Businessman Sudhir Ruparelia has asked the Commercial court to restrain two prominent law firms, MMAKS Advocates and AF Mpanga Advocates from representing Bank of Uganda in a case that the central bank has against him and his Meera Investments Limited.
Peter Kabatsi, Sudhir's lead lawyer told court this morning that the two law firms are 'heavily conflicted' in a case in which the tycoon is accused of defrauding Crane bank of close to Shs 400 billion, and that their presence as Bank of Uganda (BOU) lawyers, will deny him a fair trial and justice.
The two law firms according to Sudhir, are in breach of advocate–client relationship because Timothy Masembe Kanyerezi, the managing partner of MMAKS Advocates, and David FK Mpanga, a senior partner in AF Mpanga Advocates represented Crane bank until October 20, 2016, when BOU took over its management and thus the law firms shared confidential information with the central bank.
BOU took over the management of Crane bank last year on the grounds that the financial institution was under-capitalized and posed a systemic risk to the banking industry. It later dragged Sudhir to court for masterminding highly sophisticated fraudulent transactions to trick Bank of Uganda about the financial status of Crane bank.
The transactions include $3.5 million, over $92 million and more than Shs 8.2 billion allegedly taken out of Crane bank on different dates around December 2014, disguised as credit facilities to Infinity Investments Limited, one of Sudhir's other companies, and eventually written off as bad debts.
BOU also alleges that Sudhir fraudulently transferred freehold titles of 48 plots of land purchased and developed using the Crane bank's finances into the name of Meera Investments.
The same plots were then leased back to Crane bank at high fees with each plot leased to the bank at Shs 100 million as a premium for 49 years and $6,000 in ground rent per year, payable to Meera Investments.
According to documents presented in court earlier, a total of $990,000 was illegally withdrawn from Crane bank between 2013 and 2016 and paid to Meera Investments as rental fees. Meera Investments is also owned by Sudhir.
The businessman is also accused of concealing the ownership and control of Crane bank through his fronts that he reportedly used to take money from the bank. BOU believes that Sudhir, the registered owner of 28.83 percent of Crane bank's shares, covertly owned 47.33 percent of the bank's shares registered in the name of White Sapphire Ltd, a company incorporated in Mauritius and allegedly owned by Rasik Kantaria.
The central bank equally believes that Sudhir owns an additional 4 percent shares registered in the name of Jitendra Sanghani and the 19.83 percent shares recorded in the names of his wife Jyostna Ruparelia and children.
BOU argues that $80 million was siphoned from Crane bank on October 26, 2013, and over $9.2 million "extracted" from the institution on different dates in the same year, purportedly for the supply of core banking systems and software licenses.
Now Sudhir's lawyer Peter Kabatsi says that the defence team has listed Timothy Masembe Kanyerezi, a partner in MMAKS Advocates and David Mpanga from AF Mpanga Advocates, as possible defence witnesses, a development which requires them to be excused as advocates in the case.
MMAKS and AF Mpanga have been long time lawyers of Sudhir Ruparelia, the former proprietor of Crane bank. Masembe was Sudhir's lawyer for 12 years.
Based on their previous engagements, Sudhir argues that the two advocates are privy to information regarding a sum of $9.2 million allegedly extracted from terminal technology and another alleged fraudulent transaction of $5.9 million with technology associates in Dubai.
They told the court that Mpanga is particularly needed to appear in court to defend an agreement he authored, which is at the centre of Sudhir's counter claim against Bank of Uganda.
The lawyers are also counting on evidence where MMAKS Advocates are said to have been instructed by Sudhir to issue a demand note and recover property from Infinity investments yet in the Bank of Uganda case, MMAKS says no recovery was done by Sudhir from the said company.
Kabatsi pointed out that the presence of the two legal minds on the BOU team contravenes regulation 9 of the Advocates Professional Code of Conduct which stipulates that any lawyer, who has reason to believe that he might be required to appear as a witness in a matter before court, is barred from appearing in the same case as an advocate.
They add that regulation 7 prohibits lawyers from disclosing their client's legal information at a lawyer's benefit.
The court set November 11, 2017 as the date when it will deliver its ruling on the matter but in the meantime advised both sets of lawyers to continue talking and reach an amicable solution if possible before.