Former Crane Bank proprietor Sudhir Ruparelia and his company Meera Investments have Thursday filed their defense in the case brought against them by the bank, and sanctioned by Bank of Uganda.
In the case, Sudhir is accused of mismanaging Crane Bank and fraudulently extracting up to Shs 400Billion from its accounts.
The Central Bank and Crane Bank in the plaint now before High Court, want Sudhir and Meera to be compelled to return the money with interest.
Sudhir in a 60 page response filed at High Court, vehemently denied most of the accusations against him and his company.
In strong terms, Sudhir through his lawyers of Kampala Associated Advocates, termed the suit against him as “frivolous and vexatious, barred by law, barred by the principle of estoppel…and a representation of abuse of court processes.”
He added that the case was brought against him in bad faith, termed it as incompetent and asked that it is dismissed with costs.
Sudhir, in his response, vehemently denied causing the collapse of Crane Bank as claimed in the suit, and attributed this to the slowdown in the economy between the years 2015 and 2016.
Until October last year, Crane Bank was the fourth largest bank in Uganda with assets worth Shs. 1.8 trillion.
Between 2015 and 2016, he says, the bank had to make provisions for bad loans (known as Non-performing Assets or NPAs) which also affected other banks as the economy slowed, and that BoU was well aware.
He pointed out that a number of big customers had even sought for a government bailout to pay off loans they owed to Crane Bank.
“As a result of the slowdown in the business environment and the property market there was an increase in the NPA’s which resulted in the plaintiff becoming undercapitalized,” he said.
He also pointed out that in July last year, Bank of Uganda stopped Crane Bank from carrying out facilities like Letters of Credit, Bid Bonds, Bank Guarantees and writing of fresh loans, which crippled the bank’s business and caused it to lose many customers.
With these actions and as messages started spreading over social media that the bank was nearing closure, many more customers rushed to withdraw their deposits.
“Within 30days, an estimated UGX 250Billion was withdrawn by deposers.”
Sudhir denied fraudulently transferring freehold titles of 48 plots of land (where the bank has its branches) purchased and developed using the Crane Bank’s finances into the name of Meera Investments, from Crane Bank.
He says, the transfer, if any was not under his direction.
On claims that Sudhir fraudulently extracted USD 80million from Crane Bank, the tycoon argues that the bank is estopped (legally barred) from making this claim since it is based on a document authored by PricewaterhouseCoopers (PWC), an international audit firm, which document was issued in November 2014, two years before the bank was placed under receivership.
From this time, Sudhir says, neither he, nor any Crane Bank board member was asked any of the questions raised in the audit report. These questions, he adds, were never brought to the attention of Bank of Uganda, including in a meeting (BoU) had with Crane Bank’s external auditors.
Breach of Contract
Sudhir cited a Confidence Settlement and Release Agreement (CSRA) he entered with Crane Bank in March this year, whose terms, he says were breached once the bank decided to file the case against him.
Clause 7 of the said agreement stated; “Each Party agrees, on behalf of itself and on behalf of related parties, not to sue …prosecute or cause to be commenced or prosecuted against any other party…concerning the released claims in Uganda or any other jurisdiction.”
He argued, “The CSRA was supported by valuable consideration and was entered into freely and willingly between and among the parties.”
Bank of Uganda and Crane Bank however, argue that Sudhir failed to meet his end of the bargain by refusing to pay the money he committed to under the agreement; compelling them recently to rush to the office of the DPP, to ask that a criminal case is opened against him.
Meanwhile, Sudhir goes on to accuse BoU and Crane Bank of “intimidating, humiliating and blackmailing him” in a letter they sent him shortly before the suit was filed at High Court.
This, he argues, is in abuse of the Court Process, noting, “This honorable court cannot lend its process to blackmail which amounts to an abuse of court process.”
He went on to assert that the case where Bank of Uganda chose MMAKS Advocates to represent Crane Bank was in breach of advocate–client relation.
The law firm used to represent Crane Bank in other cases, while the bank was still under Sudhir.
This particular concern was raised recently in a parliamentary motion tabled by MP Nandala Mafabi, seeking a special committee to investigate Bank of Uganda. The motion was however blocked by Speaker of Parliament Jacob Oulanyah on prejudice grounds.
We will bring you more on Sudhir’s response