Internal Strife Erupts At Tropical Bank Over UGX 21 Billion Loan Linked To Sudhir’s Prime Finance

By Gad Masereka

Tropical Bank Uganda is embroiled in a fierce internal battle over a growing financial crisis involving a UGX 21 billion loan linked to Tycoon Sudhir Ruparelia’s Prime Finance Company Limited. The dispute stems from an unresolved loan that has sparked major infighting among top management, with allegations of fraud and mismanagement now swirling within the bank’s corridors.

The saga began in March 2020 when Prime Finance extended a loan of UGX 5.7 billion to IT Office [U] Limited, with Tropical Bank acting as the guarantor. The loan, which carried a 5% monthly interest, was supposed to be repaid by July 2020. However, no payments have been made in the four years since, causing the debt to snowball to over UGX 21 billion.

Initially, IT Office [U] Limited requested the loan to settle its debts to Tropical Bank, which in turn issued an irrevocable guarantee to repay Prime Finance should IT Office default. Despite this agreement, Tropical Bank has failed to honor its commitment, leading to tensions within the institution.

At the heart of the conflict are accusations of fraud, with the bank’s board of directors claiming the transaction was unauthorized. However, senior staff, including the Executive Director and Head of Credit, argue that the agreement was fully approved and sealed by the bank’s official stamp, making the bank legally bound to pay the loan. According to internal sources, the loan was intended to help recapitalize IT Office and enable the company to secure additional funding from Tropical Bank, using its assets as collateral.

As the crisis deepened, Prime Finance sought legal recourse, filing a lawsuit against both Tropical Bank and IT Office [U] Limited. In a ruling in 2021, the court ordered Tropical Bank to repay UGX 6.84 billion, with a 5% monthly interest rate until the full amount was settled. Despite this, Tropical Bank has yet to comply, prompting further tensions within the bank’s leadership.

The situation has led to a power struggle among the bank’s senior executives, with Managing Director Abdul Aziz Mansul and Head of Compliance Caroline B Ogwang reportedly teaming up with former Head of Recovery Joweria Mukalazi to oust the former Executive Director and other senior staff members who had supported the loan agreement. Mukalazi has since been promoted to acting Executive Director, deepening divisions within the bank.

Insiders reveal that the ongoing infighting has severely affected the bank’s operations, with resignations from key departments and rival factions within the management. The Bank of Uganda has advised Prime Finance to seek remedies under the Contract Act, recognizing the irrevocable commitment made by Tropical Bank at the time of the loan.

With Tropical Bank’s financial future hanging in the balance and the dispute showing no signs of resolution, the bank is facing mounting pressure to settle the debt and restore stability within its ranks. Meanwhile, the scandal continues to cast a shadow over the local banking sector, raising concerns about governance and accountability in Uganda’s financial institutions.