We embarked on this assignment to help each other avoid being fleeced by our bankers.
While we appreciate the valuable role that banks play in trying to elevate our lot monetarily, we are also awake to the fact that some exploit our vulnerability or lack of sophistication as far as their job is concerned, to cheat us (excuse the jest).
Today, we are considering a saga where one of the foreign banks operating in Uganda shrewdly dangled a disguised fake loan in the face of a desperate single mum of three kids. The bank carried out this kind of deception looking to grab the woman’s home complete with the land on which it stands.
The dishonest conspiracy kicks off in 2015 when Baroda’s bank manager in Uganda’s Eastern town of Mbale approaches Phelly Waburoko. The banker is out on the mission of alluring the woman to take out a loan worth UGX200m.
Phelly would prove an easy-going target for Baroda’s sophisticated deceit. For one, she was a single mum living with three kids. For two, she was struggling to take care of those issues as well as herself. She thus needed, even without saying it, money to get along in the circumstances.
Before deserting the family, the father of the kids, Dr Dominic Waburoko, had built a home for them. And as such, Baroda was targeting to snatch both the assets. But in the process, leaving the victim and her kids with no roof over their heads.
Dr. Waburoko had passed word of Phelly’s dismal monetary position to Baroda. After all, the man was part and parcel of the dirty plot that was waiting to happen. But how?
Dr. Waburoko had borrowed money from Baroda himself. He was now encountering problems of clearing the loan instalments as per schedules agreed upon. For that reason, Baroda was growing more and more wary of losing the funds loaned out to the medic.
For that matter, a wicked plot was hatched by the bank and the debtor. They conspired together to trap the single mum into clearing the debt herself. Failure of which, Baroda strategized to grab the roof off her head and that of her kids!
This was fundamentally the object of the foregone Baroda manager’s trip to Phelly. Having induced the single mum into applying for the loan, a relevant agreement was entered where the prospective borrower was convinced to surrender the Title for the house located on LRV 2205, Folio 6 Plot 40 Bungokho Road in Mbale.
Much as she was surrendering the home to the bank as a condition for the loan to be issued, Baroda was in actual sense going to hand the funds to a shoe company known as Era Shine Limited.
The shoe company was then supposedly going to give out a monthly monetary fee for the woman’s upkeep and that of her kids. Yet, the bank ended up, in actual sense, misapplying the loan funds to settling Waburoko’s debt as well as salaries for staff working at the man’s private clinic!
The bank would later embark on foreclosing the house for sale claiming how Phelly had failed to repay the loan! This is when the woman resorted to the High Court to rescue the family home. Her case was registered as civil suit number 55 of 2015.
Luckily for Phelly, Justice Andrew Bashaija ruled in her favor. This was in a judgment delivered on May 2nd 2017 at the Kampala Commercial Division of the High Court.
The judge found Baroda to have acted fraudulently in this transaction. While Phelly is the one who borrowed the money on behalf of the kids, the loan agreement showed that the bank was contracting with her and the kids.
This was vitally erroneous since the kids were minors who, according to the law and common sense, cannot enter into any binding agreement. For that reason, only, even without mentioning others, the transaction was null and void from the word go.
That the bank loaned the money to Phelly but then misapplied the funds to settle Waburoko’s indebtedness, and paying the staff of the man, was another thing which the Judge found to have been fraudulent in this matter.
If the bank had told Phelly the whole truth regarding how the money was going to be applied, the Judge noted, there was no way she would have risked surrendering her home to Baroda.
The judge repeated for emphasis sake, that in a situation where a third party is the one who is supposed to give in security for a loan to be used by another person or entity, the bank owes him a fiduciary duty to inform him or her how the money is going to be applied.
The Judge further faulted the bank for failure to sign the loan agreement as well as the mortgage deed. Only the borrowers affixed their signatures on the documents. So, honestly speaking, who was the lender in this case?
Resultantly, the judge asked Baroda to treat the transaction as a loss, then go back and carry out clean businesses. Bashaija further directed the bank to hand over the Title of Phelly free of any encumbrances.
Author Profile

- Mr. Stephen Kasozi Muwambi is a seasoned crime investigative writer, majoring in judicial-based stories. His two decades’ experience as a senior investigative journalist has made him one of the best to reckon on in Uganda. He can also be reached via [email protected]
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