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Over the last few months, a previously little-known law firm, Balon Advocates has been in the news, for all the wrong reasons.
The New Vision of Saturday, August 21st 2022 reported that Police was hunting for two directors, of Bonded Stores Limited who allegedly conned a US Company- Council for Trade and Investment Promotion (CTIP) of over UGX306 million in a bogus public procurement deal.
CTIP is an international trade and investment association based in New Jersey, United States of America, promoting the State of New Jersey as a trade and investment destination.
It is alleged that two directors of Bonded Stores Ltd, Edward Muwonge and Roger Ssebufu, the Executive Director, invited officials of CTIP to come to Kampala for a meeting between CTIP and officials of the Public Procurement and Disposal of Public Assets Authority (PPDA) over what turned out to be a non-existent deal to construct Busunju Wakiso Hospital and Elementary Medical School.
The two officials of CTIP- Emmanuel Oknwehuje and Fernando Sopot, flew in for a fictitious meeting with one Julius Ishungisa- the Board Chairman of PPDA. Upon reaching Kampala, the CTIP officials were told Ishungisa had been flown to Nairobi in a medical emergency, but they would instead meet with a Dr. Patrick Kakuru, the Special Contracts Committee Chairman.
The said meeting happened at Parliament where CTIP was asked to pay a fee of USD6,050 (UGX22 million) to the Government for their pre-qualification and registration. They were also to pay USD75,000 (about UGX293 million) as stamp duty, since the company was to have USD5 million in share capital. The money was to be paid through Balon Advocates, a commercial law firm represented by a one Daniel. All the money was paid and soon after, the two Bonded Stores Ltd officials, Edward Muwonge and Roger Ssebufu, disappeared. The alleged Dr. Kakuru, kept on assuring the CTIP officials that their contract had been forwarded to the Solicitor General for approval before he too disappeared in thin air.
CTIP officials were later to learn that while Julius Ishungisa indeed existed at PPDA, the said meetings were arranged behind PPDA’s back. They had been conned and scammed.
Hardly a few months later, on 30th November 2022, Uganda Police charged one Kaweesa Ronald Kisitu alias Kiwanuka Kevin, a resident of Kawempe-Mbogo, Kawempe Division Kampala and a one Mkwe Eric Geofrey, an Advocate and Senior Partner at Balon Advocates with obtaining money by false pretences contrary to Section 305 of the Penal Code Act. According to the Charge Sheet, Kawesa Ronald Kisitu, alias Kiwanuka Kevin and others still at large between the months of September and March 2022, in Kampala District with intent to defraud obtained a total of USD 1, 700,200 (UGX6.3 billion) from Air Options Pty Ltd by falsely representing that the said funds were fees required for the award of a contract for the supply, installation and maintenance of air conditioners by the Ministry of Local Government whereas not. They were also charged with Money Laundering Contrary of Section 3(e), 1 16 and 136 (1) (a) of the Anti-Money Laundering Act, 2013 as Amended.
Mkwe Eric Geofrey and others still at large between the months of September 2021 and March 2022, being an Associate and a signatory to the Bank Accounts of Balon Advocates, intentionally assisted Kaweesa Ronald Kisitu Alias Kiwanuka Kevin and others to benefit from a known proceed of crime to wit USD 1,700,200 by permitting the said Balon Advocates Bank Accounts to be used to receive the said funds that were fraudulently obtained from Air Options Pty Limited.
Mkwe Eric Geofrey was subsequently arrested, produced before the anti-Corruption Court and released on bail by Justice Jane Okuo Kajuga on May 12th.
These are just a few of the many cases in which Balon Advocates has been named for receiving- allegedly, on behalf of clients who are more often than not, hard to trace and or non-existent.
But who is Balon Advocates?
According to official registration papers, Balon Advocates was registered on the 6th of August 2020.
Mkwe Eric Geofrey, whose name has appeared in one of the frauds, is a Senior Associate at the law firm, whose registered address is Kampala Kingdom Mall on Nile Avenue.
Although he denies being part of Balon Advocates, Balondemu David, presently the Chairman of the Kampala District Land Board, has been seen in some online references, referring to himself as Chairman of the law firm. For example, in a video documentary recorded for a client, M/S Sekanyolya Systems Ltd, he refers to himself as a Global Corporate Attorney at Balon Advocates. However most of these references online have since been erased, including the firm’s website and social channels.
Most, if not all of Balon Advocates’ lawyers, have worked for Balondemu & Co Advocates- another controversial law firm that has since been closed by the founder- Balondemu David. There are various accounts for the closure but all of them are controversial.
Balondemu & Co Advocates⏤same rogue script, same lawyers cast?
According to the paperwork we have obtained, Mkwe Eric Geoffrey for example, has worked as a Legal Assistant at the firm. He was however born Okello Geoffrey but legally changed his names to Mkwe Eric Geoffrey on 15th February 2019. It is not clear why he changed names.
Balondemu & Company Advocates itself was incorporated on the 18th of December 2015 by Balondemu David as a sole proprietor. Prior to that, he worked at Balondemu, Candia and Wandera Advocates and WEB Advocates. He went to the Islamic University in Uganda for his law degree and completed his Law Development Centre Post Graduate Diploma in Legal Practice in 2008/09.
Controversy arose in 2016, a year later when the Law Development Centre recalled his Post Graduate Diploma in Legal Practice over alleged examination malpractice. He however sued LDC and in 2021 his diploma was reinstated. However, Balondemu David, according to evidence adduced in court in a tax dispute in which he sued Uganda Revenue Authority (URA), shows, he continued illegally and fraudulently running the law firm and its bank accounts whereas he was not qualified to do so since his practicing Diploma had been recalled.
In a case before the Tax Appeals Tribunal (TAT) where Balondemu David had contested income tax assessments to the tune of UGX665,738,205 and a penalty of UGX20,000,000.
It all started when URA in mid-August 2020 summoned Balondemu David to attend a meeting in respect of money laundering. On 31st August 2020, Eric Mkwe Geoffrey his protege-turned-defence attorney, but now under Balon Advocates, which had been incorporated only a few days earlier, on 6th August 2020 appeared for Balondemu and was requested to furnish information relating to clients who were beneficiaries of monies put on the firm’s client trust account⏤ a total of USD4,557,450 (UGX16 billion) between the 28th of January 2019 and the 4th of September 2020, and personally withdrawn by Balondemu David.
Eric Mkwe Geoffrey informed URA in the meeting that the information was confidential. On 4th September 2020, URA, this time wrote back requesting information on payments received by a client called Trimecke Group Limited. On 9th November 2020, URA further wrote to Balondemu, informing him that he had been placed under investigation. Despite several correspondences, between the two entities, URA, on 9th April 2021, informed Balondemu David that he was liable to tax arrears and a penalty and indeed on 6th September 2021, he was issued an income tax assessment. Despite an objection, his objection was disallowed on 27th December 2021, thus the tax dispute.
URA tax investigators told the Tax Appeals Tribunal that sometime in April 2019 the tax authority had received intelligence information that Trimecke Group, was concealing income through Balondemu and Company Advocates. While it was alleged that Trimecke had supplied solar generators worth USD 256,948 to Weei Ta Engineering and Construction and BHF Technologies SDN BHD in Brunei and the funds were wired through the law firm’s accounts, there was no evidence that there had been any supply of anything at all. While the money was subsequently withdrawn by Balondemu David in cash, there was no evidence that Trimecke Group, had received the money, thus the conclusion that the money was either income for the law firm, and or a proceed of money laundering, thus the tax bill to the firm’s proprietor.
Evidence on file and tendered by several government agencies- URA, URSB and the Law Council, showed that Trimecke was a briefcase company, that only operated bank accounts, but with no tax returns nor physical offices. A review of its bank statements showed there were no transactions regarding the supply of solar generators. There was also no record of payments or deposits in the bank accounts. The national identity cards of the directors used to open a bank account at United Bank for Africa were fake. URA also said that a review of its Ascyuda System showed that Trimecke never exported any solar generators to Weei Ta Engineering and Construction and BHF Technologies SDN and the said companies did not receive them and argued that Trimecke was a special purpose vehicle used in a scam and for money laundering. In any case, investigators wondered why and how companies in Brunei which is 9,000 kilometres away would want to import solar equipment from Uganda, which doesn’t manufacture them, instead of several other countries next door.
While denying the tax liability, in his defence, Balondemu David and his lawyers, argued that Balondemu had retired from the law firm as a partner in 2016. He further argued that the income tax assessment in question was related to the financial year 2018/2019, when he had already left the law firm. He further submitted that a retiring partner cannot be liable for debts and obligations after his retirement. Citing S. 19 of the Partnership Act he argued that a partner retiring from a partnership is only liable for the partnership debts before retirement.
Further evidence tendered by URA and other witnesses showed that while Balondemu contended that he had retired from the law firm in 2016, he hadn’t. He was still the sole signatory of the law firm accounts. A loan agreement between Balondemu and Company Advocates and Schillings Finance dated 1st May 2019 was signed by the applicant. He also witnessed a land agreement dated 21st January 2019. In another paperwork to the law firm dated 28th October 2019, Balondemu David had declared as his source of income being the holder of the law firm’s bank accounts.
In another testimony, Ms. Nabakooza Margaret, Secretary to the Law Council tendered in a certificate of approval of chambers issued to Balondemu and Co. Advocates, a blank letterhead and cheque of the said firm and testified on an inspection report which showed Mr. Balondemu was still the Managing Partner. The firm’s letterhead issued in 2017 also showed Balondemu was still the Managing Partner. email correspondence between Balondemu David and URA also still showed he was a Partner in the law firm at all times. The deeds of acknowledgement also show the applicant was still transacting as Balondemu and Company Advocates.
URA retorted that while Balondemu contends that the withdrawn money was passed on to Trimecke Group, there was no proof of bank transfer on either bank accounts- of the law firm or of Trimecke Group. The Deeds of Acknowledgment showing that clients received the funds from the law firm showed that the money was instead passed on to a one Kagawa Yamato of Kilowatt Bi Technologies SMC Limited who was never a party to the transaction or a registered director of Trimecke.
In a surprising ruling, while the Tribunal agreed with URA that Balondemu David had not left his law firm in 2016 or thereafter as alleged, and should therefore have been answerable for tax matters of his law firm, the Tribunal went ahead to rule that it does not understand why the penal assessment was made to him personally.
Even after hearing all the evidence that Trimecke was a smokescreen company registered by people with fake documents, the Tribunal still went ahead to rule that “the right person the respondent ought to have issued an assessment would be Trimecke”.
“There is no explanation by the respondent as to why it did not issue an assessment against Trimecke which was in the business of the supply of generators. If Trimecke was fictitious, the assessment ought to have been issued against the perpetrators,” it further ruled.
Is Balon Advocates a Balondemu & Company Advocates incarnate?
A collaboration of evidence on the ground suggests that Balon Advocates which was registered in August 2020, just a few days to 31st August 2020 when Balondemu & Co Advocates was dissolved and ceased to exist, could have been an attempt to either escape the accountability of the numerous questionable dealings and the subsequent tax liabilities therefrom.
It is possible that Balondemu David, who had now assumed another office as Chairman Kampala District Land Board, wanted to shield himself from the shady past, although he maintains close contacts with Balon Advocates and even has an office in the same law firm.
Secondly, the Trimecke Group matter is similar in fashion to subsequent frauds in which Balon Advocates is implicated. In all, matters, there is the use of semi-legitimate and untraceable companies that are seemingly legitimate beneficiaries of transactions clothed as legitimate, which on closer scrutiny, are all built on ghost directors backed by fake documents.
For example in the case of Bonded Stores Ltd, mentioned earlier, this publication understands that while Bonded Stores Ltd a company registered in 1983 does exist at the registrar of companies, the company has never done any business. This reporter tracked some of the survivors of the registered owners who indeed confirmed that they have never done any business and that they do not know of any dealings with Balon Advocates.
According to documents obtained by CEO East Africa Magazine, Bonded Stores was registered on the 21st of November 1983 by 5 shareholders, namely: Albert Charles Small, Paul Gerrit Jan Kerssemakers, James Musinguzi, Chris Kasibayo and Vicky Babiiha.
However, we got to learn from family of Chris Kasibayo, that upon the passing of Chris Kasibayo around 1984, the remaining shareholders moved on to start another business, rendering Bonded Stores Limited idle.
“IF there is anyone transacting and or purporting to transact on behalf of Bonded Stores Ltd, it is likely that they said person is doing so illegally or fraudulently,” Kristina Kasibayo, a daughter to Chris Kasibayo and a Senior Legal Officer and the Uganda National Oil Corporation (UNOC) told this reporter on phone.
Yet, Bonded Stores Ltd has a fully-fledged website: https://bondedstoresltd.com where it purports to “command 33 years of experience” as a “Custom Bonded Warehouse, Freight Forwarding, Cargo Handling and Customs Clearance Company, with Branch offices in Mombasa & Nairobi – Kenya and a Head Office in Kampala”. The company further claims to have a “track record and a clean and proven performance record with Uganda Revenue Authority (URA)”.
Coming Soon⏤ Part 2 of this investigation
We reached out to Balondemu David and asked him why he continued to run Balondemu & Company Advocates, even after claiming to leave it and if at all he is connected to Balon Advocates. We also asked him if he had closed his law firm so as to avoid criminal responsibility for all the various questionable dealings as well as to avoid tax liability. All these and more form Part II of our investigation, coming soon in the next episode.