The journey to cleaning Uganda’s Banking Industry is one that can only be undertaken by courageous Ugandans as there are some individuals using their institutions/associations to oppose the Banking Reforms being suggested by one of a local bank’s top client and renowned businessman, the C.E.O of Ham Enterprises (U) Ltd Mr. Hamis Kiggundu.
Last month, the Commercial Division of the High Court in Kampala has set aside regulation 13 of the Mortgage Act 2012 requiring Ham Enterprises (U) Ltd to make a security deposit in a case in which the company alleges Diamond Trust Bank (Uganda) and Diamond Trust Bank (Kenya) unlawfully debited sh120b from its accounts.
Where it all went wrong
The court’s decision follows an appeal by the company owned by prominent businessman Hamis Kiggundu against the regulation saying it was contradictory to Article 28 of the Constitution that provides every Ugandan with a right to a fair hearing. Subsequently, Diamond Trust Bank also conceded that in the interest of justice the 30% condition be vacated and that the matter should be left to court to determine the case on its merits.
“The Mortgage Act was enacted in 2010. However, it was not until 2012 that Regulation 13 under the Mortgage Regulation 2012 that requires payment of a 30% deposit was smuggled into the laws of Uganda as a photocopy to the income tax law which required a taxpayer to pay URA a deposit of 30% on an assessment before they could challenge such assessment at courts of law, ” Ham Enterprises said in its appeal.
“Banks have always used this law (Regulation 13) to push their clients to the wall denying them the right to a fair hearing.”
Ham Enterprises (U) Ltd sued Diamond Trust Bank seeking to recover the monies allegedly debited by the Bank from both the company’s accounts over a 10 year period. In turn, the banks argue that Kiggundu received a credit facility totaling over sh41b a few years ago and he still owes them about sh39b.
Kiggundu, the proprietor of Ham Enterprises Limited, consequently petitioned the court to block the banks from seizing and selling his assets in order to recover the money he claims was fraudulently taken from his accounts.
Through Ham Enterprises Limited, Kiggundu obtained a loan of $6,663,453 and later sh2.5b from the DTB (U) to finance his projects in the real estate business.
He also obtained another facility worth $4.5m through Kiggs International (U) Limited from DTB (K) and mortgaged his properties, which include Plot 328 located at Kawuku on Block 248 Kyadondo, three plots that include 36, 37 and 38 on Folio 1533 Victoria Crescent II situated in Kyadondo and land on Makerere Hill Road on LRV 3716 Folio 10 Plot 923 Block 9.
A total of sh29.035b, he said, was unlawfully debited from his shilling account, while $22.93m was withdrawn from his dollar account under what he calls unclear debits. In two letters to the bank, Kiggundu, who has been accessing loan facilities from DTB for over 10 years, issued a notice to the bank terminating his relationship and withdrawing the mortgage instruments.
Kiggundu stated that the bank’s acts of breach, misrepresentation, and negligence complicated the performance of the contractual relationship between his companies and the bank to their prejudice.
Kiggundu responded by writing to Diamond Trust Bank, alleging financial fraud.
He said the money was dubiously withdrawn from both his dollar and shilling accounts. He stated that the monies fraudulently withdrawn from his company accounts were in excess of what the bank was demanding. He said they had carried out an audit of his bank account and discovered that the money was siphoned off over a period of 10 years.
“We hereby communicate the termination of all existing contracts. Therefore, as far as Ham Enterprises (U) Ltd is concerned, there is no indebtedness to you,” Kiggundu stated in his letter to the DTB.
The case is ongoing.
