EDITORIAL: Why Dfcu Bank’s UGX47 bn claim for Sudhir properties is wrong, legally, morally and an abuse of taxpayers’ trust in BoU

It was recently reported in the media that following BoU’s failure to annex 48 properties belonging to Meera Investments Limited; properties it had wrongfully sold to dfcu and dfcu Bank had fraudulently gone ahead to transfer them into the bank’s names, dfcu had now decided to return the bank branches to Bank of Uganda.

That would have been the right thing to do in the first place, because dfcu should never have, knowingly purported to transfer the leases for the properties into its names without the consent of Meera Investments Limited, the lessor, but the fact that dfcu now wants to be paid UGX47 billion makes the whole move, all the more ugly.

According to information in the media dfcu, at acquisition stage, is said to have paid to BoU only UGX10 billion for the 48 properties, but on acquisition of the properties, had them revalued to UGX47 billion- the actual price they should have paid in the first place- because that is what PriceWaterhouseCoopers (PwC) had valued them at, before the takeover; however both BoU and dfcu conveniently forgot about this valuation at the sale stage.

Thank God, there are reports that now, the Governor, Bank of Uganda, Professor Tumusiime Mutebile has opposed the move to pay the UGX47 billion to dfcu Bank, saying it is undeserved.  Compensating dfcu this humongous amount of money, would make dfcu bank UGX37bn richer- never mind that they have been occupying the properties for nearly 3 years without paying rent.

This happening even before action is taken on the Public Accounts Committee on Commissions, State Authorities and State Enterprises (PAC – COSASE)  report on BoU’s mismanagement of the takeover of 7 defunct banks in which for example, it was found that Bank of Uganda did not value Crane Bank’s assets and liabilities as required by law and as such the purchase price of UGX200bn- payable over 30 months at no interest rate was unreasonable, is tantamount to abuse of justice especially for the owners of the closed banks. 

It shall be recalled that the Auditor General in his report to parliament had also found out that, as if intentionally undervaluing Crane Bank was not enough, Bank of Uganda went ahead to allow dfcu bank to pay the purchase price over a 30 months period without any interest, causing tax payers a loss of UGX39bn in lost interest.

Upon acquiring Crane Bank on the low, dfcu overnight increased their assets by 74% from UGX1.8 trillion to UGX3.1 trillion and profits by 134% from UGX45.3 billion in 2016 to UGX106.2 billion! As a result dfcu moved from being the 4th largest bank to the second largest overnight.

In fact if you add the profits associated with the Crane Bank acquisition earned by dfcu in year one alone, estimated to be at between UGX50 billion and UGX60 billion, to the UGX39 billion they should have paid to BoU as interest on the prolonged payment and now the UGX37 billion profit dfcu stands to make, if BoU went ahead to compensate them, dfcu will have earned about UGX140 billion. And that is before adding goodwill of the business they got as well as the UGX600 billion bad loan book that belonged to Crane Bank shareholders that BoU literary donated to dfcu- as it was never part of the purchase agreement.  

But that’s not all- there is an going case by Meera Investments in High Court Civil Court Suit No. 948 of 2017, in the Land Division- Meera Investments Ltd Vs dfcu Bank Limited and The Commissioner for Land Registration, challenging the transfer as an “illegality” and a “fraud.”  

Meera, wants vacant possession of the properties and a refund of “mesne profits” (profits of an estate received by a tenant in wrongful possession and recoverable by the landlord) with 20% interest, as well as damages and costs for the suit. 

Dfcu, attempting to reverse the possible fraud before court pronounces itself on the matter, is an attempt to subvert justice, especially to the aggrieved party.