Bankers’ Association Joins Battle With DTB Bank Against Tycoon Ham’s Shs120B Fraud Case Ruling

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Bankers’ Association Joins Battle With DTB Bank Against Tycoon Ham's Shs120B Fraud Case Ruling
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It is worth noting that yesterday, Civil Division of the High Court Kampala’s Justice Peter Adonyo ruled in the famous UGX120 billion fraud case between Ham and DTB that because DTB Kenya is not licensed to carry out financial services in Uganda, it was wrong to carry out any business with Hamis Kiggundu and that it was wrong for the bank to use their counterparts of DTB Uganda to help them enforce the loan agreement in Uganda.

Now based on the above judgement, Uganda Bankers Association has released a statement announcing its dissatisfaction as it reads below;

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“Uganda Bankers Association has learnt of the judgement delivered yesterday 7th October 2020 in the High Court of Uganda (Commercial Division) arising from H.C.C.S No 43 of 2020 involving one of our members, Diamond Trust Bank (U) Ltd and related parties.

Although the Association is yet to receive a copy of the detailed judgement, the ramifications of the judgement have sent shockwaves across the entire industry and related stakeholders premised on the following five preliminary areas of assessment;
a) As a result of the judgement & its implications, the syndicated portfolio currently at risk seated with commercial banks is over U.Shs 5.7 trillion
(1.53 billion USD) of running facilities across various sectors including real estate, road construction, energy covering hydro-electric power, oil & gas
and manufacturing among others. The above figure does not include pipeline transactions that were still being processed and have all been halted since judgement came out yesterday.
b) The above figures exclude syndicated lending to the Government of Uganda who is the largest beneficiary of syndicated lending for various development programmes in the country.
c) The wide-sweeping nature & sheer weight of shockwaves the judgement has sent to our international partner agencies and lenders and the implications for the country as an investment destination.
d) The message this judgement is sending to other borrowers with foul intention who can now anchor their default on this judgement that declared syndication illegal.
e) The overall impact of this judgement on the economy.
The Chief Executives of all the 35 member institutions of Uganda Bankers Association that includes all the Tier I Commercial Banks, the Development Banks and Tier II & III (Micro Finance & Deposit-taking Institutions) supervised by Bank of Uganda have this morning resolved as follows;
1. To join Diamond Trust Bank (Uganda) Limited in its appeal at the higher court to determine the case on its merits.
2. To join Diamond Trust Bank (Uganda Limited) to file for a stay of execution of the orders of the Hon Justice as ruled yesterday.
3. To call upon the Central Bank of Uganda to pronounce itself on this matter.
4. To call upon the Executive Arm of Uganda Government through the Minister for Finance, Planning & Economic Development and the Attorney General to pronounce itself on this matter, more so because they are the accountable officers for syndicated facilities contracted by Government including where foreign counterparties are involved and re-assure the financial sector, the international lending partners and the entire country of the commitment to continue honouring all debt obligations in line with agreed protocols.
5. To call upon our esteemed good borrowers & all customers to remain calm as appropriate action is undertaken to address the challenges arising from this specific judgement.
6. To call upon all our friends and stakeholders including Uganda Insurers Association, PSFU, UMA, KACITA, ULS, Members of Parliament, Civil Society, Uganda Investment Authority, Capital Markets Authority, Financial Intelligence Authority, Uganda Revenue Authority, Professional Bodies among others as well as the Judiciary itself to join us in addressing the implications of this reckless judgement and assist in avoiding the adverse effects this judgement could lead the country & economy into.’

 

Diamond Trust Bank (Uganda) and Diamond Trust Bank (Kenya) has been arguing that Kiggundu received a credit facility totalling over shs41b a few years ago and he still owes them about shs39b. In turn, Kiggundu accused the banks of fraudulently siphoning over shs200b from his accounts without his knowledge and consent over the past 10 years.

The banks add that as of January 21, 2020, Kiggundu was in default on payment obligations of $6.298m on the loan facility of $6.663m, as well as sh2.885b on the demand overdraft facility of sh1.5b and the temporary demand overdraft facility of sh1b.

They further claim that Kiggundu was in default on the payment of another $3.662m out of a total loan facility of $4m and another $458,604 on a loan facility of $500,000, as of January 21, 2020.

However, Kiggundu revealed that this was a financial fraud since the money was fraudulently withdrawn from both his dollar and shilling accounts were in excess of what the bank was demanding. “They said they had carried out an audit of my bank accounts and discovered that the money was siphoned off over a period of 10 years,” Kiggundu said.

He highlighted that a total of shs 29.035b was unlawfully debited from his shilling account, while $22.93m was withdrawn from his dollar account under what he calls unclear debits. Kiggundu, who has been accessing loan facilities from the bank for over 10 years, issued a notice to the bank terminating his relationship and withdrawing the mortgage instruments.

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