Mikaili Sseppuya
4 November 2004
Kampala — Greenland Investments Ltd (GIL) shareholders risk losing billions of shillings if a court case goes against them and the group's remaining key asset Uganda Grain Milling Company (UGMC) is put under receivership.
Dr. Sulaiman Kiggundu started GIL in 1996 as the investment arm of the defunct Greenland Bank.
Over 7,000 people bought 100,000 shares at sh50,000 each to raise sh5b and it was with these funds that GIL bought UGMC in a controversial deal in 1997 from a company controlled by Lieutenant General Salim Saleh.
But when Greenland Bank collapsed in 1999, the Bank of Uganda took control of its shareholding in GIL which it sold two years ago to Simba Distributors Ltd managed by Patrick Bitature.
According to court papers filed by the GIL shareholders, it is alleged that through a series of fraudulent maneuvers, Simba Distributors Ltd. has led to UGMC being put under receivership and trying to edge the minority shareholders out of the company.
GIL through F. Mukasa & Co Advocates sued Prime Finance Company Ltd, Paul Palia Kiapi, the receiver, Simba Distributors Ltd and Patrick Bitature.
"Ever since the third defendant (Simba) became a majority shareholder in UGMC, it has through the fourth defendant (Bitature) run the affairs of UGMC in an illegal, fraudulent and oppressive manner against the interests of UGMC and the plaintiff company (GIL)," the suit read.
"That the fourth defendant (Bitature) in abuse of his powers as chairman of UGMC, and in abuse of his fiduciary duty to UGMC made several false representations and entered into fraudulent and unjustified transactions, and as a result of the said fraud, UGMC and its subsidiaries has been put under receivership."
Prime Finance Company officials denied the allegations and said a receiver was lawfully appointed to dispose of UGMC shares.
Shareholders are understandably mad at the trend of events.
Fred Lubowa, a shareholder, said he was surprised to hear that UGMC had been sold.
"At the last shareholders' meeting, we were told that the board was going to try to redeem our shareholding which had been invested in UGMC. It is surprising to hear now that instead it was merely sold off," he said on Tuesday.
"The people who were running what was left of GIL have not had the courtsey to explain to us what is happening. All we are hearing now are rumours, which are not clear. Why don't they call us and tell us the options?" said Paul Serwadda, another shareholders operating on Luwum Street.
Sources said the previous GIL board chairman Kaaya Kavuma camp were unhappy with the move and complained that Bitature had wanted to dilute their ownership in UGMC.
They claim that Bitature refused to use some sh880m, which had been got from the sale of the UGMC mill at Kawempe as operating capital to offset the sh300m shortfall UGMC needed to operate, but instead chose to borrow from Sudhir Ruparellia.
"It is mind boggling but we are hearing that UGMC was sold off because it was bankrupt and needed sh300m as operating capital. How could it be bankrupt when at the same time we are told its Kawempe mill had been sold for sh880m?" a shareholder said.
GIL was set up under the Company's Act. It does not fall under the jurisdiction of the Capital Markets Authority which regulates share offering by companies.
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