By JACKSON OBOTH
LONDON [SHIFT MEDIA]The High Court of London presided over by Judge Pelling QC has exonerated DFCU bank and it’s Directors of underhand involvement in the purchase of Crane Bank assets.
The ruling further justified the actions of Bank of Uganda (BoU) as protected by the laws of Uganda, giving BoU a renewed empetus to seek further legal examination on technical aspects, over the recent ruling by Ugandan’s Supreme Court in favour of Crane Bank.
Recently Bank of Uganda (BoU) lost a long-running court case over the procedures it followed in placing troubled Crane Bank into receivership and subsequently selling its assets to DFCU Bank between 2016 and 2017.
Crane Bank was placed under statutory management by Bank of Uganda in September 2016 following a damning audit report that revealed insufficient capital levels, shrinking liquidity ratios, surging loan default levels and gross mismanagement.
In 2016-2017, the BoU, in exercise of its statutory and regulatory powers, took over management of CBL, then closed it and sold off some of its assets and liabilities to DFCU.
However, the claimants (CBL and some of its shareholders) contend that this sale, together with various side agreements, was a sale of CBL’s assets and liabilities at a “gross” undervalue in furtherance of a corrupt scheme carried into effect by BoU using its statutory and regulatory powers in the way that undermines it’s integrity, an unlawful means conspiracy and that DFCU and it’s Directors provided dishonest assistance in breach of trust and/or of fiduciary duty by entering a purchase agreement with BoU.
After a protracted legal battle, the Supreme Court of Uganda made a decision that Crane Bank Ltd reverts to owners Sudhir Ruparelia and co-shareholders raising public excitement, for various reasons, including an assumed return of the bank into the banking industry.
The Supreme Court of Uganda had dismissed the case against the Crane Bank owners Sudhir Ruparelia and Meera Investments, at all levels on technical grounds, not their proof of innocence in regard to the alleged offences for which BOU acted.
Crane Bank further took the matter to the London court, seeking pronouncement on DFCU and each of it’s key Directors involved in the purchase it’s assets.
In the latest judgement, read on 7th October 2022. Pelling QC sitting in London exonerated both DFCU and BoU of wrong doing saying BoU is justified in performing their oversight role enshrined in Uganda’s constitution especially following several red flags and warnings it had brought to Crane Bank’s notice against wrong doings.
DFCU on the other hand was cleared of the alleged connivance to buy CBL assets at undervalued rate.
“In my judgment, therefore, whether a claim in conspiracy could succeed would depend on the detailed facts, as would the applicability of the MCA Records Principle, assuming that it applies to conspiracy at all. So far as this last point is concerned, there
are at least two reasons why it is at least realistically arguable that it should not.” Judge Pelling QC stated.
According to the judgement, the three broad issues that arise are (a) whether the acts complained of by
Crane Bank as actions by the BoU were acts by the Ugandan executive; (b) whether those acts are sovereign or governmental acts and (c) whether any of the limitations or exceptions relied on by the claimants apply.
Judge Pelling QC justified all the three fronts in favour of BoU. Judge Pelling further exonerated DFCU of connivance with BoU to take over Crane Bank assets at give away price.
“The Defendants’ Knowledge
The circumstances of the resolution of CBL, including “red flags” indicating corruption, It is averred that all of the Management and Director Defendants, being experienced bankers and directors operating, inter alia, in Uganda, would
have been familiar with and alert to such red flags.