The defunt Crane Bank Owned by one of Uganda’s top business moguls Sudhir Ruparelia has suffered yet another huge blow at London High Court.
The High Court of London on October 7, exonerated Dfcu Bank and it’s Directors over alleged involvement in the sale of the Defunt Crane Bank.
The ruling further justified the actions of Bank of Uganda (BoU) as protected by the laws of Uganda, giving BoU a renewed impetus to seek further legal examination on technical aspects, over the recent ruling by Ugandan’s Supreme Court in favour of Crane Bank.
BoU, last year lost a long-running court case over the procedures it followed in placing troubled Crane Bank into receivership and subsequently selling its assets to DFCU Bank between 2016 and 2017.
Crane Bank was placed under statutory management by Bank of Uganda in September 2016 following a damning audit report that revealed insufficient capital levels, shrinking liquidity ratios, surging loan default levels and gross mismanagement.
In 2016-2017, the BoU, in exercise of its statutory and regulatory powers, took over management of CBL, then closed it and sold off some of its assets and liabilities to DFCU.
Claimants
The Claimants in the case before the High Court of London , (CBL and some of its shareholders) contend that this sale, together with various side agreements, was a sale of CBL’s assets and liabilities at a “gross” undervalue in furtherance of a “corrupt scheme” carried into effect by BoU using its statutory and regulatory powers in the way that undermines it’s integrity,
An unlawful means conspiracy and that DFCU and it’s Directors provided dishonest assistance in breach of trust and/or of fiduciary duty by entering a purchase agreement with BoU.
After a protracted legal battle, the Supreme Court of Uganda made a decision that Crane Bank Ltd reverts to owners Sudhir Ruparelia and co-shareholders raising public excitement, for various reasons, including an assumed return of the bank into the banking industry.
The Supreme Court of Uganda had dismissed the case against the Crane Bank owners Sudhir Ruparelia and Meera Investments, at all levels on technical grounds, not their proof of innocence in regard to the alleged offences for which BOU acted.
Crane Bank further took the matter to the London Court, seeking pronouncement on DFCU and each of it’s key Directors involved in the purchase of it’s assets.
In the latest judgement, however read on October 7, Lord Pelling QC sitting in London exonerated both DFCU and BoU of wrong doing saying BoU is justified in performing their oversight role enshrined in Uganda’s constitution especially following several red flags and warnings it had brought to Crane Bank’s notice against wrong doings.
DFCU on the other hand was cleared of the alleged connivance to buy CBL assets at undervalued rate.
“In my judgment, therefore, whether a claim in conspiracy could succeed would depend on the detailed facts, as would the applicability of the MCA Records Principle, assuming that it applies to conspiracy at all,” reads part of the judgement
“So far as this last point is concerned, there are at least two reasons why it is at least realistically arguable that it should not,” it adds
Justice Pelling QC stated further ruled that the allegation even on its face goes further than merely alleging that the third defendant carried out the duties entrusted to him by the first defendant under its constitution.
“It is not an allegation “… without more …” that the third defendant was merely fulfilling board functions,” he said
To the contrary – and certainly when read in the context of what has gone before in the pleading the Judge said that it is an allegation that he has participated or been involved in ways that go beyond the exercise of constitutional control because it is alleged that he approved or directed the participation of the first defendant in its dealings with BoU and in the preparation, approval and submission of the first defendant’s bid.
” Voting in favour of execution is only a small part of what is alleged and even that cannot sensibly be separated from the core point that it is alleged,” he ruled.
The ruling makes Crane Bank lose $170 million.
