KCB Does To Tirupati What Equity Bank Did To Simbamanyo And DTB To Ham Kiggundu: BoU, UBA And FIA Faulted For Negligence Of Duty As Kenyan Banks Exploit Investor


By Mwine Moses

It seems Kenyan commercial banks have found Uganda a soft ground to launch their thuggery and because the regulators i.e. Bank of Uganda (BoU) and the Financial Intelligence Authority (FIA) are in bed with these banks since they can’t call them to order.

The other day when President Yoweri Kaguta inquired into the Simbamanyo saga, these agencies lied to him that everything was done in accordance with the law, whereas not!!!

This time round Tirupati Development Limited, has instituted Legal proceedings not only against the offending bank, KCB, but also the regulators, for sleeping on the job.

Banking is the heart of any economy. All major economies in the world grew on the strength of their banking regimes. The slavers and colonial looters worked through bankers to exploit us and our resources.

Political independence meant nothing without stopping the theft of these resources. After structural adjustment African economies were violently subdued and as a result, the so-called foreign investors have a field day and are encouraged with the connivance and assistance of the banks, to buy and take over any assets or businesses of their choice. We are back to the colonial times.

Regrettably, the regulators and the government in service of the imperialists closed all native banks and left the field open for foreign banks only. Sadly, with neither procedure nor regulation, is it not amazing that even in the thick of COVID these foreign banks averaged millions of shillings in profit while fore-closing on major locally owned businesses investments.

Ugandan investors and the public at large have put the Bank of Uganda (BoU), Uganda Bankers Association (UBA) and the Financial Intelligence Authority (FIA) on spot for turning a blind eye when commercial banks are exploiting them and crashing the economy.

Local investors, through their associations, are now seeking audience with parliament to look into the matter expeditiously since the regulators; Uganda Bankers Association, Bank of Uganda (BoU) and the Financial Intelligence Authority (FIA) have miserably failed in their duty.

The affected investors have faulted the BoU and FIA for neglecting to execute their roles as regulatory authorities by bringing to order Kenyan commercial banks that have had a history of exploiting Ugandan investors through extending deceptive loans to their companies, hence turning the Ugandan market into a soft ground for exploitation.

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As a result of this negligence of fiduciary and statutory duty by the BOU, and the FIA, many commercial banks are engaging in fraudulent transactions and money laundering that not only affects their clients but also deprives government of revenue through unpaid taxes on income earned, as a result of money laundering.

A case in point is Tirupati Development Limited, which has since sued KCB Uganda and KCB Kenya for illegally deducting billions of shillings from their company accounts, under the guise of clearing a loan of USD7,000,000 which the banks were supposed to extend to the company in 2017.

The court documents indicate that on 17th July 2012, KCB Uganda and KCB Kenya entered into an agreement to extend a syndicated loan facility to Tirupati worth USD 7,000,000.

Tirupati Development Uganda at that time operated only one account with KCB Uganda, Account Number 2201449317 registered in the company name.

The Company provided both banks with several certificates of title to properties it owns, the same having been stipulated in the agreement between the parties and listed therein when they were executing the agreement.

As collateral security for the mortgage, Tirupati Development submitted 20 title deeds for their real estate projects around Kampala, which both banks have since refused to surrender, despite having deducted colossal sums of money from the company accounts which is way more than both the principal loan amount and the interest combined.

However, to their dismay, instead of disbursing the agreed sum of USD 7,000,000 both banks delivered a sum of USD 6,990,000, to the company account, hence a breach of the agreement, and charged the company a loan USD35,000 without seeking their consent, consideration or informing them about their decision.

As if that was not enough, both banks, KCB Uganda and KCB Kenya went ahead to open up and operate two accounts of dollar denominations in the names of Tirupati Developments under the auspices of collecting monies to offset the loan that they had extended to the company without either informing the management or seeking their consent.

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Through their fraudulent transactions, both KCB Uganda and KCB Uganda illegally deducted billions of shillings from the accounts of Tirupati Development until, on realizing the anomaly, the company requested the bank for a forensic audit of their loan and current accounts.

However, despite continued requests by the company to both banks for clarity about their loan and current accounts, plus an explanation about the suspicious transactions, the company never received a reasonable explanation from both banks, which prompted the managers to resort to legal means in a bid to expose this kind of exploitation by commercial banks.

To that effect, Tirupati Development has since filed High Court civil suit No. 015 of 2022, accusing KCB Uganda and KCB Kenya of engaging in fraudulent transaction activities that resulted into their company losing billions of shillings.

The suit filed in court bears Bank of Uganda as the 1st defendant, KCB Uganda as 2nd defendant, KCB Kenya as 3rd defendant and the Financial Intelligence Authority as the 4th defendant.

The charges against the KCB Uganda and KCB Kenya include; Breach of contract, Negligence, conversion, detinue, deceit, breach of fiduciary duty, breach of statutory duty, money laundering, Fraud and conspiracy to defraud, injurious breach of public policy.

In their suit, Tirupati Development also pray to court to hold officials at BOU and the FIA liable for negligent of duty as follows; Negligence, Breach of statutory duty and Misfeasance in public office.

On the basis of the above causes of action, Tirupati Development seek, among other reliefs against BOU and FIA, the details of which are particularized in the prayers as follows:

Declarations; a structural interdict; general, aggravated, exemplary and punitive damages; interest and costs of the suit.

However, it should be noted that this is not the first time for Ugandan investors to sue a Kenyan commercial bank over a disputed loan and attempts to distress or illegally auction mortgaged property.

The matter arises at a time when several local customers and investors are losing money and properties they staked with these banks as collateral which are being grabbed using underhand methods and bogus auctions that usually don’t allow the borrower an opportunity to get the best value for their properties

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One of the affected local investors is city architect Peter Kamya, the proprietor of Simbamanyo Estates, who filed a case against another Kenyan bank; Equity Bank, contesting the loan Equity Bank had lent to his company, Simbamanyo.

Simbamanyo was contesting the loan fees charged on its accounts by Equity Bank and after several queries into the anomalies landed on deaf ears, Simbamanyo jumped into action, and subsequently sued Equity bank in HCCS 198 of 2020 for false accounting.

Nonetheless, it was discovered that they had been cheated close to US$1.5 million (UGX 5.5billion) through unlawful debiting of their loan account with fabricated and unexplained charges by Equity Bank. However, despite this the Banks sold their properties albeit illegally and fraudulently. The matter is dragging on in court.

Another affected businessman is city tycoon Hamis Kiggundu aka Ham, who is also battling a court case in which he accuses Diamond Trust Bank Uganda and Diamond Trust Bank Kenya of illegally debiting his Ham Enterprises accounts without his consent under the auspices of clearing a loan he had secured from the same bank.

The investors contend that these unethical banking practices are being perpetrated under the regulators’ watch and have negatively affected several clients, among them Edith Nakacwa, whose money Shs21 million was withdrawn from her account through e-banking (eazzy funds transfer) without her knowledge or consent.

Nakacwa says the electronic fraudulent transaction was executed on her account number 1044101283389, which she opened in 2019, and in April, 2021 and when she raised the complaint with police and threatened to sue Equity Bank, the officials at the bank admitted the fraud and promised to refund her savings.

The association of local investors thus far urges PARLIAMENT to intervene in this matter to determine why the country’s banking code of ethics are being flouted and a lot of impunity like this being accepted without the exploitative banks being called to order by the BOU, FIA, and ultimately the Government, which is losing a lot of revenue as a result of these institutions sleeping on the job.

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