A group of youths under the Poor Youth Network have petitioned the President Yoweri Museveni over what they have termed as ‘excessive legal fees payments’ in court case between the Bank of Uganda and former shareholders of Crane Bank Limited (under receivership).
In the petition, Ssempala Zahid, the national spokesperson for Poor Youth Movement copied to the World Bank, the Speaker of Parliament, and IMF among others, calls for the president’s intervention into the matter so that the case is settled outside court to save the tax payers money.
“We are writing to inform you that, on 23rd June 2020, in the middle of the COVID 19 Pandemic, in the worst period for all Ugandans locked down, the Court of Appeal (Court) ruled yet again against Crane Bank Limited in Liquidation (CBL) in a case where BoU filed to recover Shs397bn from Dr Sudhir Ruparelia claiming that he allegedly siphoned the same from CBL before it was closed and sold in 2017,” Ssempala says
It should be remembered that on June 23rd, Court of Appeal Justices, Alphonse Owiny Dollo; Cheborion Barishaki and Stephen Musota agreed with earlier ruling by Commercial Court Judge, Justice David K. Wangutusi’s August 26th 2019 that a bank in receivership, under the Financial Institutions Act (2004) cannot sue or be sued and therefore Crane Bank (in receivership) cannot and should not have sued businessman Dr. Sudhir Ruparelia and his company Meera Investments. Following the court ruling, the case was dismissed.
Following the case dismissal, there were also many questions to ask after Auditor General’s Special Audit Report revealed that out of UGX478.8 billion that BoU purportedly injected into Crane Bank as liquidity support- a total UGX270 billion, couldn’t be traced to the final recipients leaving questions of where the money could have disappeared to.
Delivering the ruling on 23rd June, Civil Appeal 252 of 2019 at the Court of Appeal, court of Appeal justices also ruled that Crane Bank (in receivership) being a foreign owned bank, cannot own freehold land in Uganda and therefore had no legal basis to sue Dr. Sudhir for land it cannot own.
This was the second time, the BoU lost to the CBL following case- HCCS 493 of 2017, in which BoU, through Crane Bank (in receivership) alleged that the businessman fraudulently took out up to $92.8m (about Shs334b) and another Shs8.2 billion of depositors’ money from Crane Bank for personal gain.
Upon losing all the two cases, BoU was condemned to pay total costs of the lawsuit which could go up to UGX 600 billion which the petitioner blames on the greed in the BOU Legal Department.
‘’The greed in the BoU Legal Department misled the Board to authorise an Appeal which was filed to the Court of Appeal … this appeal was dismissed and the costs awarded to Meera Investments Ltd and Sudhir Ruparelia yet again. The total taxed bill is yet to be filed which according to legal experts could be anything in the region of [UGX] 150bn which will be visited on the taxpayers. The BoU does not have its own money to pay those costs and will have to seek for recapitalisation or a refund from the government after payment,” Ssempala stresses.
“Uganda has bled enough, let these costs not be multiplied in the Supreme Court not to forget the interest and damages the bank will continue to incur, at the end of this all it’s we the taxpayers to suffer. Let BoU Board meet and consider settling this matter given that out court and Alternative Dispute Resolutions are valid methods of settling cases,” adds the petition.
Burdening the budget
How Stanbic Bank CFO Ronald Makata Blends Governance, Technology and Human Leadership to Drive PerformanceThe group also stresses that payment of such excess lawsuit costs will be a burden to the budget of the country following negative effects of COVID-19 on the government’s bottom line. “Your Excellency, it should be worth noting that, the Government is currently facing deep budget cuts and might not realize the 22 Trillion budget for 2020/2021. This condition will be further aggravated by payment of the legal costs by tax payers in the suit which by law must be paid and considering views/ analysis of legal experts will be lost again in the Supreme Court in the event of an Appeal,” he stressed.
“BoU has a litany of lost cases where billions have been paid to claimants and winners of cases. The performance of the Bank’s Legal Department could be as a result of over reliance on so called external legal experts who are bent on appealing any losses given that they will be paid. And as it is common knowledge, the higher they Appeal, the higher their fees. A law firm billed BoU over 13bn for services in the CBL closure which services where later on regarded as ineffective and contrary to the law by COSASE as parliament faulted BOU in deliberately disregarding the law or legal procedures in the process of closure of CBL, which leaves one wondering why the said “legal experts” were paid a hefty 13bn for wrong advice.”
The petitioner also adds that the payment of about UGX20 billion to the legal department possesses a burden to the tax payers.
“The COVID-19 pandemic has slowed down productivity, Ugandans have borne the brunt of biting poverty, revenue collection estimates have been reduced drastically fiscal discipline and austerity measures have been proposed and now Ugandans have to watch and see as the usual mistakes are being repeated by the same advisors misleading the BoU Board into entering a bottomless pit that is likely to cost BoU an arm and a leg,” Ssempala noted.
The petitioner thus says that there are so many questions that need to be answered by the BoU Board and the executives.
“As soon as the ruling was made dismissing the Appeal, the same Legal Head Mrs Margaret Kasule was summoned by the Board which was sitting on that same day to advise on the way forward and as expected, the Legal Head advised that the only way out of this was through an appeal to the Supreme Court. Indeed several interactions and engagements are underway to file an appeal to the Supreme Court where one of the Justices who dismissed the case is likely to be seated again this time as Chief Justice as he is Acting Chief Justice at the moment”.
“Even a blind person will see that this case which has so far cost Ugandans in excess of 20bn in costs to Lawyers is a waste of public resources. The COVID-19 pandemic has slowed down productivity, Ugandans have borne the brunt of biting poverty, revenue collection estimates have been reduced drastically fiscal discipline and austerity measures have been proposed and now Ugandans have to watch and see as the usual mistakes are being repeated by the same advisors misleading the BoU Board into entering a bottomless pit that is likely to cost BoU an arm and a leg”.
“Many questions have been raised by the public in regard to the viability of the said Appeal by BoU to the Supreme Court like; what is the ultimate goal of this appeal, is it to appease the Governor or the President? Is it to recover real money? If so how much has the BoU recovered in the last 20 years of Bank resolutions?”
“The Bank has instead sunk billions into the coffers of expensive unthankful legal sharks who have no heart for Ugandans but their wallets”.
The group has therefore called for the president’s intervention to solve the matter outside court to save the tax payers’ money.
“Your Excellency, as your Bazukulu and Tax payers who feel the pinch of our monies being wasted by BoU in endless litigation, the purpose of this petition is to say enough is enough. Let this wanton disregard to the financial bleeding of BoU STOP HERE. Let Sudhir Ruparelia be paid his money and let Ugandans start with a new slate. Uganda has bled enough, let these costs not be multiplied in the Supreme Court not to forget the interest and damages the bank will continue to incur, at the end of this all it’s we the tax payers to suffer. Let BoU Board meet and consider settling this matter given that out court and Alternative Dispute Resolutions are valid methods of settling cases.”
