Court to rule on Ham Kiggundu, DTB-Kenya transaction

The Commercial Court is set to rule on the legality of the loans advanced to businessman Hamis Kiggundu by Diamond Trust Bank (DTB)-Kenya.

The ruling was supposed to be delivered on Monday, but the presiding judge, Henry Peter Adonyo, said it was not ready and deferred it to tomorrow at 11:00am.

Kiggundu does not deny the loans, but insists that DTB-Kenya is not authorised by Bank of Uganda to conduct financial business in the country.

DTB-Kenya's head of debt recovery and company secretary Stephen Kodumbe, however, contends that the bank never conducted any business in Uganda and the credit facilities were offered in Kenya.

"Ham Enterprises Limited applied for the credit facilities in Kenya, which was obtained in Kenya and transferred to his account from Kenya," Kodumbe says.

He argues that DTB-Uganda did not act as an agent of DTB-Kenya to conduct business in Uganda, but only sought its services as a collection agent for it to receive its payments from Ham Enterprises Limited.

Kodumbe says even if the court found that there were illegalities in the issuance of the credit facilities, it cannot be a ground to strike out the bank's amended statements of defence.

On the other hand, DTB- Uganda head of legal and company secretary Emejeit Mbabazi insists that the bank only acted as a collection agent for DTB-Kenya to receive its payments from Ham Enterprises, but did not act as its agent to conduct business in Uganda.

The banks, through their lawyer, argues that the case only seeks to delay Kiggundu's debt repayment obligations and ought to be dismissed with costs because he purportedly failed to service credit facilities.

Last week, the court stayed an audit on Kiggundu's accounts pending a ruling on the legality of the credit facilities extended by DTB-Kenya to Kiggundu.

At stake is Kiggundu's assets that he mortgaged to secure the loan that include Kyadondo Block 248, Plot 328 land at Kawuku, FRV 1533, Folio 3, Plot 36-38, Victoria Crescent II Kyadondo and LRV 3176 Folio 10, Plot 923, and Block 9 located at Makerere Hill Road.

Background

In March, Kiggundu and his two companies — Ham Enterprises Limited and Kiggs International (U) Limited — dragged DTB-Uganda and DTB-Kenya to the Commercial Court accusing them of fraudulently siphoning over sh120b from his accounts without his consent.

Kiggundu contends that between February 2011 and August 2018, he sought and was offered loans by the banks for construction of commercial properties. He said when he carried out an audit and reconciliation of the loan accounts, he found that the banks had purportedly taken sh34b and $2,346,670 from his account.

He wants a court order for recovery of this money.

He also seeks a declaration that the banks demand for $4,014,444 and $6,974,600, which was advanced to him by DTB-Kenya, is illegal and unenforceable on the grounds that the Kenyan bank had no licence to carry out financial business in Uganda.