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How one lady took on KCB and won

High court judge Billy Kainamura has ordered KCB bank to pay Deborah Kigongo, a businesswoman, millions of shillings for breach of contract, writes ALON MWESIGWA.

In the corridors of the Commercial court division of the High court in Nakasero, Kigongo, 54, hops from corner to another. She hugs everyone on the way – from her lawyer and relatives to strangers.

A few minutes before, on September 6, 2018, Justice Kainamura had ruled in her favour against KCB bank over the dispute linked to a loan facility and failure of the bank to carry out agreed instructions to aid her clear goods she was importing into the country in 2011.

Deborah Kigongo

Justice Kainamura ordered KCB bank to pay Kigongo and her company Kaaya L Enterprises Limited, Shs 100m in general damages, special damages of Kenya shillings 1,481,126 (UShs 52m) and $8,387 (Shs 31.5m). The bank will also foot her legal costs. The case had been running since 2013.

“God can never forget His people,” she said after the ruling in a reassured voice. “This bank even advertised my property [to sell it], saying I owed them money”.

The judge also ordered the bank to stay away from her property on block 313-320 plot 1544 in Busiro. The bank’s lawyer Moses Opio said they were going to appeal the ruling.


In 2010, Kigongo, through her company, Kaaya L Enterprises, was contracted by the Uganda National Roads Authority to supply them with ground-engaging road construction equipment, which included cutting edges and other accessories. The contract was worth $120,000 (Shs 450m).

She immediately contacted a supplier called Allied Companies in Singapore to make and supply the required specifications of the equipment. The company agreed and goods were to be supplied through USG Products Ltd. But she needed a financial institution to facilitate the transaction. She approached KCB bank in 2011, which agreed to facilitate the contract.

Through Stanbic bank, UNRA’s bankers, the authority had issued irrevocable letters of credit to Kaaya L Enterprises, which was an assurance to KCB that it would be paid. On this assurance, KCB paid 30 per cent ($40,000) of the contract price to the suppliers as advance payment.

The supplier then shipped goods and required the plaintiff [Kigongo] to pay 70 per cent before handing over original documents including the bill of lading, which was needed by Uganda Revenue Authority for goods to be cleared, said court documents.

KCB refused to offer her the remaining money and preferred to issue letters of credit to the supplier because they doubted her capacity to pay back the money.

The defendant bank wrote at the start of November 2011 asking suppliers to accept letters of credit instead of cash, court papers show. On November 24, 2011, the supplier wrote back saying: “it was hard to accept the letters of credit because the understanding was of full payment of contract price and in cash.”

KCB negotiated with the supplier who later accepted the letters of credit.

“As her banker, we are willing to give her a letter of credit to yourselves then you send us the bill of lading…we shall remit the specified amount by telegraphic transfer within a period of one week,” KCB wrote in November 2011.The bank then turned around and refused to send the LCs.

The judge said: “I note it was the defendants [KCB] that were negotiating with the supplier and asking them to accept the letters of credit. In fact, they promised to send the letters of credit in one week.”

“If the defendant [KCB bank] had sent the letters of credit like they had promised to, there would not have been delays and the goods would have been cleared sooner.

“Therefore because of the defendant’s failure to send the letters of credit, the plaintiff [Kigongo] suffered loss,” the judge said.

“In fact, they didn’t even inform the plaintiff that they would not send the LCs and probably advise her to use another bank. They simply did nothing and time was going,” the judge observed.

The bank said the woman owed it Shs 127m from an earlier loan facility and they could not give her more money. The judge found that Kigongo had actually paid Shs 30m of that money and there was no reason for the bank to doubt her.

In order to help Kigongo, UNRA, desperate to get the goods into town, wrote to its banker Stanbic to be the one to send letters of credit to the supplier on January 19, 2012 for original documents to be released for her to clear her goods that had been delivered to Mombasa. It was too little too late.

According to the judgment, Kigongo had already incurred demurrage charges, and one of her containers auctioned, and incurred costs in terms of fees to Kenya Revenue Authority, bank itself, Kenya Ports Authority, and thousands of dollars paid to the shipping company. UNRA also recalled part of the contract money because she had failed to deliver.

“Under the circumstances, therefore, I find that the bank breached its duty of care when it failed to send the letters of credit to the supplier while they had agreed to send them,” the judgment reads.

“This is the road to recovery,” Kigongo smiled, displaying her smile.

Kigongo was represented by JM Musisi and company advocates.



0 #1 Robert Atuhairwe 2018-09-14 19:20
What's with KCB?I know of other cases.

Some other diddled people have approached me. Is the bank going down the Crane way?
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+1 #2 Franklin Bagachwera 2018-09-16 09:38
Good to read a positive outcome from a Ugandan court. This is justice.
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