By Nasser Kasozi AKandwanaho
Uganda’s Businessman and tycoon Hamis Kiggundu has on Wednesday trounced Diamond Trust Bank [DTB] in a court case that saw the multibillion loan he acquired, declared illegal.
Hamis Kiggundu and his companies Ham Enterprises [U] Ltd and Kiggs International [U] Ltd sued DTB Uganda and DTB Kenya for breach of contract in a multibillion loan.
Hamis Kiggundu claimed that between February 2011 and September 2016, his two companies acquired loans from the two sister banks and deposited commercial properties as security.
Hamisa said along the way the banks did not remit the full amount but deducted it from his accounts in purported repayment.
The banks denied any breach of contract and said the loans were duly taken by the businessman’s companies and the deductions from his bank accounts were lawful and for repayment of the credit facilities.
The bank lawyer, Kiryowa Kiwanuka, listed the loan facilities taken by Ham Enterprises as $6,663,453, Shs1.5b, Shs1b, $4m and $500,000.
In the ruling on the dispute Wednesday, Justice Henry Peter Adonyo of the Commercial Division of the High Court declared that DTB Kenya is not licensed to conduct financial business in Uganda and therefore the credit facilities granted to Ham Enterprises were irregular, null and void.
He said DTB Uganda to act as a collecting agent for DTB Kenya contravened the Financial Institutions Act and Agent Bank regulations.
“I declare that the credit defendants (banks) breached the different loan agreements in which the applicant (Ham Enterprises) acquired between 2011 and 2019,” the judge ruled.
“The acts of DTB Kenya Limited in conducting a financial institution business as a deposit taking financial institution licensed in Kenya which illegally impacted on activities in Uganda calls for it to be penalised. It was not licensed as a financial institution in Uganda which makes it an offence to conduct business without a licence,” he added.
He dismissed DTB Uganda and DTB Kenya’s defence and said DTB Uganda is liable to being penalised for taking part and facilitating the commission of the offence.
Justice Adonyo ordered the banks to refund Shs34b and $23.2m which they deducted from Ham Enterprises’ accounts.
The court also cancelled the loan mortgages and ordered the banks to return the mortgaged property to Ham since the loan transactions were illegal.
The properties which Ham Enterprises had deposited as security included land titles for buildings at Kyaddondo, Kawuku, Victoria Crescent II and Makerere Hill Road.