By Spy Uganda
Kampala: The Commercial Court in Kampala has ordered Stanbic Bank to cough more than Shs400m in a case where some of its top staff created a sham company that they used to fraudulently sell to themselves several plots of customer’s land.
According to a Friday ruling delivered by Justice Richard Wejuli Wabwire, the employees of Stanbic Bank circumvented the law to the disadvantage of their esteemed customer known as Macdowel Food and Beverages hence being ordered to pay over Shs400m in general and punitive damages.
“It is very clear from the evidence on record contained in the affidavits in support of this application and rejoinder that the shareholders of the 2nd respondent (Myriad Investment Club)…..are employees of the 1st respondent (Stanbic Bank) on February 3, 2020, opportunistically incorporated a sham or conduit company in the name of 2nd respondent (Myriad), with a hidden motive of purchasing the securities, of the applicant (Macdowel),” Justice Wejuli ruled.
“It is my finding that the 2nd respondent (Myriad) which was incorporated after an advert for auction of the applicant’s securities is a creature of the employees of the 1st respondent (Stanbic Bank) as a devise by a sham, a mask which the employees of the 1st respondent who are also directors and shareholders of the 2nd respondent, chose to shamelessly place upon their faces in an attempt to circumvent the provisions of Section 30 of the Mortgage Act 2009. It would create an absurdity if this court allowed the respondents to walk away scot-free,” he added.
Background Of The Matter
In 2017, MacDowell limited mortgaged its properties on plot 1, 3, 4, 5 and 6 closes, Luzira to Stanbic Bank Limited as security for a loan. The company at times failed to pay loan instalments on time and decided to go for Consent judgment to clear the loan by 30th June 2020. The company claimed that they paid off the loan but the bank declined to release its titles.
Initially, according to McDowell, the bank’s lawyer identified as Andrew Munanura claimed that it had sold the property by public auction after the bank advertised in the monitor publication and auction took place on December 6, 2019, yet there was no auction.
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The company claimed that its properties were undervalued in that, they were sold at Ugx 1 billion yet the actual value of the property was over Ugx 4 billion.
Also, the claims are that the property was grabbed through an insider, dealing scheme between the bank and its employees using a front called Myriad Investment Club limited. The shareholders of Myriad Investment Club limited include; Kenneth Kitungulu (Executive and head Global markets Stanbic Bank), Lawrence Kaweesa (Global Business Manager Stanbic Bank), Allan Muhinda (interests dealer Stanbic Bank), Daisy Nitwe (Treasury sales dealer Stanbic Bank).
The others are Emmanuel Rukeeba (head analytics and products Stanbic Bank), Maureen Kembabzi Katwebaze (works with Stanbic IBTC Bank Nigeria) and Thaib Lubega (Formerly Treasury Manager Stanbic Bank).
It was revealed that Kenneth Kitungulu and Daisy Nitwe signed the sale agreement as to the buyer’s directors. The sale agreement was drawn by the bank’s legal department, colleagues of the buyers/ directors/ shareholders.
According to section 39(2) AND (3) of the mortgage Act, sale of mortgaged property by a bank to its employees is a crime punishable for not less than 24 months in prison.
