The legal battle between businessman Hamis Kiggundu and Diamond Trust Bank (DTB) has had several twists over the past year, with the latest taking a criminal dimension.
It has sucked in the Directorate of Public Prosecutions (DPP) to investigate alleged fraud by top-level DTB officials during their dealings with Kiggundu, writes Derrick Kiyonga.
On September 13, Valerian Tuhimbise, the Buganda Road chief magistrate, issued criminal summons to Prince Karim Al-Husayn Shah, the founder and chairman of the Aga Khan Fund for Economic Development and other top DTB officials including DTB Kenya CEO Massimo Mohamed Devji, Varghese Thambi, the DTB Uganda CEO as well as John Sitakange, the DTB Uganda head of credit at DTB (U) Ltd.
The privately instituted criminal case by Muwema and Company Advocates accuses the four for making false entries in financial ledgers, electronic fraud, uttering false documents and conspiracy to commit a felony.
In his complaint on oath, Kiggundu alleges an audit of his account by KSK Associates, Certified Public Accountants, revealed that the bank had unlawfully debited Shs 34bn and $23m respectively from his accounts over nine years. This totals to Shs 120bn.
He further says that the bank ignored his request for a full account reconciliation and it is on that premise that he wants court to charge the top-level bank leadership because they had knowledge of the illegal transactions and they bear criminal liability for the approval and concurrence in committing the deception and fraud on his bank accounts.
However, as preparations were being made to charge the four, the magistrate informed Muwema on September 15 that the DPP has taken over the case. It remains unclear whether the DPP will pursue the matter or lose interest and efforts to reach out to Fred Muwema on the development were futile as he didn’t pick our calls.
An official from the DPP office who preferred anonymity said they are studying the file to see whether the four DTB officials can be charged in court. “This is a complex case that involves huge amounts of money and we need more time to scrutinize every detail before making a decision. If we find that the DTB officials have a case to answer, they will be arraigned before court,” she said.
The criminal case is part of the ongoing multi-billion case in which Kiggundu accuses DTB for fraudulently siphoning over Shs 120bn from his accounts without his knowledge or consent.
But whereas the civil case has reached the Supreme court, the criminal case is gaining traction. In May, the Financial Intelligence Authority of Uganda (FIA) questioned Thambi for money laundering during transactions with Kiggundu but are yet to prefer charges against him.
In the ongoing civil suit, Kiggundu wants court to declare that DTB breached the different loan agreements entered into with him between February 16, 2011 and November 16, 2019 when it fully recovered over and above what was due to it through the loan instalments and interest payment deductions.
In its defence, DTB argues that the businessman through his two companies obtained credit facilities from them and provided securities in the form of property to secure the credit facilities.
The bank argues that the facility agreements entered into between the parties are legally binding and enforceable under the law and that the deductions and charges made against the plaintiff’s accounts were in accordance with the credit facilities issued to them.
According to the bank, the businessman’s issuance of notices to it purporting to terminate their bank-customer relationships, it remains liable to settle its payment obligations and fulfil the terms of the mortgage instruments.
All this sets up a protracted legal battle that could have far-reaching impact in the banking sector, especially at a time when several leading businesspersons are suing banks over fraud.