Lawyers representing businessman Hamis Kigundu (Ham) have condemned a statement put out recently by the Uganda Bankers Association (UBA) in light of last week’s High Court ruling against Diamond Trust Bank (DTB), which was accused of debiting billions of shillings on Ham’s account.
The High Court Commercial Division Judge Henry Peter Adonyo on October 7, 2020 ruled that DTB Kenya acted illegally in lending money to Ham Enterprises owned by Ham Kigundu through DTB Uganda.
The syndicated loan facility totaled 39.7 billion shillings which Ham acquired to facilitate his business and defaulted on payment.
Following the ruling, Uganda Bankers Association (UBA) put out a statement warning among others that the syndicated loan portfolio which currently stands at 5.7 trillion shillings was at risk.
They also warned that the court ruling was likely to encourage loan defaulting and also negatively affect investor confidence in the country.
However, in response to this, Ham’s lawyers of Muwema and Co. Advocates have come out condemning the UBA statement, terming it as a “malevolent attack on the Court” and a “lack of understanding of the ruling.”
The lawyers noted that this was not the first time, a bank customer has accused or will accuse the bank of “such predatory and unethical conduct of financial pilferage.”
The lawyers also wondered why UBA had “not come out to condemn some of its errant members who go against UBA core values of integrity, transparency, professionalism, good governance and service excellence.”
“The High Court ruling/ judgement was promoting good banking practice which UBA is supposed to stand for when it insisted that that FIA (Financial Institutions Act) must apply to all banking transactions undertaken by DTB Uganda and DTB Kenya. Why would anyone find a judgement which ensures compliance with the law to be reckless? It is true that DTB Uganda and DTB Kenya engaged in syndicated loan transaction with our client but it is not true that the judgment declared syndicated loans to be illegal,” the lawyers said.
The lawyers raised questions as to whether UBA is trying to push for the deregulation of foreign lending in Uganda by vehemently protesting a Court judgement which seeks to enforce the Regulation of such foreign lending.
“The implication which should be derived from the judgment is that any Bank which desires to conduct syndicated loan transactions in Uganda is allowed to do so provided it comes under the regulation of the law. This is the message which UBA should be passing on to its members and the foreign lenders who want to participate in the lucrative syndicated loan market in Uganda instead of alarming them that the Court has banned syndicated loans in Uganda,” the lawyers said.