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Fresh from securing an English appellate court order that dfcu Bank, its former management and directors, must answer claims that they participated in corruption and bribery of Central Bank officials so as to buy the former Crane Bank on the cheap, shareholders of the now closed Crane Bank have welcomed the ruling and vowed to pursue their search for justice in English courts.
In a media statement released on Friday, 28th July 2023, Crane Bank shareholders said they were “delighted with the judgment of the Court of Appeal, which vindicates their position” that “their claim for hundreds of millions of US Dollars against dfcu Bank, its executive directors, non-executive directors and shareholders can proceed to be heard by the English courts”.
In the ￡170 million (UGX798.2 billion) suit, Crane Bank shareholders sued dfcu Bank, its holding company, dfcu Limited, as well as dfcu Bank’s former board chairman, Jimmy Mugerwa (now dfcu Limited Chairman), Juma Kisaame and William Sekabembe, the bank’s former Managing Director and Executive Director respectively. Also sued are dfcu’s majority shareholders at the time⏤CDC Group Plc, as well as Norfinance AS, Rabo Partnerships B.V., and Arise BV, as well as the respective directors of these shareholder companies, namely Stephen Caley, Michael Alan Turner, Albert Jonkergouw, Willem Cramer, Ola Rinnan and Deepak Malik.
“Crane Bank claims that senior former officials at the Bank of Uganda engaged in a corrupt scheme to take control of Crane Bank and sell its assets at a gross undervalue, while also syphoning off public funds. Along with its shareholders, Crane Bank claims that dfcu Bank and the other Defendants took part in the fraudulent scheme and purchased Crane Bank’s assets at a gross undervalue, while also effectively paying a bribe,” the Crane Bank shareholders said in the statement.
In the ￡170 million (UGX798.2 billion) suit, CBL Shareholders are also suing dfcu bank, together with the majority shareholders at the time⏤CDC Group Plc, Norfinance AS, Rabo Partnerships B.V., and Arise BV, as well as the respective directors of these shareholder companies, namely Stephen Caley, Michael Alan Turner, Albert Jonkergouw, Willem Cramer, Ola Rinnan and Deepak Malik.
However, when the case first came up for mention dfcu Bank and its shareholders, separately challenged the jurisdiction of the London High Court on the case, arguing that the seizure and sale of dfcu was a sovereign act of the government of Uganda and therefore the claims before court were debarred by the foreign act of state rule. The rule bars English Courts from adjudicating on the lawfulness of executive acts of a foreign state (Uganda), under the laws of that state and performed within its territory.
On 19 October 2022 High Court Judge, HH Pelling KC agreed with dfcu Bank and ruled that the matter was bound by the foreign act state of rule and therefore out of his jurisdiction. However, in a unanimous ruling on 26th July 2023, three London appellate court justices⏤ Sir Julian Flaux, Lord Justice Popplewell and Lord Justice Phillips overruled the High Court ruling and said that while the act of taking over Crane Bank and placing it under receivership by the Central Bank was a sovereign act, “the BoU, in acting as receiver, must be taken to have owed the usual common law and equitable duties to its principal (CBL) to act in good faith and to obtain a proper price for property under receivership”.
“Further, the sale to dfcu Bank, as set out in the Agreement, was a straightforward commercial transaction on standard commercial terms: indeed the parties expressly declared that it was a commercial contract,” the Court of Appeal in London ruled.
“I am of the view that it is well arguable, at the very least, that the sale by the BoU as the receiver was commercial activity, regardless of the purpose of the BoU in entering it and giving associated dispensations. It is therefore arguable that the claim is not barred by the foreign act of state doctrine and the jurisdiction challenge should therefore have been dismissed. I would accordingly allow the appeal on this ground,” Sir Julian Flaux ruled in his lead judgement.
Court also ordered dfcu Bank to pay shareholders of the former Crane Bank Limited (CBL), ￡1,875,000 (UGX8.8 billion) in court costs. Court also ordered that the quintet must refund, within 14 days, with 4.5% interest per annum, the ￡1,250,000 (UGX5.9 billion), that the CBL shareholders paid to them on 27 October 2022 as costs, when the High Court initially dismissed the main case brought up by CBL’s shareholders.
Stanbic Bank boosts unsecured SACCO loans from sh200m to sh4 billion“The dfcu and the other Defendants cannot rely on the foreign act of state doctrine to evade liability. Crane Bank and its shareholders will continue to vigorously pursue their claim as part of a fair legal process before the English courts,” the Crane Bank shareholders vowed in their statement.
They stole my bank, they will pay⏤ Sudhir Ruparelia vows
The latest win in a London Court of Appeal is an addition to several other courtroom wins that Crane Bank shareholders, led by Dr. Sudhir Ruparelia have bagged in his now 7-year battle for justice.
In July 2022, Uganda’s Supreme Court ruled that the Bank of Uganda should return Crane Bank Limited to its shareholders, following the lapse of the receivership that ended on 20th January 2018. This followed the collapse and dismissal of the Bank of Uganda’s case against Dr. Sudhir Ruparelia, one of Crane Bank’s co-founders and second-largest shareholder at the time of closure. The Central Bank’s attempts to put the bank under liquidation in November 2020 subsequently also failed since this was being done, long after the receivership had elapsed, legally putting Crane Bank out of the Central Bank’s hands.
Explaining why the shareholders have opted to go to the London Court, even after severally winning against the Central Bank in the Ugandan courts, Dr. Sudhir Ruparelia, the co-founder of Crane Bank and the second largest shareholder at the time of the takeover said that they are looking to also hold the dfcu Bank’s shareholders who participated in the transaction accountable.
“This was a commercial transaction involving dfcu Bank’s foreign shareholders, who are development finance institutions (DFIs) based in Europe, most of them government-owned by their respective countries. These DFIs go around the world preaching their good works only. This case is meant to show the world what harm some of the individuals in these institutions are doing in the developing world, such as taking over assets of other entities unlawfully, like was in the case of Crane Bank,” Dr. Sudhir told CEO East Africa Magazine.
CDC Group plc, which has since rebranded to British International Investment is a development finance institution of the UK government as was the majority shareholder at the time dfcu Bank completed the now-contested transaction. Norfinance AS, another co-defendant in the case is owned by the Norwegian government while, Rabo Partnerships B.V., is a subsidiary of Rabo Group, a Dutch multinational banking and financial services Group. Norfinance AS and Rabo Partnerships B.V, are both shareholders in Arise B.V- dfcu Bank’s present majority shareholder.
“Because most of the controlling interests and the big decisions in these DFIs are taken in Europe, we had to take the case to Europe, where the case is also free from any interferences such as politics and the government players some of whom are still in positions of influence,” he said, adding: “These guys stole billions in Crane Bank’s assets and the money released by government to allegedly recapitalise the bank after taking it offer. They also stole our UGX500 billion in Crane Bank’s bad loans book. Who knows what influence that kind of money can do on the case locally?”
“We have the evidence of this grand corrupt scheme. These people will pay,” he said.