The High Court will on Monday August 26, 2019 decide to dismiss or continue hearing the case in which Bank of Uganda alleges that businessman Dr Sudhir Ruparelia siphoned over Shs400 billion from his own now-defunct- Crane Bank.
The property mogul denies the allegation and has since counter-sued BoU, seeking compensation of $8m (Shs28 billion) in damages for breach of contract.
Last month, he asked the Commercial Court to dismiss the case arguing that the central bank over stepped its mandate in commencing court proceedings against him and his Meera Investments Company.
Presenting an objection against BoU, Sudhir through his lawyers Kampala Associated Advocates told Justice David Wangutusi that when dissolving a bank, BoU had three options including putting someone else in its management – what is termed as statutory management, receivership or liquidation.
Counsel Elison Karuhanga argued that however, BoU chose to go for receivership yet under the law, specifically only the manager and the liquidator of the said bank is mandated to file a suit and not a Receiver.
He further explained that, BoU as a Receiver could only dissolve or sell Crane Bank within 12 months but not sue it’s managers.
However, in response to the submissions of Sudhir’s lawyers, BoU through its lawyer Dr Joseph Byamugisha told court that when a financial institution is placed under receivership the power to commerce or to continue with a civil suit does not stop.
BoU on October 20, 2016 placed Crane Bank under statutory management for being under-capitalised.
The central bank attributed the under-capitalisation to mismanagement and insider lending, resulting in Crane Bank’s unsustainable non-performing loan portfolio. The bank was later sold to dfcu Bank in January 2017, although the central bank retained some of its liabilities.
Bank of Uganda closed Sudhir’s bank, then the second biggest bank, and largest indigenous financial institution
Meanwhile, separate investigations by the Auditor General and Parliament recently found contrary information regarding the takeover and sale of Crane Bank. It was also discovered that BoU managers fell short of professionalism, having closed six more banks in the same shabby and illegal manner.
