The High court has dismissed an application by Dei Biopharma Ltd and DEI Industries International Ltd proprietor Mathias Magoola seeking to block an independent audit into loan facilities held with Equity Bank Uganda and Equity Bank Kenya.
Dei Biopharma, a pharmaceutical start-up, has received billions of shillings in government funding to support the manufacture of medicines for various diseases.
In 2024, Magoola petitioned the court seeking an account and reconciliation of his loan and current accounts held with Equity bank. He asked the court to determine the actual amount owed under the credit facilities, examine loan variations, consolidations and restructurings, and order the bank to refund any money allegedly unlawfully debited from his accounts.
On December 10, 2024, the court appointed KPMG to conduct a comprehensive audit of the loan arrangements and establish the outstanding amount due. However, after KPMG filed its report on December 18, 2024, Magoola applied for a review of the firm’s appointment.
The court allowed the application and directed the Institute of Certified Public Accountants of Uganda (ICPAU) to nominate an independent audit firm. ICPAU subsequently appointed Clayton & Company to carry out the audit.
Before the firm could submit its report, Magoola, through his lawyer Fred Muwema, returned to court seeking another review.
He argued that ICPAU had been compromised by Equity bank and therefore lacked the independence required to oversee the appointment. He also contended that ICPAU ought to have consulted both parties before selecting the audit firm.
In her ruling, Justice Suzan Abinyo dismissed the application, describing it as an abuse of the court process. The judge held that the court’s earlier order merely required ICPAU to nominate an independent audit firm and did not require it to consult either party before making the appointment.
Justice Abinyo said imposing such a requirement would defeat the very independence the court intended ICPAU to exercise. She further found that the application had been overtaken by events because it sought to challenge a process that had already been lawfully established and implemented.
On the allegations that ICPAU lacked integrity and independence, Justice Abinyo ruled that Magoola had failed to adduce evidence to support the claims.
She held that the burden of proof rested with the applicants and that they had failed to prove, on a balance of probabilities, that ICPAU had been compromised or had colluded with Equity Bank in appointing Clayton & Company.
The court also found that allegations of a conspiracy between ICPAU and Equity Bank were unsupported, holding that mere assertions contained in affidavits and written submissions were insufficient in the absence of credible evidence.
Seeking to block an independent audit review that he himself requested smells as though he has something to hide.
Just need to be given an ample time. Every thing can be settled. There was a lot to be handled in the same time yet in the shortest time, construction, install equipment and many others, the payment period need to be revised.
As Ugandans, we should fight not to loose such great opportunity. Equity Bank should focus on building the clients stronger instead of loosing them and their credibility. Just need to think twice before we act. Ugandan please let us live our Country, Dr. Magoola is not a foreigner so we need to support our brand
But with all the funding from government, does this investor still need to undertake loans? One would think that the support enabled the investor to move quickly into mass production, generate sales, and meet financial obligation.