DFCU says it did not cheat former Crane Bank employees

COURT|BANKING

KAMPALA - DFCU bank has told the court that it did not cheat former Crane Bank Limited (CBL) employees, whose contracts were terminated.

The banking institution's stand is contained in its statement of defence dated October 22, 2020, filed at the High Court civil division, Kampala.

The aggrieved purport that when DFCU took over operations of CBL in January 2017, a new employer (DFCU) hoodwinked them, terminated contracts of some, while others were deliberately frustrated into resigning. 

But the bank, through its lawyers Sebalu & Lule Advocates says it meant well when it paid the aggrieved sh1m (each) as a gesture of goodwill and moral obligation.

"The defendant (DFCU) made an ex gratia payment of sh1m  to each of the laid-off employees because the Crane Bank scale was low," says DFCU.

The institution asserts that the complainants have no logical claim to monies sent by the Bank of Uganda as part of the reimbursement package.

Genesis

On October 1, representatives (10) of the 625 employees filed a suit at the High Court civil division in Kampala. They sued through Centre for Legal Aid (CLA).

The representatives are Catherine Achan, Teddy Akullo, Janet Ngwena, Mactose Arinaitwe, Edward Bukenya, and Loy Kiwumulo.

Others are Abbey Mivule, Benjamin Muchwa, Robert Mwanje, and Emmanuel Ngororano.

Some of these employees' contracts were terminated on February 24, 2017, while others departed by October 23, 2017, when the court permitted the representative suit. 

They accuse DFCU of unjust discrimination, gross human rights violations, fraud, negligence, breach of duty, bad faith, breach of trust, and unjust enrichment.

Prior, in October 2016, Bank of Uganda (BOU) took over the operations of CBL, on the premise that the institution had become undercapitalised and posed a systemic threat to the financial system.

Subsequently, in January 2017, BOU informed the public that CBL's assets and liabilities had been transferred to DFCU.

The ex-CBL employees claim DFCU hoodwinked them into believing that a restructuring and integration exercise was underway, yet it was a plot to kick them out.

"The plaintiffs shall contend that the defendant and its servants or agents used fraudulent means to procure or induce the collective termination of former CBL employees for economic, technological, and structural reasons," the plaint reads in part.

Auditor General puzzle of sh5.1b terminal benefits

The Special Audit Report of the Bank of Uganda on Defunct Banks, authored by Auditor General, August 2018, made a startling revelation.

The aggrieved claim DFCU concealed the fact that it (DFCU) applied for and obtained sh5.1b meant for their terminal benefits, under the terms of the Purchase of Assets and Assumption of Liabilities Agreement (PAALA).

"The said transfer was subject to a PAALA executed by the defendant and BOU January 25, 2017, but its terms and conditions relating to staff generally were concealed from the plaintiffs (aggrieved) and several others whose rights and interests were directly affected. 

A hearing date is yet to be fixed. Justice Esta Nambayo will hear the query.