Welcome to Uganda Multimedia News & Information   Click to listen highlighted text! Welcome to Uganda Multimedia News & Information

Ugandan Banks Gang Up Against Businessman Ham Kiggundu

Ham Kiggundu

Uganda’s banking sector has joined Diamond Trust bank (DTB) in the fight to overturn a court judgement that saw DTB lose a Shs 42 billion case against Ham Enterprises. The industry fears that the court decision if implemented, will have far-reaching consequences on the industry.

Ham Kiggundu, and his two companies Ham Enterprise Limited and Kiggs International (U) Limited sued DTB-Uganda, and DTB-Kenya, in March this year, accusing them of fraudulently siphoning more than Shs 120 billion from his accounts without his knowledge and consent.

Kiggundu contents that between February 2011 and August 2018, he was offered credit facilities by the tow banks to develop commercial properties in Uganda. But as he continued servicing them, he learnt that the banks were taking out money from his accounts.

He asked the court to declare DTB Kenya‘s demands for payment illegal, since it was not registered to carry out business in Uganda, to which the Commercial court agreed. Kiggundu argued that it was illegal for DTB-Uganda to appoint DTB-Kenya as the agent bank and security agent in respect to its loan.

DTB-Kenya unsuccessfully argued that it was not conducting business in Uganda because the credit facilities were extended to Ham in Kenya.   DTB-Kenya head of debt recovery and company secretary, Stephen Kodumbe argued that DTB-Uganda did not act as agent of DTB-Kenya to conduct business in Uganda, but only sought its services as a collection agent for it to receive its payments from Ham Enterprises Limited.

“The act of DTB-Kenya in conducting financial business is licenced in Kenya and it therefore illegally offered the facilities in Uganda. Consequently, this application is allowed with costs,” Commercial court head Justice Henry Peter Adonyo said in the judgement on Wednesday.

DTB immediately issued a notice of intention to appeal and asked the court to stay the ruling. Similarly, in a brief statement signed by the governor of the central bank on Thursday, Bank of Uganda said it was awaiting receipt of the full judgement before deciding the next course of action.

“Bank of Uganda (BoU) has taken note of the judgement of the commercial division of the High court …. involving M/s Ham Enterprises and others Vs Diamond Trust Bank (U) Ltd and another, which was delivered on October 7, 2020.”

“We await the detailed written judgement of the court to assess its implications and to determine an appropriate response thereto, including any future actions about the matter. Bank of Uganda would like to reassure all stakeholders and the general public that the BoU remains committed to ensuring a resilient, sound and stable financial sector,” the statement reads.

On its part, the Uganda Bankers Association says the judgement has sent shockwaves across the industry and stakeholders especially regarding syndicated loans. The syndicated loan portfolio, or loans that two or more banks jointly give to a borrower, currently stand at Shs 5.7 trillion or $1.5 billion, with the government as the biggest beneficiary.

They assert that the ruling also sent shockwaves to the banking sector’s international lenders who might change their attitude towards Uganda. UBA fears that this decision also sets a bad precedent as other such borrowers might take similar actions.

In a statement, UBA is now rallying all government business facilitation agencies like Uganda Revenue Authority, Uganda Investment Authority, the ministry of Finance and the Judiciary, as well as the private sector agencies to; “join us in addressing the implications of the judgement and assist in avoiding the adverse effects” of the judgement on the economy and the country.

Source:URN

Leave a Reply

Your email address will not be published.

468x60

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Click to listen highlighted text!