Hamis Kiggundu writes to Uganda Bankers Association over court ruling

Hamis Kiggundu, the proprietor of Ham Enterprises has written a stinging letter to Uganda Bankers Association after its Executive Director Wilbrod Owor and CEO Mathias Katamba described the High Court ruling in favour of businessman Hamis Kiggundu (Ham) as reckless.

Kiggundu and his two companies Ham Enterprise Limited and Kiggs International (U) Limited sued DTB -Uganda, and DTB-Kenya in March accusing them of fraudulently siphoning more than sh120b from his accounts without his knowledge and consent.  

He contends that between February 2011, and August 2018, through his companies, he was offered credit facilities by the banks for the construction of commercial properties.  

According to Kiggundu, as he was servicing his credit facilities, he was shocked when he carried out an audit and reconciliation of the loan accounts and found out that the banks had purportedly taken sh34b and $2,346,670 from his account without his knowledge.  

He sought 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 grounds that the Kenyan bank had no licence to carry out financial business in Uganda. Kiggundu argued that it was illegal for DTB Uganda to appoint DTB Kenya as the agent bank and security agent concerning its loan.

On Wednesday, the Commercial Court head Justice Henry Peter Adonyo ruled that the credit facilities DTB-Kenya offered to Kiggundu were illegal since the bank is not licenced by Bank of Uganda as required under the law to carry out financial business in Uganda.

However, in a statement dated October 8, the Uganda Bankers' Association protested the ruling saying the "reckless judgment"  puts a portfolio of sh5.7 trillion held in syndicated loans at stake.  

Responding to UBA's statement, Kiggundu through his lawyer Fred Muwema of Muwema and Co Advocates, says Uganda Bankers Association is misrepresenting the ruling of the court.

"To bring back some sobriety to the subject, we wish to highlight some of the important points and correct implications which can be discerned from the case; The High Court ruling was promoting good banking practice which UBA is supposed to stand for when it insisted that the Financial Institutions Act must apply to all banking transactions undertaken by DTB Kenya and DTB Uganda," Kiggundu said in the letter.

"Why would anyone find a judgment which ensures compliance with the law to be reckless? It is true, that DTB Uganda and DTB Kenya engaged in a syndicated loan transaction with our client but it is not true that the judgment declared syndicated loans to be illegal."

Kiggundu further says that the syndicated loan involving DTB Kenya to be illegal because it did not obtain permission from the Bank of Uganda as required by the FIA to conduct financial institutions business in Uganda.

"The implication which should be derived from the judgment is that any Bank which desires to conduct syndicated loan transactions in Uganda is allowed to do so provided it comes under the regulation of the law," Kiggundu said.

"This is the message which UBA should be passing on to its members and foreign lenders who want to participate in the lucrative syndicated loan market in Uganda instead of alarming them that the court has banned syndicated loans in Uganda."

Kiggundu also said in the letter that UBA felt the shockwaves of the judgement because it exposes the hitherto undisclosed foreign loans which have been escaping regulatory oversight by the Central Bank of Uganda and whi are otherwise eligible for taxation by the Uganda Revenue Authority.

He added that the government should not be blackmailed and taken hostage in its own soverreign jurisdiction just because it is the largest beneficiary of syndicated lending for various projects.

The letter was copied to the Chief Justice, the Attorney General, Bank of Uganda Governor, and the Principal Judge of the High Court of Uganda.