Wednesday, July 26, 2017

Bank of #Uganda, #Sudhir (#CraneBank) get sued for fraudulent liquidation of National Bank of Commerce

In a 25-page lawsuit filed at the Commercial court yesterday, businessman Amos Nzeyi, a shareholder of the defunct National Bank of Commerce (NBC), accuses Bank of Uganda (BOU) of illegally closing the bank he co-owned with former premier Amama Mbabazi. 

Also sued are embattled businessman Sudhir Ruparelia, his business partner Raskillal Chhotalala Kantaria and Crane bank, which was taken over by Dfcu bank in January this year.

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

NBC was owned by high-profile personalities from Kigezi sub-region, who included retired Supreme court Justice George Wilson Kanyeihamba, former finance minister Ezra Suruma and Prime Minister Ruhakana Rugunda. 

Businessman Amos Nzeyi
Through Muwema and Company Advocates, Nzeyi says 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.   

Nzeyi says they are interested in and affected by the admissions and reported fraudulent actions of Sudhir and Kantaria as disclosed in BOU’s case, which is before Justice David Wangutusi of the Commercial court.

Nzeyi says it is during the same period (2012) when the alleged fraud happened that BOU sold NBC assets to 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 says, 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 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.

“It had also, among others, purchased several ATMs and the T24 temenos core banking system with the knowledge and approval of the first defendant [BOU],” the plaint reads in part.   


That after the closure of NBC by BOU, Nzeyi says, 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 says the Constitutional court order was ignored by both BOU and Crane bank and all attempts to hear the main constitutional petition have since proven futile for the last five years.

Between September 29, 2012 and October 1, 2012, Nzeyi says BOU officials who includedBen Sekabira and Godfrey Yiga forcefully took over securities (money) from NBC well aware of the Constitutional court injunction. On October 1, 2012, Justine Bagyenda, BOU’s executive director, supervision, participated in the sale of some of NBC’s foreign currency deposits worth Shs 2 billion whilst she was aware of the said court order.

In the intervening period, Nzeyi says that one AR Kalan, who was the managing director of Crane bank during the contested purchase of NBC assets, disappeared mysteriously in circumstances inconsistent with good corporate governance of a financial institution.

Though Kalan disappeared, Nzeyi says, BOU did not put Crane bank, Sudhir and Kantaria to account for his mysterious disappearance, neither was a case of a missing person ever reported.

In the suit, Nzeyi says 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 says, it has 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. 

“That the plaintiffs, therefore, take strong exception to the double standards and discrimination exhibited by the first defendant [BOU] against NBC which was unjustly and illegally put to sudden death,” the plaint goes on.

Subsequently, Nzeyi wants the Commercial court 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.

“A declaration that the purported winding up and liquidation of NBC by the first defendant [BOU] was irregular, illegal, null and void,” the suit says, adding that court should order BOU to furnish an inventory of assets and liabilities of NBC at the time of takeover.  

Nzeyi also wants court to order BOU to show the NBC liquidators’ forensic investigation report together with the financial liquidation report plus an order for Sudhir to account for the disappearance of Kalan.

Asked whether they had been served with the plaint, the BOU lawyers said, not yet. Interviewed yesterday for this story, lawyer Peter Walubiri said the case by NBC confirms that so far BOU is on trial for failing in its supervisory role.

“The best case scenario for BOU would have been for the case with Sudhir to be settled out of court,” Walubiri said, adding, “But now they have failed to settle out of court; it’s time for the public to know who did what.”


Amos Nzeyi sues Bank of Uganda, Sudhir

In a 25-page lawsuit filed at the Commercial court yesterday, businessman Amos Nzeyi, a shareholder of the defunct National Bank of Commerce , accuses Bank of Uganda of illegally closing the bank he co-owned with former premier Amama Mbabazi.

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