The governor Bank of Uganda, Mr Emmanuel Tumusiime Mutebile
Bank of Uganda has called for calm and assured Ugandans that the banking sector in the country is sound and stable despite an October 8 court ruling in which Diamond Trust Bank (DTB) was ordered to refund several billions of money to Ham Enterprises’ accounts.
In a statement, the governor Bank of Uganda, Mr Emmanuel Tumusiime Mutebile said: “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.”
He said Bank of Uganda (BoU) has taken note of the judgment of the Commercial Division of the High Court in Misc. Application No. 654 of 2020 and High Court Civil Suit No. 43 of 2020 involving M/s Ham Enterprises and Others –VsDiamond Trust Bank (U) Ltd and Another, which was delivered on October 07, 2020.
“We await the detailed written judgment of the Court to assess its implications and to determine an appropriate response thereto, including any future actions with regard to 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,” he said.
However, in the ruling, a copy of which has been seen by Daily Monitor, Justice Henry Peter Adonyo of the Commercial Division of the High Court declared that DTB Kenya is not licensed to conduct financial business in Uganda and therefore the credit facilities granted to Ham Enterprises were irregular, null and void.
He said DTB Uganda to act as a collecting agent for DTB Kenya contravened the Financial Institutions Act and Agent Bank regulations.
In his detailed ruling he stated: “I declare that the credit defendants (banks) breached the different loan agreements in which the applicant (Ham Enterprises) acquired between 2011 and 2019.”
The acts of DTB Kenya Limited in conducting a financial institution business as a deposit taking financial institution licensed in Kenya which illegally impacted on activities in Uganda calls for it to be penalised.
It was not licensed as a financial institution in Uganda which makes it an offence to conduct business without a licence,” he added.He dismissed DTB Uganda and DTB Kenya’s defence and said DTB Uganda is liable to being penalised for taking part and facilitating the commission of the offence.
In the ruling Justice Adonyo ordered the banks to refund Shs34b and $23.2m which they deducted from Ham Enterprises’ accounts.
The court also cancelled the loan mortgages and ordered the banks to return the mortgaged property to Ham since the loan transactions were illegal.
The properties which Ham Enterprises had deposited as security included land titles for buildings at Kyaddondo, Kawuku, Victoria Crescent II and Makerere Hill Road.
The DTB lawyer, Mr Kiryowa Kiwanuka had listed the loan facilities taken by Ham Enterprises as $6,663,453, Shs1.5b, Shs1b, $4m and $500,000.
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