13 September 2017

Uganda: Sudhir, BOU Legal Battle Kicks Off

Kampala — The raging high-profile commercial legal battle between property mogul, Sudhir Ruparelia, and Bank of Uganda (BoU), kicks off today in Kampala.

BoU sued Mr Ruparelia and his Meera Investments in July, accusing the tycoon of fleecing the then Crane Bank of Shs397b in disputed transactions, a claim the businessman denies in his countersuit filed in the High Court recently.

In Mr Ruparelia's countersuit, the businessman accuses BoU lawyers (MMAKS Advocates and AF Mpanga Advocates) of conflict of interest and faults Bank of Uganda for breach of Confidential Settlement and Release Agreement (CSRA).

In the run up to the Crane Bank saga, it emerged that Mr Ruparelia and BoU authorities under Clause 7 of the CSRA had agreed not to sue each other.

Mr Ruparelia now wants a refund of $8m (Shs28.7m) and the titles on land in Industrial Area and Parliament Avenue.

Today, the head of the Commercial Court, Justice David Wangutusi, is set to hear three applications that have since arisen from the original suit lodged by BoU, including a request by BoU lawyers to be allowed to file their response to Ruparelia's countersuit.

The applications in the BoU case are to be heard today under the pre-trial session arrangement. They include; conflict of interest of BoU lawyers of MMAKS Advocates and AF Mpanga Advocates.

Under this application, Mr Ruparelia says some of the lawyers in the aforementioned law firms such as Timothy Masembe Kanyerezi represented him before and David Mpanga is a potential witness in this case since his law firm participated in the coming up of PWC report that implicated him in the alleged fraud and that because of that, he should instead be a witnesses and not a lawyer on the opposite side.

Although MMARKS at the weekend disowned Mr Ruparelia, the businessman in a September 11 rejoinder attached invoices from Mr Masembe to Meera Investments and receipts from MMARKS for the payment of professional fees and stamp duty.

"Any attempt to use the knowledge they obtained to my prejudice as a result of the instructions they received is manifest breach of MMAKS Advocates' fiduciary obligations. Mr Sembatya by purporting to reveal the extent of his instructions, moreover falsely, in order to prejudice me and even expand the allegations in the plaint is a clear violation and betrayal of my more than 12-year trust in MMAKS Advocates," Mr Ruparelia's rejoinder reads in part.

The BoU lawyers are expected to respond to these documents.

The other application expected to be heard today is that of extension of time as requested by BoU in connection with late response to the counter suit lodged against them by Mr Ruparelia for breach of the Confidential Settlement and Release Agreement.

Under this same application, Crane Bank (in receivership) wants to amend its original plaint and make changes with regard to the manner in which Rasiki Kantaria became a shareholder in Crane Bank and also bring an alternative cause of action against the businessman.

The last application is about former shareholders of defunct National Bank of Commerce (NBC), including businessman Amos Nzeyi, who are seeking to be added to the BoU suit against Mr Ruparelia.

In September 2012, BoU took over NBC before selling it to then Crane Bank in which Mr Ruparelia had shares. NBC was co-owned by former prime minister Amama Mbabazi, city businessman Amos Nzeyi, retired Supreme Court judge George Kanyeihamba, among others.

Mr Nzeyi, who sued Mr Ruparelia, contends that him and Mr Kantaria acted dishonestly in authorising the execution of the purchase agreement for NBC assets and did not meet the test of managing, controlling and owning the bank.

On Monday this week, Mr Ruparelia through his lawyers Kampala Associated Advocates (KAA) filed his response to oppose Crane Bank (in receivership) to amend its original suit to include an alternative action. The tycoon contends that the amendment is a means to defeat his defence that he has since filed based on clear facts.

"That by reason of the foregoing, I am advised by my lawyers of Kampala Associated Advocates, which reason I believe to be true that the proposed amendment prejudices me as it attempts to stop me from raising the point of law I had given notice that I was going to raise," Mr Ruparelia states in his application to oppose the amendment.

He adds: "That according to Margaret Kasule's affidavit, the proposed amended plaint is purportedly introduced as an alternative cause of action and in particular to secure the correlative rights of Crane Bank in receivership under the Confidential Settlement and Release Agreement."

The intended amendment, according to Mr Ruparelia, proposes that he received Shs35.8b instead of Shs35.2b from Mr Kantaria.

The businessman also fears that if the original plaint is amended, new issues might be introduced and that he may be ambushed.

Mr Ruparelia further contends that the money under the Confidential Settlement and Release Agreement was strict entitlement of BoU only and that Crane Bank in receivership has no right to $52m (about Shs187b) or any sum since the confidential agreement proposed payment of $60m (about Shs215b) to BoU.

KEY ISSUES

Conflict of interest. In Mr Ruparelia's countersuit, the businessman accuses BoU lawyers (MMAKS Advocates and AF Mpanga Advocates) of conflict of interest and faults Bank of Uganda for breach of Confidential Settlement and Release Agreement.

Receipts. Although MMARKS at the weekend disowned Mr Ruparelia, the businessman in a September 11 rejoinder to his affidavit, the property mogul attached invoices from Mr Masembe to Meera Investments and receipts from MMARKS for the payment of professional fees and stamp duty.

Extension. The other application expected to be heard today is that of extension of time as requested by BoU in connection with late response to the counter suit lodged against them by Mr Ruparelia for breach of the Confidential Settlement and Release Agreement.

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