Crane Bank Shareholders Vow To Pursue DFCU Bank, Its Owners In English Courts After Winning In London

By Gad Masereka

After recently obtaining an English appellate court order requiring dfcu Bank, its former management, and directors to respond to allegations that they engaged in corruption and bribery of Central Bank officials in order to acquire the former Crane Bank at a discount, shareholders of the now-closed Crane Bank have welcomed the ruling and vowed to continue seeking justice in English courts.

According to the shareholders of Crane Bank in a media release on Friday, July 28, 2023, stated that they were “delighted” with the Court of Appeal’s decision, which “vindicates their position” and allows their claim for hundreds of millions of US dollars against dfcu Bank, its executive directors, non-executive directors, and shareholders to move forward and be heard by the English courts.

Shareholders of Crane Bank sued dfcu Bank, its holding company, dfcu Limited, Jimmy Mugerwa, the former board chairman of dfcu Bank (who is now chairman of dfcu Limited), Juma Kisaame, and William Sekabembe, the bank’s former managing director and executive director, in the £170 million (UGX798.2 billion) lawsuit. Additionally named in the lawsuit are the directors of each of the shareholder companies, including Stephen Caley, Michael Alan Turner, Albert Jonkergouw, Willem Cramer, Ola Rinnan, and Deepak Malik, as well as CDC Group Plc, which at the time held a majority stake in dfcu.

“Crane Bank asserts that senior former Bank of Uganda officials conspired in a shady conspiracy to seize control of Crane Bank, sell its assets for a vastly undervalued sum, and steal public monies. The statement from the shareholders of Crane Bank claimed, “Crane Bank claims that dfcu Bank and the other Defendants participated in the fraudulent plan and purchased Crane Bank’s assets at a gross undervalue, while also effectively paying a bribe.

The majority shareholders at the time, CDC Group Plc, Norfinance AS, Rabo Partnerships B.V., and Arise BV, as well as the respective directors of these shareholder companies, namely Stephen Caley, Michael Alan Turner, Albert Jonkergouw, Willem Cramer, Ola Rinnan, and Deepak Malik, are all named as defendants in the £170 million (UGX798.2 billion) lawsuit.

However, when the case first came up for mention, dfcu Bank and its shareholders separately contested the London High Court’s jurisdiction over the matter, asserting that the government of Uganda’s seizure and sale of dfcu constituted a sovereign act, and as such, the claims brought before the court were barred by the foreign act of state rule. The rule prohibits English Courts from ruling on the legality of executive acts of a foreign state (Uganda), undertaken within its territory and in accordance with its laws.

It was one of the top 5 banks in the nation when the central bank decided to shut down Crane Bank. Shareholders of Crane Bank want the London Courts to look into how the bank was sold to dfcu and what role dfcu managers and directors had in that process.

On October 19, 2022, High Court Judge HH Pelling KC concurred with dfcu Bank and made a decision that the case was outside of his jurisdiction because it was governed by a foreign act state of rule. Sir Julian Flaux, Lord Justice Popplewell, and Lord Justice Phillips of the London Appellate Court, however, unanimously overturned the High Court’s decision on July 26, 2023, and stated that while the Central Bank’s takeover of Crane Bank and subsequent placement of it under receivership was a sovereign act, “the BoU, in acting as receiver, must be taken to have owed the usual common law and equitable duties to its principal (CBL), to act in good faith and to obt

The Court of Appeal in London found that the sale to dfcu Bank, as described in the Agreement, was a simple business transaction on conventional commercial terms: in fact, the parties expressly proclaimed that it was a commercial contract.

“Regardless of the reason the BoU entered it and granted associated dispensations, I am of the opinion that it is well conceivable, at the very least, that the sale by the BoU as the receiver was commercial conduct. Therefore, it might be argued that the jurisdictional issue should have been resolved because the claim is not precluded by the foreign act of state concept. Therefore, on this ground, I would grant the appeal, Sir Julian Flaux ruled in his lead judgement.

Additionally, the court ordered dfcu Bank to pay £1,875,000 (UGX8.8 billion) in court costs to shareholders of the erstwhile Crane Bank Limited (CBL). The quintet was also ordered to repay the £1,250,000 (UGX5.9 billion) in expenses that the CBL shareholders paid to them on October 27, 2022, after the High Court initially dismissed their primary legal claim, within 14 days and with 4.5% interest each year.

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The foreign act of state theory cannot be used by the dfcu or the other defendants to escape responsibility. The shareholders of Crane Bank stated in their statement that they would continue to zealously pursue their claim as part of a just legal procedure before the English courts.

They robbed my bank, but Sudhir Ruparelia promises they will compensate.

The most recent victory in a London Court of Appeal adds to the numerous prior victories in court that Dr. Sudhir Ruparelia and the Crane Bank shareholders have achieved over the course of their now seven-year quest for justice.

After the receivership ended on January 20, 2018, Uganda’s Supreme Court ruled in July 2022 that the Bank of Uganda must give Crane Bank Limited back to its owners. This came after the Bank of Uganda’s case against Dr. Sudhir Ruparelia, one of the co-founders of Crane Bank and the second-largest shareholder at the time of closure, collapsed and was dismissed. When the receivership period had passed and Crane Bank was no longer technically under the Central Bank’s control, attempts to liquidate the bank in November 2020 were unsuccessful as well.

Dr. Sudhir Ruparelia, the co-founder of Crane Bank and the second-largest shareholder at the time of the takeover, explained why the shareholders chose to go to the London Court, even after repeatedly defeating the Central Bank in Ugandan courts. He said they did so in order to hold the dfcu Bank’s shareholders who took part in the transaction accountable.

“This was a business transaction between the foreign shareholders of the dfcu Bank, who are development finance institutions (DFIs) situated in Europe, the majority of which are controlled by the governments of their respective nations. These DFIs exclusively preach about their good deeds as they travel the world. This case is intended to highlight the harm that some employees of these institutions are causing in developing nations, such as when they illegally seize the assets of other companies, as happened in the Crane Bank case, according to Dr. Sudhir.

The UK government’s development finance agency, CDC Group plc, which has subsequently changed its name to British International Investment, was the main stakeholder at the time dfcu Bank completed the in-disputable transaction and is currently a development finance institution. Another co-defendant in the case, Norfinance AS, is owned by the Norwegian government, and Rabo Partnerships B.V. is a branch of the Dutch international banking and financial services group Rabo Group. Shareholders of Arise B.V., the current main shareholder in dfcu Bank, including Norfinance AS and Rabo Partnerships B.V.

He explained: “We had to take the case to Europe, where the case is also free from any interferences like politics and the government players, some of whom are still in positions of influence, because the majority of controlling interests and major decisions in these DFIs are taken there. These guys stole billions in Crane Bank’s assets and the money released by government to allegedly recapitalize the bank after taking it offer. Additionally, they took our bad loan book at Crane Bank for UGX 500 billion. Who knows how much of an impact that amount of money could have on the situation here?

“We have proof of this massive crooked enterprise. They will pay, he warned of these folks.