Businessman Francis Nekuusa and his wife Stella Nekuusa are embroiled in a court battle with Diamond Trust bank (DTB) over loans that amount to more than Shs 10bn in a case that could shed more light on what could be seen as suspicious banking practices in the country, writes DERRICK KIYONGA.
The case has seen both sides hire two of Uganda’s leading law firms – DTB through MMAKS advocates wants the couple to pay the humongous amounts of money without any further delay on grounds that they have documentary evidence to prove that the two borrowed money from the bank.
But the couple, through Kampala Associated Advocates (KAA), insists that they don’t owe the bank any money since all the money DTB is accusing them of taking accumulated as a result of the bank crediting their account without their permission, which, according to them, amounts to fraud.
DTB was the first to dash to the Commercial court earlier this year, saying that the couple accrued the said debt from the bank as a result of unpaid loans. The loans, the bank said, were meant to resuscitate a number of their businesses such as F&S Steel Industries Limited and Global Fuel Systems.
In the summary suit filed by MMAKS advocates, DTB broke down how the couple took the money in installments.
First, the bank alleged that couple signed as guarantors for the first loan bunch, which money was meant for F&S Industries Limited. The money was to a tune of Shs 1.3 billion.
This was followed by the couple signing as guarantor for another loan worth Shs 4.1 billion, which was to revitalize Global Fuel Systems Limited. As if that wasn’t enough, the bank insists that Francis and Stella, in their joint names, took another loan of Shs 4.3 billion followed by another which was in an overdraft format. This draft was valued at Shs 616.8 million
Since DTB had filed a summary suit, the defendants in this case – Francis and Stella – were not entitled to defend themselves as a matter of right, which is different in an ordinary suit. So, the couple had to obtain the leave of the court to defend themselves.
Consequently, through KAA, they filed an application for leave in order to defend themselves, where they denied being indebted to DTB, either in form of personal guarantor or as straightforward debt, as the bank claims.
In his affidavit in support of the application, Francis admits that on October 21, 2014, together with his wife, they executed a joint personal guarantor for F&S Steel Limited which was worth Shs 5 million, and not the billions that DTB talks about.
Furthermore, he admits that he executed an executive guarantee deed for a loan facility for Global Fuel Systems Limited, worth Shs 5 million. But when it came to he loan the couple took jointly, Francis says that it was worth only Shs 3 billion.
Francis, nevertheless, says in his affidavit that he knows that in its operation and conduct of his accounts, the bank has acted fraudulently by debiting his account with a number of fictitious transactions.
As a guarantor, debtor and customer, Francis says he asked the bank to explain and clarify what his terms were after he noticed a number of fictitious and repetitive transactions on his account. However, he says, DTB wasn’t receptive and simply ignored his request.
With the bank ignoring his queries, Francis says he looked for his own solutions by appointing auditors of Allied Certified Public Accountants to audit his account and establish what was going on with his account.
Through that audit, he says, he obtained information, which was to the effect that he might be in credit with DTB because of the “fraudulent and secretive nature of the transactions.”
“After repeated demands to avail the desired information, the respondent [DTB] totally refused to avail information of our bank statements, loans accounts, loans schedules,” Francis says. He adds: “I was forced to bring this to attention of the commercial banking department of Bank of Uganda.”
That instead of responding to the request to avail them information, DTB, according to Francis, simply just reminded them of the money they owed the bank. With that, Francis says, DTB filed a suit against him and his wife in which it demanded more than Shs 10bn.
In the case which is before Justice Christopher Madrama, Francis asserts that from the perusal of the documents in the suit, it’s clear that the DTB used both his and the wife’s accounts as a basis to carry out fraudulent transactions.
A closer look at the documents, he says, reveals that he was paying legal fees on transactions he had no idea about and he was purchasing property he has never owned and from persons unknown to him.
For instance, Francis says that documents reveal that he purportedly bought land from a one Gingo Mujje, purchased land from Broadway, paid fees to Muganwa advocates, yet he had no knowledge of all the transactions and he has never approved any of them. And yet these transactions attracted interest of 50 per cent per annum.
Although Francis admits that he and his wife signed the loan facility letter dated February 29, 2016, which amounted to Shs 3.5bn, he says neither him nor the wife received the same amounts nor did they utilize the money.
The documents also show that on March 23, 2016 DTB debited Francis’ account with Shs 2bn and Shs 1bn, which brought the total amount of the utilized overdrafts to more than Shs 3.3bn.
Francis further asserts that the bank proceeded to advance a loan of Shs 3.5 billion in their account, the effect of which, he says, was to clear the fictitious overdraft. This particular loan of Shs 3.5bn, according to Francis, was never disbursed to him.
With such anomalies, the couple says there is a need for a reconciliation of their accounts to determine how these transactions came about.
“That the respondent [DTB] has not provided us with a copy of the loan account indicating corresponding entry with our accounts and has only provided loan schedule in respect of Global Fuel Systems Limited and our personal account,” Francis states, “which is not indicating what is allegedly owned against our accounts…”
On June 29, 2017, Justice Madrama allowed the couple to file their defence within 14 days in what could be a legal showdown that could expose banking practices that have never been seen before.
Credit: All Africa