Crane Bank Conundrum: Sudhir Accuses Central Bank of Killing His Bank and Presiding Over Its Burial

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Mutebile (L) and Sudhir

KAMPALA, Uganda: Property mogul Sudhir Ruparelia finally unleashed his defense yesterday evening. Until then, the public had been treated to one side of the whole story. That story was being propagated by the Central Bank (CB).

Such account by the CB piled all tribes of blame for the collapse of now defunct Crane Bank on its proprietor Dr. Sudhir Ruparelia. According to such account, Sudhir took out close to Ugx400b, among other alleged fraudulent dealings, from his former bank which allegedly led to its collapse.

The Central Bank filed its case at the Commercial Court close to three weeks ago through two law firms of MMAKS and A.F. Mpanga and Company Advocates. Upon receipt of summons to file his defense, Sudhir retained Kampala Associated Advocates to take on the CB.

Like we reported at the outset, Sudhir’s lawyers have since filed his defense. And the same is a chilling account detailing how the Central Bank led, by its governor Prof Tumusiime Mutebile presided over the death and burial of Crane Bank.

Victim of circumstances

Sudhir says his bank just like many other businesses encountered liquidity problems because of the slowdown in the economy starting in the year 2015 to 2016. That the economy was doing badly during that period and even now though recovering bit by bit, is common place.

Governor Mutebile himself as well as other relevant authorities including the President, ministry of finance officials as well as the International Monetary Fund (IMF) and the World Bank have all conceded this point on many occasions.

Everyone knows who is supposed to regulate the economy so that it does not encounter problems such as ones encountered by Uganda during the period above. For those who might not know, the persons paid to do this job are the people at the Central Bank superintended by Prof Mutebile himself.

Going by the above, one would forgive Sudhir for attributing the collapse of his bank on the slowdown of the economy which by the way, saw many companies running to the President for a financial bail-out that has seen one investor, Amina Hersi picking a staggering Ugx62Bn cheque from government to keep her Atiak Sugar factory afloat. Amina is one of the biggest debtors of Crane Bank. Her debt stands at a whopping Ugx111bn, according to an audit report t issued by the Price Water House audit firm.

On the other hand, Sudhir blames the collapse of Crane Bank on borrowers who took money to do business in South Sudan and the oil and gas sector. He says they failed to pay back after the war broke out in Southern Sudan and because the oil and gas business has been slow generally.

He adds that when he asked the Central Bank for permission to write off these loans, they authorities turned his request down.  Yet he had made some provisions to fix the problem of mounting non-performing loans.  More so, he adds, when some of the debtors asked for a bail-out from government in order to rejuvenate their businesses and then pay back, their requests were not honored.

“As a result of the slowdown in the business environment and the property market, there was an increase in NPA [Non-Performing Assets], which resulted in the plaintiff [Crane bank] becoming under-capitalized and necessitated an additional capital injection,” expounds the businessman.

As Crane Bank agonized over the above issues, Sudhir adds the Central Bank dealt it another blow.  He explains, “In July 2016, Bank of Uganda [BOU] stopped Crane Bank from carrying out business relating to various facilities such as letters of credit, bank guarantees, bid bonds, performance bonds and writing of fresh loans.”

As if that was not crippling enough, Sudhir points out how the Central Bank again placed a blockade on his bank’s treasury bills. The bills in question had a maturity value of Ugx169Bn, we have gathered.

As Crane bank worked hard to weather the storm, social media went into overdrive with accounts of how the bank was to be closed down soon. This in turn saw many customers rushing to the bank in drove to make withdrawals.

At the end of the day, a total of Ugx250Bn had been withdrawn. To demonstrate the impact such rumors caused to the bank, it should be pointed out the Ugx250Bn was withdrawn within just 30 days.

The Crane Bank management still stood firm in the face of all these calamities. They turned to the Central Bank for a loan. They did this because BOU is the lender of last resort in as further as commercial banks are concerned. But, the central bank was in the mood of listening. It looked the other way!

More betrayals

In the hard-hitting defense, Sudhir goes on to show how the people at the central bank are actually suing him in bad faith and contrary to their written undertaking never to do as such.

“I signed an agreement with them (CB) barring them from suing me.” He has the agreement and is even exhibiting it in court. He signed the agreement on March 20, 2017. It is titled, “Confidential Settlement and Release Agreement.”

It reads in part, “This confidential   settlement and release agreement is in full, complete and final settlement of all claims that either party, or related parties and or shareholders, may have against the other, and each of Bank of Uganda and Crane Bank Limited hereby fully and finally releases and forever discharges and shall refrain from instituting, directing, procuring, instigating or maintaining all or any actions, claims, sanctions [whether administrative, civil or criminal in nature],”

The document goes on to clarify that the agreement was not in any way an admission of fact or liability on behalf of Sudhir. It adds that the party to the agreement would not aid any party to constitute a lawsuit basing on the agreement.

Merchants of fortune

He slams lawyers representing the central bank as Iscariots. He says both firms have represented him in the past yet are now representing his adversaries which runs counter to the Advocates-Act. The lawyers are MMAKS and A.F. Mpanga and Company Advocates.

But in particular, Sudhir says MMAKS and to be exact, Timothy Kanyerezi Masembe, one of the managing partners at the law firm was the one who represented him at the time Crane Bank was buying the National Bank of Commerce.

Afterthought

Turning to the forensic audit report by Pricewaterhouse on which hinges his prosecution, Sudhir dismisses it as unworkable. He says the matters the report is raising were never raised by the Central Bank nor the auditors during a meeting Crane Bank management had with them on November 13th 2014.

To the contrary, he adds that on April 14th 2015, BOU held a tripartite meeting attended by the BOU external auditors KPMG, which was convened ostensibly to approve Crane Bank’s accounts for the year ending December 31st 2014. He said, at the meeting the Central Bank did not raise any of the issues premised in the forensic report.

Overall, Sudhir counters almost 99% of the claims put forward by the Central Bank, saying they lack in merit, are mere conjectures and idle talk which court should not waste its previous time dwelling on at length but simply dismiss.

Anyways, Justice David Wangutsi who heads the Commercial Court is set to hear the case and will have the first say since the parties will have the right to appeal.

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