In what is building into a landmark commercial case between businessman Hamis Kiggundu and Diamond Trust bank, the two sides are still keeping their cards close to the chest, writes DERRICK KIYONGA.
It started as a rumour last year when Hamis Kiggundu threatened to sue Diamond Trust Bank for fraud and on August 31, after a series of media sparring, the two sides faced off for the first in court. This is a heavyweight battle with about Shs 30bn at stake and pits two of the biggest law firms in the country.
Businessman Hamis Kiggundu, the proprietor of Ham Enterprises Limited and Kiggs International (U) Limited, dragged DTB -Uganda, and DTB-Kenya to Commercial Court for fraudulently siphoning over Shs 120bn from his accounts without his knowledge or consent.
In court, he pleaded with the Commercial division of the High court to throw out the defence evidence in which DTB argues that Ham Enterprise Limited is indebted.
DTB presents the figures as follows; $6,298,380 on term loan facility of $6,663,453, Shs 2.8 billion on the demand overdraft facility of Shs 1.5 billion, temporary demand overdraft facility of Shs 1bn, $3,662,241 on the term loan facility of $4,000,000 and 4458,604 on the term loan facility of $500,000.
Kiggundu’s lawyers led by Fred Muwema raised a preliminary objection in which they said they had filed an application to move court to struck out DTB’s defence arguing that it is based on illegalities.
“The defences are based on illegal transactions including the loan agreements which were made in Kenya lending in Uganda. DTB Uganda facilitated an illegality by allowing DTB Kenya to break the law in Uganda,” Muwema said.
The lawyer explained that because DTB Kenya is not licensed to carry out financial services in Uganda, it was wrong to carry out any business with Hamis Kiggundu and that it was wrong for the bank to use their counterparts, of DTB Uganda to help them enforce the loan agreement in Uganda.
The lawyer argues that the court should find it logical to dismiss the evidence by DTB Uganda for helping another bank carry out an illegality.
Muwema said that if their application is successful in an October 5, 2020 ruling by the trial judge, Henry Peter Adonyo, there will not be need for any further hearing of the case.
According to court documents, Kiggundu provided security/mortgage comprised in Plot No.923, Block 9 located at Makerere Hill Road to support the credit facilities he had got from DTB but the businessman says when he carried out an audit and reconciliation of the loan accounts, he found out that the DTB had taken Shs 34 billion and $23 million from his account.
The businessman wants court to declare that DTB breached the different loan agreements entered into with him between February 16, 2011, and November 16, 2019 when it fully recovered over and above what was due to it through the loan instalments and interest payment deductions.
In its defence, DTB argues that the businessman through his tow companies obtained credit facilities from them and provided securities in the form of property to secure the credit facilities.
The bank argues that the facility agreements entered into between the parties are legally binding and enforceable under the law and that the deductions and charges made against the plaintiff’s accounts were in accordance with the credit facilities issued to them.
According to the bank, the businessman’s issuance of notices to it purporting to terminate their bank-customer relationships, it remains liable to settle its payment obligations and fulfil the terms of the mortgage instruments.
All this sets up a protracted legal battle that could have far-reaching impact in the banking sector, especially at a time when several leading business persons are suing banks over fraud.
At the moment, Peter Kamya, the proprietor of Simbamanyo Estates is embroiled in a similar legal battle with Equity Bank Uganda and Equity Bank Kenya.