Hajji Hamis Kiggundu with his lawyer Fred Muwema at commercial court on Wednesday Diamond Trust Bank is set to appeal the judgement of the High Court which declared syndicated loans as “illegal”, a ruling that threatens the future of Uganda’s banking industry and entire economy.
“DTB, in consultation with its legal advisers, has filed a notice of appeal against the judgement of Justice Henry Peter Adonyo,” the bank said in a statement on Thursday morning.
“We look forward to the expeditious resolution of the matter in the court of appeal and are confident that the case will be determined on its merits.” The Commercial Division Judge, Henry Peter Adonyo on Wednesday ruled that DTB Kenya (DTBK) acted illegally in lending money to Ham Enterprises owned by businessman Hamis Kiggundu.
DTB is battling Kiggundu over Shs 39.7bn which the businessman acquired to facilitate his businesses and defaulted on payment.
Adonyo said DTB Kenya didn’t have the license from Bank of Uganda as provided for under the Financial Institutions Act 2004.
Kiggundu, through his lawyer, Fred Muwema, argued that DTBK, was carrying out illegal banking business in Uganda by lending money to the first Plaintiff, Ham Enterprises.
Kiggundu further stated that Diamond Trust Bank Uganda was “facilitating and abetting the illegal conduct” of Financial Banking Business in Uganda contrary to the Financial Institutions Act.
In his ruling, Justice Adonyo faulted DTB Kenya for appointing its counterpart in Uganda to collect the loan facility from Ham Enterprises without fulfilling the set legal requirements.
The judge described the appointment of agents as “illegal, unethical and breach of trust.”
Justice Adonyo further said the “The Act contravened Financial Institutions Regulation number 5 and the first respondent (DTB Uganda) is culpable of breaking the law and is penalized for taking part in an unauthorized transaction.”
ChimpReports has learned that Justice Adonyo had by Wednesday evening not signed the ruling. The practice is judgements are signed after being delivered.However, when DTB lawyers asked for a signed copy of the ruling, they were told to “wait until next Monday.”Contacted, DTB lawyer, Kiryowa Kiwanuka confirmed this development, saying: “The judgement has not been released. Our clerk was told that it will be available next Monday.” Panic Bankers yesterday said the judgement had huge ramifications for the industry, for syndication, for Uganda as investment destination and capital flows.The official gave the example of Stanbic Bank, the largest financial institution in Uganda which can only lend up to $60m to […]