Politicians fight over city bank
Mar 15, 2010
A row has erupted over the ownership of the National Bank of Commerce involving high-profile NRM politicians. One group of shareholders accuses the other of hijacking the bank and using it for their own benefit.
By Barbara Among
A row has erupted over the ownership of the National Bank of Commerce involving high-profile NRM politicians. One group of shareholders accuses the other of hijacking the bank and using it for their own benefit.
The aggrieved shareholders, assisted by top lawyers in town, are now calling for an extra-ordinary general meeting to resolve the stand-off.
At the centre of the row is security minister Amama Mbabazi, Uganda’s representative to the UN Ruhakana Rugunda, and city businessman Amos Nzeyi. They are being accused of using insider information to acquire a majority shareholding.
Shareholders said to be unhappy with the board include retired Supreme Court judge George Kanyeihamba, former ministers Jim Muhwezi, Tim Lwanga and Manzi Tumubweine, and former Kabale district chairman Yosam Baguma.
In their latest communication to the board, they gave the directors a one-month ultimatum to call a general meeting about the status and operations of the bank, or else they will take the matter to court.
The shareholders complain that the bank management is in the hands of the three individuals.
They want an explanation on how and why the Bank’s name was changed from the Bank of Kigezi to the National Bank of Commerce. They argue that there was no consultation or resolution to that effect.
Documents show that Mbabazi, Rugunda and Nzeyi own 86% shares and the three collectively enjoy about 99% of the effective voting rights, dividend rights and capital redemption rights in the company.
Formed in 1991 as the Kigezi Bank of Commerce, it had over 260 shareholders, all holding preferential shares, and its aim was to provide banking services and provide cheap loans to the Kigezi community.
“When we started the bank, we were all minority shareholders; it was Kigezi Bank of Commerce, whose purpose was to teach the people of Kigezi techniques of banking. It was also to provide easy and cheap credit to the people from that region,†said a shareholder.
“We created preferential shares to ensure that the bank remains in the hands of the people. How did these preferential shares disappear to allow three individuals take over the bank?â€
Documents indicate that the majority shares of the bank were sold to a group of Kenyans of Asian origin in the mid 1990s. The Gidoomal family acquired 86%. It is not known how the Kenyan brothers came to purchase the majority shares.
According to Nzeyi, the Kenyan shareholders insisted that among the Ugandan directors, they only wanted to retain Nzeyi, Mbabazi, Rugunda and Ezra Suruma.
However, in April 2008, they sold their shares to Mbabazi, Nzeyi and Rugunda. The shares were bought with the proceeds from the sale of the Temangalo land to the National Social Security Fund.
The agreement shows that Mbabazi got 40% of the shares, Nzeyi 30% and Rugunda 16%.
The sale was never brought to the attention of the other shareholders and was not supported by a resolution, the Kanyeihamba group argues.
At its formation, the Kigezi Bank of Commerce had 15 founding members who all signed the articles of association. When it changed name to National Bank of Commerce on April 12, 1997, only Nzeyi and Rugunda signed, according to documents seen by The New Vision.
None of the three majority shareholders were available for a comment.
A row has erupted over the ownership of the National Bank of Commerce involving high-profile NRM politicians. One group of shareholders accuses the other of hijacking the bank and using it for their own benefit.
The aggrieved shareholders, assisted by top lawyers in town, are now calling for an extra-ordinary general meeting to resolve the stand-off.
At the centre of the row is security minister Amama Mbabazi, Uganda’s representative to the UN Ruhakana Rugunda, and city businessman Amos Nzeyi. They are being accused of using insider information to acquire a majority shareholding.
Shareholders said to be unhappy with the board include retired Supreme Court judge George Kanyeihamba, former ministers Jim Muhwezi, Tim Lwanga and Manzi Tumubweine, and former Kabale district chairman Yosam Baguma.
In their latest communication to the board, they gave the directors a one-month ultimatum to call a general meeting about the status and operations of the bank, or else they will take the matter to court.
The shareholders complain that the bank management is in the hands of the three individuals.
They want an explanation on how and why the Bank’s name was changed from the Bank of Kigezi to the National Bank of Commerce. They argue that there was no consultation or resolution to that effect.
Documents show that Mbabazi, Rugunda and Nzeyi own 86% shares and the three collectively enjoy about 99% of the effective voting rights, dividend rights and capital redemption rights in the company.
Formed in 1991 as the Kigezi Bank of Commerce, it had over 260 shareholders, all holding preferential shares, and its aim was to provide banking services and provide cheap loans to the Kigezi community.
“When we started the bank, we were all minority shareholders; it was Kigezi Bank of Commerce, whose purpose was to teach the people of Kigezi techniques of banking. It was also to provide easy and cheap credit to the people from that region,†said a shareholder.
“We created preferential shares to ensure that the bank remains in the hands of the people. How did these preferential shares disappear to allow three individuals take over the bank?â€
Documents indicate that the majority shares of the bank were sold to a group of Kenyans of Asian origin in the mid 1990s. The Gidoomal family acquired 86%. It is not known how the Kenyan brothers came to purchase the majority shares.
According to Nzeyi, the Kenyan shareholders insisted that among the Ugandan directors, they only wanted to retain Nzeyi, Mbabazi, Rugunda and Ezra Suruma.
However, in April 2008, they sold their shares to Mbabazi, Nzeyi and Rugunda. The shares were bought with the proceeds from the sale of the Temangalo land to the National Social Security Fund.
The agreement shows that Mbabazi got 40% of the shares, Nzeyi 30% and Rugunda 16%.
The sale was never brought to the attention of the other shareholders and was not supported by a resolution, the Kanyeihamba group argues.
At its formation, the Kigezi Bank of Commerce had 15 founding members who all signed the articles of association. When it changed name to National Bank of Commerce on April 12, 1997, only Nzeyi and Rugunda signed, according to documents seen by The New Vision.
None of the three majority shareholders were available for a comment.