October 24, 2020
October 24, 2020

BoU to Sacrifices taxpayers money shs.110b Cash as Costs Appealing loss to Sudhir




By Andrew Visper
Kampala: Bank of Uganda is determined to cost Ugandans more shs 79 billion in its attempt to appeal a commercial litigation against property mogul Sudhir Ruparelia, the commercial court ordered BoU to pay legal costs amounting to shs 39 billion.
However it’s the taxpayers because Bank of Uganda uses money generated from the taxes paid by the citizens.
On Monday 26 of August, Justice David K Wangutusi threw out a case in which Bank of Uganda and Crane Bank (in receivership) sued Mr Sudhir and his Meera Investments for causing a financial loss of shs 397 billion to Crane Bank before it was taken over by the Central Bank in 2016.
Bank of Uganda legal officers asked court to compel Sudhir to refund this cash which they alleged belonged to Crane Bank depositors.
Justice Wangutusi dismissed the case on a technicality that a bank that is under receivership (Crane Bank), under the law has no audacity to sue its former shareholder.
The BoU is expected to compensate Sudhir with at least UGX. 19b and his Meera Investments Ltd would also claim another UGX. 19b, with the whole bill expected at 36b.
With the decision to appeal the ruling, should the Central Bank lose at the Court of Appeal, they would be condemned at 10 percent costs of the appeal. A quick calculation puts the whole figure at UGX. 110 billion.
The deputy registrar, Mr Festo Nsenga who delivered the judgement of Justice Wangutusi noted that at the time BoU and Crane Bank (in receivership) filed the suit against Mr Ruparelia and his Meera Investments in January 2017, Crane Bank was a non-existing entity, having been terminated when the Central Bank sold its assets to DFCU Bank in October 2016.
The judge ruled that this rendered Crane Bank in receivership incapable of suing or being sued since there would be no assets to be claimed for.
“In his [BoU] notice, he specifically stated that the liabilities of the respondent had been transferred to DFCU Bank Ltd and that because DFCU Bank had taken over the liabilities, it would, by way of consideration, be paid by conveying to it the respondent’s assets,” the judge ruled.
The Central Bank had not only fulfilled Section 95(1)(b) of the Financial Institutions Act but had in a way also sold the respondent, albeit that the payment was in kind, by way of exchange of liabilities for assets.
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