Weaknesses in supervision with in the banking sector are part of what court proceedings at the High court commercial division from 31st August 2020 in the case of Hamis Kiggundu versus Diamond Trust Bank Uganda Limited and Diamond Trust Bank Kenya exposed in the banking system locally.
This is after submissions from the plaintiff’s counsel showed Diamond Trust Bank Kenya limited was actually doing business in Uganda facilitated by Diamond Trust Bank Uganda without a license to operate locally.
According to Counsel Muwema who is the plaintiff’s Lawyer this could tantamount to tax evasion and illicit out flows from the country as the proceeds from the Loan advanced to Ham Enterprises Limited by DTB Kenya are not monitored by the bank of Uganda which is a breach of the Financial Institutions Act 2004.
The defence counsel Kiwanuka Kiryowa admitted too that DTB Kenya has no license to operate in Uganda which creates a complicated situation for not only Diamond Trust Bank Uganda and Kenya but their supervisor Bank of Uganda too.
Is the later (BOU) doing enough to supervise the internal operations of banks or does it leave most of its duties to the internal control mechanisms of individual commercial banks. This is one of the issues that needs to be looked into going forward to stream line the banking sector.
However the Uganda Bankers Association in a missive responding to some of the queries raised by Ham Enterprises Limited on various media said this was a syndicated loan where various Banks can partner to meet the loan requirements of a client when the are beyond the scope and risk absorption capacity of a single bank.
Come October 5th the matter at had will be settled as Court will pronounce itself on whether with an illegality of that nature, the evidence tabled by the defendants in the case still stands and whether court can still proceed to try the case or there is no case at all.
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