The law firm which represented local businessman Hamis Kiggundu, alias Ham, in his legal showdown with Diamond Trust Bank (DTB) over a sour loan deal, has accused the Uganda Bankers’ Association (UBA) of misinforming the banking industry and the public and causing a “flurry of fake news.”
Muwema & Co Advocates and Solicitors, said Friday, that the bankers’ lobby’s press release in which it claimed the commercial Court ruling in the case of Hamis Kiggundu against DTB rendered loan syndication illegal and put at risk a 5.7 trillion syndicated loan portfolio currently seated with commercial banks, is alarmist and its claims ignorant of the law and facts regarding the case.
On Wednesday, commercial Court Judge, Justice Henry Peter Adonyo, found in a court ruling, which has since attracted media attention, that the loans amounting to $4.5M extended to Hamis Kiggundu by DTB Kenya were illegal and unenforceable because the bank did not possess a license or permission from the Bank of Uganda to conduct financial business in Uganda.
In a letter to Uganda Bankers’ Association chairman Mr Mathias Katamba, the law firm says that the association should have welcomed the court decision instead, because by insisting that the provisions of the law apply to all banking transactions whether by local or foreign banks, the decision promotes good banking practices, which by definition, the association stands for.
” Why would anyone find a Judgement which ensures compliance with the law to be reckless? The firm wonders.
” The Judgement declared the syndicated loan involving DTB Kenya to be illegal because it did not obtain permission from Bank of Uganda as required by the Financial Institutions Act (FIA) to conduct financial institutions business in Uganda.
” Is the UBA trying to push for deregulation of foreign lending in Uganda by vehemently protesting a court judgement which seeks to enforce the regulation of such foreign lending? Is UBA trying to promote illicit financial flows and anarchy in the financial sector?” the law firm said.
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Muwema & Co Advocates and Solicitors, which describes self as a firm that has ” carved out a niche as trusted advisors and partners in matters of banking and finance law,” bluntly accused the association of being an accessory to banks in illicit financial transactions and escaping the scrutiny of the authorities.
” This is not the first time nor the last that a Bank customer has accused or will accuse a bank of such predatory behavior and unethical conduct of financial pilferage. It would appear to us that the UBA has felt shockwaves of the Judgement because the Judgement exposes the hitherto undisclosed foreign loans which have been escaping regulatory oversight by the Central Bank of Uganda and which are otherwise eligible for taxation by the Uganda Revenue Authority.” The firm said.
” Can the UBA give an account of all taxes payable to the Ugandan treasury against interest payments remitted on the syndicated loan portfolio which you have reported to now stand at 5.7 trillion? ”
In their press statement, the bankers’ association sought to rally the support of several stakeholders in overturning the Court judgement including the Government of Uganda which it said is the ‘ biggest beneficiary of syndicated lending for various development programmes in the country.’
However, the law firm dismissed this as unnecessary. ” There is no reason why the Government of Uganda which is a sovereign juridical person should be blackmailed and taken hostage of in its own sovereign jurisdiction just because it is the largest beneficiary of syndicated lending for various projects” the firm said.
” The Government of Uganda has a corresponding duty to respect, protect,and apply the laws of Uganda equally to itself and all players in the banking sector, irrespective of whether they are local or foreign lenders.”
The law firm urged the Uganda Bankers’ Association to follow judicial due process in contesting the judgement of the court and to ” stop undermining the administration of justice and independence of the courts in Uganda through misguided media releases” otherwise it risks being ” cited for committing offences against judicial proceedings.”