Court blocks transfer of sh3.5b from Makerere University account

The High Court has blocked the transfer of sh3.5b from Makerere University's account in Stanbic Bank.

The money was meant to be transferred from the institution's account to Ram Engineering Uganda Limited's account in Housing Finance Bank for supply of wireless internet, premised on a fictitious procured court order.

However, Makerere University detected the anomaly and petitioned Masaka High Court judge Victoria Nakintu Katamba, who issued an order that aborted the electronic fund transfer.

The interdicted Masaka High Court registrar, Cissy Mudhasi, had allegedly issued the garnishee order. A garnishee order is a common form of enforcing a judgment debt against a creditor to recover money.

On Monday, Justice Nakintu also directed Ram and its directors — Violent Tumusiime, Patty Sauce Waigonda and Julius Mugambagye — to meet the costs of the application.

This is after she directed that the corporate veil of Ram be lifted to allow Makerere to extract an order for remedies against its shareholders and directors.

Makerere lawyer Pope Ahimbisibwe said they will calculate the costs according to the Advocates Act Remuneration and Taxation rules, to decide on the amount of money they will demand.

"The respondents are liable for the consequences arising out of the fraudulent actions, but not limited to the costs incurred by the institution as it attempted to stop fraudulent money transfer premised on a fictitious contract, arbitral proceedings, awards and the resultant garnishee orders," the judge ruled.

Court documents indicate that on January 16, 2018, Ram authorised Ivan Kayuki, their agent, to procure business on its behalf.

Kayuki, according to court records, then hatched and created a fictitious and fraudulent arbitration agreement.

Armed with the agreement, he concocted some arbitral proceedings and award, which he used on behalf of the company to file in court for enforcement, resulting in the expunged garnishee order.

"The respondents worked hand in hand with Kayuki, provided the account details and waited behind the cover of corporate personality to withdraw the money once it hit the said account," Justice Nakintu noted.

The judge said the respondents incorporated a company with the intention of using it as a mask to defraud unsuspecting third parties.

"The respondents owed the company the fiduciary duty of trust to always act in a manner that promotes its success. They were supposed to exercise a degree of skill and care as a responsible person would do looking after their own business, and to act in good faith in the interest of the company, which duty they did not exercise," she said.

Nakintu said Ram directors acted together in the execution and registration of documents intended to enable the fraudulent transactions.

She said in furtherance of the fraudulent scheme, the directors caused the opening of an account in Housing Finance Bank in the names of Ram, where money was to be transferred.

Scheme uncovered

On June 17, the university secretary, Yusuf Kiranda, received a call from its account relationship manager at Stanbic Bank branch, Makerere, to the effect that the institution's money was about to be debited and paid out to Ram under a court order.

However, it later turned out that the purported arbitration agreement, arbitral proceedings and contract between Makerere and Ram were all fictitious.

This prompted Makerere to file several applications seeking to set aside the purported arbitral proceeding, award and the resultant garnishee orders.

On July 22, the parties agreed that the arbitral proceedings, award and order for garnishee absolute were procured fraudulently and requested court to set it aside. However, court was to determine the issue of costs.

Submissions

Prior to the ruling, Ahimbisibwe argued that Makerere should be awarded costs since the actions of Ram directors prompted the institution to hire lawyers to prevent the illegal transaction.

He contended that they filed three applications in which Makerere incurred and continues to incur legal costs and disbursements on transport for both its counsel and staff due to the respondents' illegal scheme.

In response, Waigonda agreed that Ram fraudulently procured an arbitral award against Makerere, but was opposed to the order of having Ram's corporate veil lifted to make them personally liable to pay the costs of the application.

The respondents — Tumusiime and Mugambagye — argued that they did not know the arbitration causes and awards.

Ram officials remanded

On September 28, Julius Mugambagye, the founder of Ram, lawyer Mugisha Akleo and businessman Ivan Kayuki, were charged and remanded to Kitalya Prison for allegedly stealing sh444m from Uganda Nurses and Midwives Council (UNMC).

Prosecution alleges that the trio, and others still at large, on February 14, in Kampala, purported to provide UNMC with software services and app development project for database, whereas not.