By Our Reporters.
The Uganda Supreme Court on February 11, 2022 ruled that Crane Bank ownership reverts to businessman Mr Sudhir Ruparelia, in a historical judgment that ended a five-year legal battle preceded by the bank’s closure.
The court in its judgement dismissed an appeal filed by the Bank of Uganda / Crane Bank (in Receivership) against tycoon Mr Sudhir Ruparelia and his company Meera Investments Ltd.
Central bank had earlier taken Sudhir Ruparelia and Meera Investments Ltd. to court for causing financial loss amounting to Ushs 397b to Crane Bank allegedly in fraudulent transactions and land title transfers.
But judge David Wangutusi dismissed the case on technicalities saying Crane Bank (in Receivership) lost its powers to sue and to be sued, which rendered its suit a nullity.
Bank of Uganda/Crane Bank (in Receivership) challenged the judgement and argued that receivership was a management situation, and had no legal change on capacity of a company to sue and be sued.
Supreme Court Registrar Mary Babirye on behalf of five Justices of the Supreme Court; Opio Aweri, Faith Mwondha, Lillian Tibatemwa, Ezekiel Muhanguzi and Percy Night Tuhaise, said court ruled that receivership of Crane Bank Limited ended on January 20, 2018, and from that date, the management and control of Crane Bank reverted to its Shareholders.
Mr Sudhir said the monies he was accused of siphoning did not even reach Crane Bank and that the Legal department of Bank of Uganda prolonged the case as it continued benefiting from legal fees. The ruling means that if Crane Bank resumes its operations coutrywide at least over 1000 workers will regain employment. This will help reduce on the problem of unemployement for the workers now striving to recover from effects of Covid-19 pandemic that raveged the country.
Crane Bank Limited was closed by Central Bank on October 20, 2016, allegedly after it failed to comply with a capital call on July 1, 2016.
Bank of Uganda Governor Emmanuel Tumusiime Mutebile said at the time that the Bank takeover was guided bysystemic nature of the under-capitalized institution to avoid financial taking up more tasks.
However years later Parliaments’ Committee on Commissions, Statutory Authorities and State Enterprises -COSASE said, in a report, that the closure of Crane Bank by the Bank of Uganda was illegal. The report indicated that an analysis of the Bank’s liquidity from January 1, to January 24, 2017, revealed that the financial institution had recovered from liquidity distress to the time it was disposed on January 25, 2017.
“Bank of Uganda had stopped injecting money on January 9, 2017. Therefore the bank’s liquidity position had stabilized,” read the report which was presented before parliament by COSASE chairman and Bugweri County MP Abdu Katuntu.
COSASE recommended that in the process of making a decision to liquidate a financial institution, detailed plans for revival should have been exhausted before liquidating it.
Crane Bank proprietor, Mr Sudhir Ruparelia told COSASE that the agreement for the sale of Crane Bank to DFCU was shoddy and fraudulent. Mr Sudhir also accused Bank of Uganda senior officials of striving to take over or “steal” his properties.
Todate there are seven known local commercial banks that have been closed by Bank of Uganda allegedly for flouting financial institutions regulations.
Teefe Trust Bank was the first commercial bank to be closed by Bank of Uganda in 1993 due to insolvency. BOU said the collapse of Teefe Bank was due to excessive insider lending and accumulation of bad debts.
International Credit Bank that was owned by Mzee Thomas Katto and family got closed in 1998 also due to excessive inside lending, mismanagement and insolvency.
Greenland Bank – Formerly owned and managed by former BoU Governor the late Dr Sulaiman Kiggundu, was closed on April 1,in 1999 after central bank cited massive inside borrowing that affected operations and led to insolvency.
Cooperative Bank Limited whose actual reasons for closure in 1999 remain a mystery. BoU made unclear statements that there were two Cooperative banks’ entities operating at the same time.
National Bank of Commerce (NBC) formerly owned by businessman Mr Amos Nzeeyi and former Prime Minister, Hon John Patrick Amama Mbabazi, was closed in 2012 for what BoU said “NBC’s activities were detrimental to interests of its depositors”.
Global Trust Bank that started operations in 2008 with small financial services to Ugandans, was closed in 2014.. The financial institution is said to have lacked profitability and accurate information.
Crane Bank is the most recent commercial bank that was closed by Bank of Uganda in 2016.
At that time Central bank reassured the public that “it would continue to protect the depositors’ interests and maintain stability in the financial sector.
Following the ruling in favour of Mr Sudhir Ruparelia and his Meera Investments, the local business fraternity is demanding for review of all closed commercial banks.
The ruling in the Crane Bank – Bank of Uganda case came a few days after BOU governor Prof Emmanuel Tumusiime Mutebile had passed on and laid to rest■