The Bank of Uganda in the latest report confirmed that Dfcu Bank is in preparations to leave 48 Meera Investment Limited properties some of which were being used by the defunct Crane Bank Limited (CBL) branches before it was taken over by its rival.
However, it has now emerged that Dfcu Bank wants BoU to pay them Shs47 billion as a result of the decision to exit properties and they are basing that claim on the Purchase of Assets and Assumption of Liabilities Agreement signed between the bank and BoU on January 25, 2017.
The valuation of Meera investment properties was Shs47 billion as dfcu Bank took over CBL. Yet Dfcu Bank paid BoU only Shs10 billion for the properties and has used them for almost now three years without paying rent, leading Meera Investments Limited to sue them.
The latest scenario now shows Dfcu Bank underdeclared the value of the properties as they did the valuing which BoU based on to accept Shs10 billion. Dfcu Bank should have paid more in stamp duty based on the value of the properties, which amounts to tax evasion and criminality.
Dfcu bank is demanding for the money after realising BoU is unlikely to recover the money as sighted in the agreement.
“Following court’s dismissal of HCCS No.493 of 2017 on 26th August 2019, it is unclear how long it will take BoU to recover the reversion from MIL. This state of affairs creates uncertainty for the Bank which is prejudicial to its business interests. In line with its strategic interest and risk management framework, the Board has resolved that it is in the best interest of the Bank to exercise its option to rescind the purchase of the MIL properties,” DFCU Bank in a letter dated September 12, 2019 and signed by CEO Mathias Katamba and others says.
However, the demand by Dfcu Bank per the agreement with BoU means taxpayers will incur loss of Shs37 billion.
“Following the Court’s ruling … Dfcu Bank Limited in a letter dated September 12, 2019 communicated to BOU its decision to exercise its option to rescind its interest in purchasing the 48 properties pursuant to clause 8.7 of the Agreement,” BoU says in its latest annual report, even though BoU failed to announce in the report that Dfcu Bank demands them those billions.
The BoU says that as part of the rescinding of this purchase, dfcu will return to Bank of Uganda Certificates of title for Meera Investments Limited ‘and requires Bank of Uganda to pay dfcu the new book value of properties recorded in the assets and inventory compilation as October 20, 2016.’
Under the agreement, BoU as the receiver of CBL undertook to recover the reversionary interest relating to 48 leasehold properties acquired by DFCU Bank. The money was to be recovered in 24 months from the date of the agreement but BoU failed.
Dfcu Bank says that after BoU realised that it could not recover the money within the 24 months as stated in the agreement, it asked for an extension of the contract timelines under certain conditions, even though DFCU says they have not reached an agreement with BoU over the same especially when BoU/Crane Bank in receivership lost a case against Sudhir and Meera Investments Limited.
On August 26, 2019, Court ruled on Miscellaneous Application No.320 of 2019 in favor of Sudhir Ruparelia and Meera Investments Limited dismissing Suit No.493 of 2017 where Crane Bank (receivership) had sued Sudhir Ruparelia and Meera Investments Limited to recover Shs397 billion allegedly swindled. Sudhir and Meera investments Limited (MIL) has argued that Crane Bank in Receivership had no right to sue them.
Court ruled that costs of the application be paid by the Bank of Uganda on the basis that Crane Bank (in receivership) is non-existent and does not have locus standi to put forth any claim against Sudhir and Meera Investments Limited.
A recent leaked document showed Dfcu Bank calling for bids from companies that want to provide consultancy services at it seeks to relocate its branches to new areas in various districts and towns across Uganda.
