10 September 2017

Uganda: Lawyers Disown Sudhir Over Crane Bank Case

Kampala — Lawyers contracted by Bank of Uganda to prosecute the case it brought against Mr Sudhir Ruparelia regarding the defunct Crane Bank have defended themselves against the businessman's claims that they have a conflict of interest in the matter.

Mr Ruparelia, in an application supported by an affidavit this newspaper published verbatim on Thursday, claims that individual lawyers of MMAKS Advocates and AF Mpanga Advocates have acted as his lawyers in the past and that their representing Crane Bank in the case brought by Bank of Uganda against him amounts to a conflict of interest.

The lawyers are David Mpanga of AF Mpanga Advocates and Kanyerezi Masembe of MMAKS Associates.

Mr Ruparelia says he intends to call on the said lawyers as witnesses during his defence, and therefore that they are not qualified to represent Crane Bank (in receivership), which is suing him.

But in a jointly drawn statement, MMAKS Advocates and AF Mpanga Advocates deny that Sudhir is currently their client or has ever been.

The lawyers argue that Crane Bank, now in receivership, and Mr Ruparelia are two separate entities and representing the former cannot imply that they represented the latter even when he was a shareholder in Crane Bank.

The defence

In the joint statement of defence, the law firms state: "The claims of fraudulent extraction of monies by the 1st Defendant [Ruparelia] from the Plaintiff [Crane Bank], which are subject of this suit, only came to light subsequent to and by reason of a forensic audit carried out by PWC after the 20th October 2016 and were not known by anyone other than the 1st Defendant and his associates/co-conspirators prior to the issuance of PWC's forensic audit report."

The two law firms also separately deponed affidavits in defence of their instructions by Bank of Uganda to defend Crane Bank in the matter.

In his affidavit, Mr Ernest Sembatya, a partner at MMAKS Advocates states that the issues raised by Mr Ruparelia "are made by him, knowing them to be false and/or by reason of conflating Crane Bank Limited with himself".

He states that it is up to Mr Ruparelia to choose which law firm or lawyers to act for entities that sue him and it is a party's right to have their matters conducted by counsel of their choice.

"This Application is a clear abuse of process and a sinister attempt by SR [Sudhir Ruparelia] to control which Counsel will conduct this litigation against him with the hope that the contest will not be conducted by capable, ethical and incorruptible counsel of the 3rd and 4th respondents' choice," he says.

Mr William Kasozi, the managing partner of AF Mpanga Advocates on the other hand, says Mr Ruparelia's claims make many false assertions about "AF Mpanga, Advocates, in general, and my partner Mr. David F.K. Mpanga, in particular."

He says AF Mpanga Advocates since its founding in 2003, has never acted for Mr Ruparelia and none of its partners or associates have ever been engaged or done any legal related work for Mr Ruparelia and that nothing done by any of the Partners or Associates of AF Mpanga, Advocates legally or ethically disqualifies them from acting for the BoU or Crane Bank in receivership as alleged.

"... using my experience as counsel, this application appears to me to be an abuse of process and one in which the Applicant[Ruparelia] seeks to overbear and handicap the 3rd and 4th Respondents by depriving them of capable, ethical and incorruptible counsel of their choice," he says.

In a 14-page affidavit he filed in the Commercial Court last week, Mr Ruparelia includes Mr Kanyerezi and Mr Mpanga in his list of witnesses.

The case

On October 25, 2016 Bank of Uganda took over the management of Crane Bank and suspended all members of its board, saying the then biggest indigenous bank was grossly undercapitalised and posed a systemic risk to the country's banking sector.

BoU then transferred Crane Bank's assets and liabilities and sold to Dfcu Bank in January, and on July 13, 2017 announced that it had sanctioned the filing of a suit against Sudhir Ruparelia and his Meera Investments to recoup money that was "fraudulently extracted from, as well as losses that were caused to Crane Bank".

The suit seeks to recover a total of $93.8m (about Shs337b) and Shs60.3b from Mr Ruparelia, together with the freehold titles of Crane Bank's branches, general damages, interest and costs".

BoU instructed MMAKS Advocates and AF Mpanga Advocates (Bowmans Uganda) to represent Crane Bank.

The Bank accused Mr Ruparelia of fraudulently taking out $92.8m (about Shs334b) and another Shs8.2b of depositors' money from Crane Bank for personal gain.

BoU also accuses Mr Ruparelia of failing or refusing to remit more than Shs52b in workers' contributions to the National Social Security Fund.

Drama of suits

A citizen, Mr Derrick Nsereko, sued the Central bank requesting court to declare BoU officials culpable of statutory negligence and failure to comply with the Financial Institutions Act.

He said "the central bank acted in bad faith, negligently and in breach of duties in giving the bank a clean bill of health".

Then on July 25, the liquidated National Bank of Commerce (NBC) and former shareholder Amos Nzeyi sued Bank of Uganda, Crane Bank and its former owner Mr Ruparelia and a Kenyan tycoon Rasiklal Chhotalal Kantaria over Crane Bank taking over NBC's assets.

In the back and forth, it became apparent that BoU had entered a Confidential Settlement and Release Agreement (CSRA) signed between Mr Mutebile for BoU on behalf of Crane Bank Limited/CBL (in receivership) and Mr Ruparelia.

The latter agreed to pay $60m (about Shs214b) in cash and to transfer all freehold and mailo titles for land on which all Crane Bank branches around the country are sitting, as part of the "settlement consideration."

BoU ran to court after Mr Ruparelia, apparently, breached the CSRA but the businessman would later file a counter-suit before the Kampala High Court against Bank of Uganda (BoU) and Crane Bank Limited (CBL), seeking to be repaid $8m (about Shs 29b in accordance with an agreement he had signed earlier with the two.

Mr Ruparelia accuses BoU and Crane Bank of breaching the agreement under which he had so far paid them the $8million.

Then last month, Mr Ruparelia moved to the Commercial court seeking a default judgement after what he said was the failure of BoU to respond to his counter suit on time within the mandatory 15 days.

Last week, he petitioned the High Court, seeking to throw out MMAKS Advocates and AF Mpanga Advocates, the BoU lawyers and Crane Bank in receivership on mainly conflict of interest grounds.

The law firms have since responded calling his application a bluff and an attempt to determine who will prosecute him and his co-accused.


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