KAMPALA: On 5 May 2021, Court of Appeal in its ruling set aside, Justice Peter Henry Adonyo’s ruling that had ordered Diamond Trust Bank Uganda (DTBU) and Diamond Trust Bank Kenya (DTBK) to pay businessman Hamis Kiggundu Shs120 billion allegedly deducted from his bank account; among other requests as prayed for by his lawyer in a minor application regarding the legality of a loan extended to the businessman by the two banks. The latest Appellate Court decision to quash Judge Adonyo’s ruling has not been welcomed by Kiggundu and he intends to go the Supreme Court as you will read ahead. Question is whether Kiggundu will be favoured by the highest court in the land, given the existence of the main case that he lodged in High Court against the two sister banks.
*But first, Flashback is important.*
Between February 2011 and August 2018, Kiggundu’s Ham Enterprises Limited and two others borrowed money to the tune of Shs41 billion from DTBU and DTBK and then failed to pay as agreed and the banks started recovery proceedings by way of deducting money from the company’s account. According to K& K Advocates that represent the banks, Kiggundu had loan obligations ofShs39 billion.
The action by the banks to recover the money irked Kiggundu and his Ham Enterprises Limited and Kiggs International (U) Limited. They filed suit No. 43 of 2020 against the banks, alleging amongst others that the financial institutions had breached the loan agreements, the credit facilities had been settled at law, the banks irregularly debited and recovered monies from the companies account over the period of ten years to the tune of Shs120 billion and that they were entitled to the release of their mortgaged properties. The case was before Judge Peter Henry Adonyo.
*DTBU and DTBK challenge Kiggundu’s allegations*
In response, DTBU and DTBK would file a joint written statement of defence, denying Ham Enterprises allegations that they had deducted Shs120 billion from the company’s account. The banks instead argued that Kiggundu and his companies were indebted to the banks for various loan facilities that they lawfully and willingly acquired to run their business operations. Kiggundu, whom the banks had helped, now turned against them, wanting to instead steal their money through use of the law that is not tenable or exists in Uganda.
*Independent audit agreed on by both sides*
The two opposing sides argued their cases before Judge Henry Peter Adonyo of Commercial Division of the High Court. The two sides first agreed to the September 30, 2020 directive by the Judge that an independent audit be carried out by Institute of Certified Public Accountants of Uganda (ICPAU) on Ham Enterprises account to establish whether indeed the banks illegally debited the company’s account as alleged by Kiggundu without any shame in his face.
*Independent audit okayed but later on ignored by Justice Adonyo*
In a surprise move, Kiggundu’s lawyer Fred Muwema came in with another application on August 10, 2020, seeking to establish the legality of the loans extended to Kiggundu. He then argued that the joint written statement of defence by the banks be struck off the main case as the issue now was establishing the legality of the loans first. Judge Adonyo allowed the amendment to main case. The judge would later ignore the independent audit he had ordered. He instead in a shocking ruling delivered on October 7, 2020, agreed with Counsel Muwema that the banks illegally gave Kiggundu the loans, stating that the transactions contravened the Financial Institutions Act, 2004.
Judge Adonyo would further order the banks to give back Kiggundu titles of his mortgaged properties on top of awarding Kiggundu costs of the application. The learned Judge further surprised many when he failed to mention anything to do with the loans Kiggundu had acquired. Analysts of the case said the ruling meant the banks were to lose the money given to Kiggundu as loans.
It should be remembered that the harsh ruling by Judge Adonyo caused worldwide criticisms especially in the banking and legal professions. In Uganda, the Uganda Bankers’ Association (UBA) castigated the ruling, warning that the carelessness in which the Judge handled that matter would result into about Shs5.7 trillions in synchronised loans being lost by banks to the businessmen in Uganda should they run to court with the intention not to pay.
On the other hand, after Judge Adonyo’s ruling was published, the Bank of Uganda, through its Governor Prof. Emmanuel Tumusiime-Mutebile, came out to categorically state that the credit transaction between the two banks and Kiggundu was legal as there was no related law in Uganda banning such transaction. Tumusiime-Mutebile’s statement was meant to tell the public that the judge had erred by giving Kiggundu a leeway to steal from the two banks. The banks had to appeal against Judge Adonyo’s ruling; that if allowed to stay unchallenged, would impact negatively on syndicated loans in the country.
*DTBU and DTBK fight on, appeal against Judge Adonyo’s careless ruling*
As Kiggundu was celebrating his unconvincing victory in the High Court, in early October, 2020, DTBU and DTBK supported by other bankers in Uganda, went to court to appeal seeking for stay of the execution of Judge Adonyo’s ruling; amongst others, rightfully claiming that Judge Adonyo mistakenly taken a wrong decision. The Principal Judge Flavian Zeija handled the banks’ appeal application and sent it to the Court of Appeal after appreciating its merits.
Justice Zeija, having observed the law, on November 2, 2020 saw it as befitting to send the appeal by the banks to the Court of Appeal especially to look at the legality of the loans given to Kiggundu. Kiggundu could later allege that Justice Zeija was biased in his ruling that said the matter be heard in Court of Appeal. Meanwhile the Justice Zeija said Kiggundu had tried to ‘bribe’ him as the businessman sent the judge emissaries, probably carrying money as an appeasement.
*Kiggundu defeated in Court of Appeal*
On May 5, 2021, the Court of Appeal heard dealt a blow to Kiggundu and his Ham Enterprises Limited when it ruled that Judge Adonyo misinterpreted the law he ruled that DTBU and DTBK illegally gave Kiggundu the loans. “I know of no law that makes it illegal for a Ugandan citizen or a foreigner resident in Uganda to borrow or pay back money borrowed from a foreigner or foreign institution, stated Deputy Chief Justice Richard Buteera while delivering a ruling on behalf of the other two members on the bench-Justice Kenneth Kakuru and Justice Christopher Madrama. They three justices had been slated to hear the case since January 27, 2021.
Now Kiggundu’s lawyer thinks the Court of Appeal erred and intends to take the battle to the Supreme Court. On May 10, 2021, Kiggundu and his companies-Kiggs International (U) Limited and Ham Enterprises Limited filed a notice to the Court of Appeal and Supreme Court, alerting them of their intention to appeal against the Appellate Court decision to have the main case heard very quickly, with a different judge presiding over. Analysts have weighed in on the matter and say Muwema and his client Kiggundu will not succeed in the Supreme Court.
*Why Kiggundu won’t succeed in Supreme Court*
After losing in the Court of Appeal, Kiggundu and his lawyer Muwema have gone public to show the perceived unfairness in the Court of Appeal, but in the Supreme Court sit Judges of considered to be of high integrity. It will be very hard for Kiggundu to convince them that DTBU and DTBK lent him monies illegally; especially that he was the beneficiary of the purported illegality. _He should have rejected the money at the time he was receiving it if at all the transaction was illegal._
More, Kiggundu has employed the services of a lawyer that is not helping him, but only interested in getting more and more money from the businessman in legal fees. That is why he is interested in challenging the ruling of the Court of Appeal in the Supreme Court. He knows his client Kiggundu has no chance of winning in the Supreme Court. Counsel Muwema’s stubbornness will surely impoverish his client Kiggundu. Judges of the Supreme Court will be able to observe that Muwema is interested in the money he is earning from Kiggundu than actually trying to get justice for his client.
*What the Supreme Court is likely to consider should Kiggundu take his case there*
In the Supreme Court, Kiggundu will be told to go by what the Court of Appeal held-The main case in the Commercial Division of the High Court must be heard and it is to be handled by a different Judge. Kiggundu himself lodged the case in the court but now wants to run away from it. It is surprising. Was he serious or not?
Further justices in the Supreme Court know that businessmen like Kiggundu are the reason why Uganda performs poorly when it comes to doing business. Such businessmen borrow money from banks and then they don’t want to pay back. As such the judges in the Supreme Court won’t allow Kiggundu’s desperate move to dodge paying the loans he willingly acquired from DTBU and DTBK.
Still, the justices in the Supreme Court already know that the Bank of Uganda, which regulates the banking business in the country, has said there is no law in Uganda banning DTBK to lend money to Ugandans and Ugandan institutions or foreigners resident in Uganda. So citing the Financial Institutions Act, 2004, by Kiggundu won’t hold any water. He must pay back the loans.
More so, the Justices in the Supreme Court also want Uganda to remain as one of the leading investment destinations in Africa. As such the justices will not help Kiggundu to steal the money from the banks that play a big role in funding developmental projects in Uganda. They also know that the strength of the economy any country is also measured by the strength of its financial sector, which means the banks, must be protected from fraudsters and those that don’t want to pay back the loans.
The justices in the Supreme Court also are aware that the regional governments and bankers were not happy with Judge Adonyo’s harsh ruling against the banks. For example, politicians and the bankers in Kenya are so much interested in this case where a businessman wants to steal from banks via use of law. Point is that they don’t want to see Ugandan judicial system aid Kiggundu to steal from DTBU and its Kenyan associate DTBK.
If Kiggundu was allowed to steal from the banks, analysts say, it could lead to a political and economic mistrust between neighbours Uganda and Kenya.
The Justices in the Supreme Court also have come to learn that Kiggundu has a habit of writing nonsense about the judges when they don’t rule in his favour. The top most judicial officers in Court will have to punish Kiggundu for his bad behaviour of harassing their colleagues. They will teach him a lesson for the bad behaviour, said a top politician in Kampala, adding that to accuse, a judge of prejudice and corruption, like Kiggundu accused Justice Zeija, one must have concrete evidence.
*Why Kiggundu fears the case he lodged in High Court against DTBU and DTBK*
The Ugandan public knows very well that it was Kiggundu that lodged the Shs120 billion suit against DTBU and DTBK. The public is however puzzled that Kiggundu wants to run away from his own case in the High Court. The reasons are many but we look at the following:
Firstly, Kiggundu knows very well that he lied when he claimed that DTBU and DTBK were illegally deducting money from his account without his knowledge. Most persons working in the banking industry say Kiggundu told lies as he lodged the suit in court. “As far as I know banks inform their clients in case of any deductions or additions on their accounts,” a respectable banker said, when asked to comment on the matter.
Still Kiggundu knows that the independent audit of his account that was suggested would prove him wrong on the allegations. Remember the audit is to be done by independent auditors who won’t be bribed by Kiggundu. Protecting their image is important in this matter.
Still Kiggundu wants to run away from the main case because he knows he stands higher chances of losing and therefore is likely to bear the costs of the suit. Being a multi-billion case, the costs to be awarded to the banks will be high for Kiggundu to pay and of course they will impact negatively on Kiggundu’s empire.
Additionally, Kiggundu knows that the case is going to expose him further as a businessman that cannot be trusted on his word. He also has financial issues with other banking institutions and they are watching the case with keen interest. Already, the Uganda Bankers’ Association, An umbrella body of commercial banks in the country, has castigated Kiggundu. The institutions are unlikely in the future to help him get credit or arrange the same facility from outside Uganda.
As Kiggundu tries to appease his followers with an appeal in the Supreme Court, analysts say he will be sent back to High Court just as the Court of Appeal has ruled. They add he will further bear costs to the banks. He must prepare to argue his case against the banks in the High Court. Meanwhile DTBU and DTBK are ready to take him on in the Shs120 billion case.
However, other business analysts say should Kiggundu be defeated in the main case, he will likely seek help from President Yoweri Museveni; especially to bail him out of the financial stress. But they add that Kiggundu also has financial issues to sort out with government over the development of Nakivubo Stadium.