By Ivan Okuda
Kampala — Former presidential candidate Amama Mbabazi and Prime Minister Ruhakana Rugunda, among other shareholders of the defunct National Bank of Commerce (NBC), have asked the Constitutional Court to block the planned sale of shares of Crane Bank which took over NBC when it was closed four years ago.
In a November 4 letter to the Court’s registrar, copied to the Chief Justice Bart Katureebe and his deputy Steven Kavuma, Mr Mbabazi’s lawyers John Mary Mugisha and Severino Twinobusingye asked for an expedited hearing of their case filed on September 28, 2012.
NBC shareholders, including businessman Amos Nzeyi, in 2012 secured a court order issued by Justice Remmy Kasule barring Bank of Uganda (BoU) officials from continuing with the sale of NBC pending disposal of a case challenging the closure that year.
The Central Bank at the time said the court order had been overtaken by events since it was issued after it transferred NBC assets, liabilities and customer to Crane Bank, which BoU took over a fortnight ago.
This prompted NBC shareholders to, through the Attorney General, sue the officials and government (in constitutional petition number 42 of 2012-Humphrey Nzeyi versus BoU and eight others) for contempt of court.
Justice Kasule on February 15, 2013 maintained and extended an interim order earlier issued by Justice Kavuma until determination of a constitutional petition challenging takeover of NBC. Neither the contempt of court case nor the substantive application has been heard ever since. Following BoU’s takeover of the under-capitalised Crane Bank about two weeks ago, the government announced it is in talks with potential investors to buy some of the bank’s shares.
In last week’s letter written on behalf of Mr Humphrey Nzeyi, a son to businessman and NBC shareholder Amos Nzeyi, the shareholders warned prospective buyers of Crane Bank Ltd shares to “keep their hands off” as the takeover of NBC by Crane Bank remains a matter of litigation.
“We wish to express our deep concern that this related application to determine whether the various respondents committed acts of contempt of court has not been disposed either. To crown it all, the said (respondents) have had the audacity of proceeding to commit the very acts they are prohibited from doing involving transferring the assets of the NBC (U) Ltd to third parties; thereby infringing on our client’s fundamental rights,” the letter reads in part. Judiciary spokesman Solomon Muyita said he had not seen the letter and he would need to “consult with my superiors to establish what response they have given to the petitioners’ lawyers.”
Lawyers Mugisha and Twinobusingye in their latest petition wrote that: “Notice is hereby given to the general public by the shareholders of the NBC (U) Ltd that Crane Bank which is being presented for sale is a subject of litigation in the above cases where NBC and all its assets and property worth $200m (Shs680b) are in Crane Bank Ltd. We equally warn all and sundry to keep their hands off the purported sale of the NBC assets under the disguised sale of Crane Bank Ltd.”
Mr Twinobusingye who said he was speaking on behalf Mr Mbabazi and 270 other shareholders of the bank, including Mr Nzeyi and premier Rugunda, said: “The constitutional court made a ruling wherein Justice Kasule prohibited the dealing in any way; be it winding up or sale of NBC until the Constitutional Court petition number 44 (challenging BoU actions) has been disposed of. That ruling is still in force to the extent that the petition and all applications arising from it have not been determined.
We have now learnt that they are selling Crane Bank but how many banks are they selling? My clients’ view is that it is dangerous for anyone to attempt to buy Crane Bank when these matters have not been resolved.”
Background
Bank of Uganda revoked the license of the National Bank of Commerce (U) Ltd and ordered the winding up of its business under Sections 17(f), 89(2)(f) & (7)(c) and 99(1) of the Financial Institutions Act 2004.
“… the continuation of NBC’s activities is detrimental to the interests of its depositors,” said Mr Kasekende at the time. BOU moved to suspend the management and board of directors of NBC before transferring deposits, accounts and assets of the bank to Crane Bank with effect from October 1, 2012.