Accused of conflict of interest by Sudhir Ruparelia, two prominent law firms representing Bank of Uganda (BOU) in its Shs 400 billion lawsuit against the businessman deny all charges in their response filed at the Commercial court on Friday, September 8.
According to the two law firms, MMAKS Advocates and AF Mpanga Advocates, Sudhir’s application is a ploy to deprive BOU of “capable,” “ethical” and “incorruptible” counsel of its choice.
Sudhir, in his application filed on September 6, asked the Commercial court to kick the two law firms off the case because they are in breach of advocate–client relationship and that “it will be incongruous for them to prosecute their former client.”
Sudhir particularly singles out Timothy Masembe Kanyerezi, the managing partner of MMAKS Advocates, and David FK Mpanga, a senior partner in AF Mpanga Advocates. He says the two cannot prosecute him because he has listed them as his witnesses.
MMAKS ADVOCATES
Sudhir argues that the two lawyers 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.
But MMAKs, in an affidavit sworn by Ernest Sembatya, a lawyer at the same legal firm, says there is no case here but rather “disturbances.”
According to MMAKS, Sudhir’s assertion, on the advice of his lawyers, Kampala Associated Advocates [KAA), that he was a client of MMAKS by virtue of the law firm representing Crane bank where he was a shareholder and director, is patently wrong legal advice.
“Further, the question as to whether someone is your lawyer is a matter which a client should be able to immediately ascertain and should not necessitate seeking legal advice from another lawyer. SR [Sudhir] is not and has never been a client of MMAKS Advocates,” MMAKS says.
MMAKS admits that they were part of the panel of lawyers of Crane bank and provided advice to the bank on various issues including conducting a Crane Bank board training. But MMAKS insists that like in the past and present matter, they have been instructed by Crane bank albeit now in receivership.
The law firm explains that the present suit is an action by Crane bank to recover from Sudhir its majority or sole shareholder, a distinct monetary sum amounting to $110,587,103 (plus interest) said to have been unlawfully extracted by the property mogul from Crane bank as well as to recover from Meera Investments Limited, Sudhir’s company, 48 freehold certificates of title said to have been unlawfully transferred by Sudhir from Crane bank into the names of Meera.
MMAKS contends that the fraud case against Sudhir only came to light subsequent to and by reason of a forensic audit commissioned by Crane Bank and BOU, conducted by PricewaterhouseCoopers (PWC) and issued on January 13, 2017.
In his application, Sudhir said Crane bank sought and received specific advice from MMAKS Advocates regarding the structure and shareholding of the bank.
That indeed MMAKS Advocates conducted a due diligence on the bank and confirmed the shareholding. But MMAKS insists the instructions for compilation of a report on the shareholding were given by Crane bank and not Sudhir and that the report merely stated what the company’s registry filings showed.
In its main case, BOU alleged that Sudhir caused Crane bank to give loan facilities worth $3.5m and more than Shs 8.2bn to Infinity Investments, a company he allegedly owned and that later the facility was written off as bad debts under Sudhir’s instructions.
But Sudhir insists MMAKs is conflicted because following the approval of the said loan facilities in 2010, 2011, 2014, by Crane bank, MMAKS were instructed to conduct a due diligence and prepare the security documents for the loan facility.
And indeed according to Sudhir, the law firm prepared the security documents, which included a debenture and mortgage for Infinity. Following the failure of infinity to pay the outstanding amounts, Sudhir says MMAKS on instructions from Crane bank, instructed their auctioneers to advertise and sell some of the property infinity had offered as security.
In response to Sudhir’s claim that MMAKS shall be required testify in relation to the cash extraction allegation pertaining to Infinity, the law firm contends that it acted for Crane bank not Sudhir.
MMAKS insists that no sale or recovery was done and subsequent to the takeover of Crane Bank, PWC through its forensic audit, established that Infinity Investments Limited’s loan disbursement was onto accounts operated by Sudhir through his close associates.
That valuable securities were released without the loan having been paid off and that the remaining securities were worthless.
AF MPANGA ADVOCATES
And Sudhir wants AF Mpanga Advocates off the case because the findings of the PWC report were mainly based on Mpanga’s legal analysis and advice. Having been heavily involved in the PWC report, Sudhir contends that AF Mpanga Advocates will be necessary, competent and compellable witnesses to testify to the veracity of the contested report.
AF Mpanga Advocates however, in an affidavit sworn by William Kasozi, the law firm’s managing partner, says that after perusing Sudhir’s application and supporting affidavits, he found many false assertions about the company, in general, and his partner Mpanga, in particular.
Kasozi says the conclusions in Sudhir’s application are based on what he terms as “a clear misapprehension of the applicable laws” which is a “result of negligent legal advice.”
Kasozi says that at no time since its inception in 2003 has AF Mpanga Advocates acted for Sudhir and that none of his partners or associates have ever been engaged or in any way executed any instructions from Sudhir.
According to Kasozi, all the facts they know about this case are as a result of being advocates for Crane bank upon the instructions of BOU, who is the bank’s receiver. Kasozi says that AF Mpanga Advocates’ involvement in the BOU main case begun on or about October 29, 2016 after the central bank took over management of Crane bank.
According to Kasozi, their brief was to provide legal support to PWC, which was carrying out a forensic audit of Crane bank to establish what led to its undercapitalization and eventual takeover.
“That I was part of a team that comprised about 5 lawyers, including Mr David F.K. Mpanga, which provided legal support to PWC, “ Kasozi says, adding that, “In our work we were giving our legal opinion on PWC’s factual findings. We also assisted PWC in carrying out registry searches, perusing and explaining the legal implications of documents, which PWC found in its audit, and in attending interviews of persons that PWC deemed important to its inquiries to enable us advise PWC on the legal implications of their evidence.”
PWC according to Kasozi, owns all the factual findings and conclusions in its Forensic Audit Report of January 13, 2017 subject to the limitation that it obtained legal advice from us.
When hearing of the BOU case starts, Kasozi says that PWC and other witnesses will be called to testify to prove the factual assertions PWC made its report and upon which Crane bank in receivership based its claims against Sudhir.
NATIONAL BANK OF COMMERCE
Sudhir’s contends that in 2012, AF Mpanga Advocates represented Crane bank in the Constitutional court case filed by the former shareholders of National Bank of Commerce (NBC) and thus the firm’s lawyers will be required to testify in this case.
Sudhir asserts that the testimony of AF Mpanga Advocates will prove if at all in their interaction with Crane bank, they witnessed that he wasn’t in charge of Crane bank’s day to day operations as they allege in their main case.
In response, Kasozi says that he is aware that on or around the October 18, 2012, AF Mpanga, Advocates received instructions to represent Crane bank as well as A.R. Kalan and Ajay Kumar, then managing director and deputy managing director, respectively, of the bank in Constitutional court.
In the application according to Kasozi, Nzeyi was seeking a declaration that Crane bank and its then officers, A.R. Kalan and Ajay Kumar acted in contempt of an interim order issued by the Constitutional Court on the September 28 2012 when the assets and liabilities of NBC were taken over by Crane bank pursuant to a purchase of assets and assumption of liabilities agreement executed by and between Crane bank on September, 27, 2012.
Kasozi says the said instructions from Crane bank were conducted by AF Mpanga Advocates lawyers: David F.K. Mpanga and Brian Kalule. And according to Kasozi, the only issue was whether Crane bank and its then officers were aware of the existence of the Interim Order of the Constitutional court at the time they took over the NBCs’ assets and liabilities.
“So at no time during the conduct of that case did Mr David F.K. Mpanga, Mr. Brian Kalule or any other Partner or Associate of AF Mpanga, Advocates take instructions from the Applicant [Sudhir] about his shareholding, management or control of the third respondent [Crane bank] nor indeed was there any hint of the facts behind the matters now in issue in High court case number. 493 of 2017,”Kasozi says.
Kasozi says that he is aware that Crane bank’s claims against Sudhir essentially stem from the tycoon’s apparent inability to extricate himself from the defunct bank and the BOU case.
It is therefore not surprising, Kasozi claims, that Sudhir still believes that when AF Mpanga, Advocates acted for Crane bank in the contempt of court case they acted for him.
dkiyonga@observer.ug