appeal in the February ruling.
“The appeal is hereby dismissed with costs. The costs shall be borne by Bank of Uganda. The dismissal of the Appeal shall take effect from the date of this judgement being the 11th February 2022, ” Justice Tibatemwa stated in a notice read by the court Registrar at the Supreme Court on Friday.
The justices reasoned with the Court of Appeal that management of Crane Bank be returned to the shareholders including Sudhir Ruparelia and Meera Investments Limited since the receivership status had ended in 2018. “The Appellant’s receivership ended on 20th January 2018, and thereafter its management reverted to the shareholders,” the court ruled.
Crane Bank started operations on 21 August 1995 “with a vision of being the largest privately owned Ugandan Bank.”
In September 2012, Crane Bank acquired the assets and some of the liabilities of the National Bank of Commerce, a small, indigenous, financial services provider in Uganda that had lost its banking license.