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Court has issued criminal summons against a South African moneylender to appear in court to substantiate on allegations that they are transacting business in Uganda without a licence. 

The summons was issued on Wednesday against Vantage Mezzanine Fund 11 Partnership bosses Warren Van Der Merwe, Mokgome Mogoba and Alexander Derek. 

According to the charge sheet, Merwe is the Vantage company banker and managing partner; Mogoba is a chartered accountant, investment banker and an associate partner at Vantage, while Derek is an attorney at Vantage. 

Buganda Road Court acting Principal Magistrate Grade One Magistrate Winnie Jatiko Nankya issued the directive following an application filed by lawyer Wyckliffe Atuhairwe under private prosecution.

Criminal prosecution  

The magistrate allowed Atuhairwe to commence private criminal prosecution against the South African moneylenders and sanctioned charges against the accused by signing the formal charge sheet attached to Atuhairwe’s application. 

“The applicant has satisfied all the statutory and/ or procedural requirement necessary to commence a private criminal prosecution against the respondents. Therefore, leave is granted to the applicant to commence a private criminal prosecution against the respondents,” the magistrate directed. 

The magistrate, therefore, issued criminal summons against the respondents to appear in court on March 22, 2024, and plead to the charges. 

The charge 

The accused face charges of transacting in money lending business in Uganda without a valid money lending license, contrary to section 84(1)(a) of the Tier 4 Microfinance Institutions and Moneylenders Act, 2O16. 

If found guilty, the South African firm and its bosses will be disqualified from engaging in money lending business in Uganda. 

The accused are also battling charges of carrying on and operating a business in Uganda under a business name, which does not consist of the true surnames of all partners who are individuals and the corporate names of all partners which are corporations without registration, contrary to section 4 (1) and (2) of the Partnerships Act No. 2 of 2010. 

The accused further face two counts of disobedience of statutory duty, contrary to section 116 of the Penal Code Act, 13 counts of obtaining execution of a security (money) by false pretence, contrary to section 306 of the same Act, and conspiracy to commit a misdemeanour, contrary to section 391 of the same Act. 

The offence of disobedience of statutory duty attracts a maximum sentence of two years’ imprisonment upon conviction while obtaining execution of a security by false pretence and conspiracy to commit a misdemeanour elicit a five-year jail term. 

Allegations 

It is alleged that the accused, trading as Vantage, between December 11, 2014 to date, in Kampala, Uganda, transacted and continue to transact a money lending business. 

Vantage purportedly advanced a loan referred to as a “$10m Mezzanine Term Facility Agreement” to Simba Properties Investment Company Limited, whose credit facility is accruing interest and recoverable to date, without a moneylending licence. 

The private prosecutor purports that the South African moneylenders disobeyed statutory duty by refusing to register and/or incorporate a name “Vantage Mezzanine Fund II Partnership” under which they operate a money lending business illegally. 

It is also purported that the accused, on December 31, 2014, in Kampala, obtained execution of a security, namely; mortgage deeds for several properties of businessman Patrick Bitature to secure $10m (about sh36.6b), under the representation that the said Vantage was legally mandated to transact a moneylending business in Uganda, knowing full well that the said representation was in fact, false.

High court ruling  

In 2022, Justice Musa Ssekaana of the Civil Division of the High Court declared that Vantage is a non-existent legal entity and has no capacity to sue anybody in Uganda. 

Ssekaana ruled that failure by Vantage to register as a partnership under section 4 of the Partnerships Act, 2010, constitutes a criminal offence under section 4(2) of the same Act. 

The entity had rushed to the High Court to seek a judicial review over the decision by the Uganda Registration’s Services Bureau (URSB) to refuse the transfer of shares to it from four of businessman Patrick Bitature’s companies. The companies are Simba Properties Investment Co. 

Limited, Simba Telecom Limited, Linda Properties Limited and Elgon Terrace Hotel Limited. 

URSB’s lawyers had submitted that Vantage is a non-existent legal entity and hence incapable of instituting legal proceedings. Ssekaana opined that for the South African firm to do business legally in Uganda, it had to first be registered in accordance with Ugandan laws and failure to do so invalidates their activities in the country, including instituting legal proceedings.

 “The law in Uganda is prohibitive of such a partnership to operate without registration and penalises the offending party continuously for offending the provision for registration under the partnership Act,” Ssekaana ruled. 

Despite the ruling, Vantage attempted to take over Bitature’s multi-billion shilling properties, claiming they were used as collateral. But the Court of Appeal has since blocked the sale of the properties, pending determination of applications before it. 

The properties that are in danger of being attached include Elizabeth Apartments at Kololo Gardens, Protea Hotel-Naguru (Skyz Hotel), Moyo Close Apartments, Kololo Gardens and plots of land in Naguru, Kampala.