COURT | FRAUD | JUSTICE MUBIRU 

KAMPALA - Four city businessmen face civil remand over failure to pay over sh400m arising from a judgment in which the Commercial Court found them culpable of defrauding an insurance company. 

Under the law, a judgment creditor is imprisoned for six months and this does not relinquish his or her obligation to pay the money, unless declared bankrupt. 

Haji Magid Bagalaaliwo, Albert Nduma, Consten Mutukwa and S. R. Sham on Wednesday escaped arrest by auctioneers of Kassim Kyagulanyi after Commercial Court head Judge Stephen Mubiru issued an interim order, staying their arrest in ex parte (one party) proceedings. 

The order lapses on July 14, which means that in case they fail to pay the money, they will be committed to civil remand. 

Mubiru had earlier declined the application of the accused for review of the judgment in which they were ordered to pay the debt as directors of Southern Union Insurance Brokers (U) Ltd. 

Court documents seen by New Vision indicate that in 2012, Haji Magid Bagalaaliwo, Albert Nduma, Consten Mutukwa and S. R. Sham, the directors of Southern Union Insurance Brokers (U) Ltd obtained sh156m on behalf of Niko insurance (U) Ltd (now Sanlam General Insurance (U) Ltd), but never remitted it. 

It is indicated that Southern Union Insurance Brokers (U) Ltd, owned by the trio, would solicit and take out insurance policies from the insurance company on her various clientele and would collect and receive payments for the premiums from its various clientele to remit the same at a commission. 

However, it failed to remit the money in question and instead sold the company to Kinkizi Development Company Limited on January 13, 2013, a move the court interpreted as conspiracy to defraud Niko Insurance Company of its monies. 

Court heard that in January 2013, Southern Union Insurance Brokers (U) Ltd left its known address without leaving forwarding addresses as to where they had shifted and completely cutting the telephone communications without remitting the money collected from the insurance company clientele. 

On June 27, the deputy registrar of the commercial division of the High Court issued a warrant of arrest against the trio for failure to pay the money. 

On October 1, 2021, retired High Court Judge David Wangutusi entered a judgment against the trio as the directors and ordered them to jointly pay sh117m owed to the insurance company and another sh50m in damages at an interest rate of 20% per annum from December 13, 2012, until full payment. 

In his judgment, Wangutusi observed that acts done by directors and managers on behalf of the company binds the company. 

On May 10, 2016, Justice Christopher Madrama Izama lifted Southern Union Insurance Brokers (U) Ltd corporate veil, permitting the insurance company to sue the directors of the company in their individual capacity on grounds that they mismanaged the company. 

Niko Insurance Company, through its lawyers, led by Justus Tumusiime, argued that since Southern Union Insurance Brokers (U) Ltd place of work could not be found and money collected was not remitted, it amounted to fraud on part of Bagalaaliwo, Nduma, Mutukwa and Sham, who were the directors of the company.