Bad Deals Banks Do: Hope for Dfcu Borrowers as It Emerges, Unless Miracles are Performed, All Mortgages from Defunct Crane Bank are Invalid

In Uganda, everything is possible, or so, goes the progressively proven adage. However, it will take miraculous divine intervention, first-class forgery, and or, a shameless strangle of the law, for Dfcu Bank to sort out the mess caused by their legal team, at the time they bought off the defunct Crane Bank, along with her incumbered assets, the Investigator can exclusively report.

By all measures, most Ugandans who secure loan facilities from commercial banks, would love to repay and rescue their mortgaged assets. However, Ugandan banks are proving to love the mortgages than recovering their money. This, they do by making it hard for the borrowers to rescue their staked, prized belongings. This, through altered computations and putting to use most of the desperate borrowers` ignorance of their systems.

It therefore would sound great for any borrower whose mortgage was bought alongside the defunct Crane Bank Limited (CBL)`s assets by Dfcu, to note that their titles are in a wrong place and can technically be rescued. Going by what is on our desk, all these mortgages hitherto registered with Crane Bank are as dead as the Bank itself. In actual sense, whatever Dfcu is holding as recoverable mortgages from the deceased Crane Bank, is illegally retained by them.

The Story

The story is that Dfcu is holding onto `byoya bya nswa` (hot air). It is a simple story whose particulars are just being complicated by legal minds via twisting and rephrasing the Queen`s language, and use of legal vocabularies. And it all started when Dfcu attempted to sell off one of the hitherto Crane Bank (CBL) customers` properties. These are registered under MP Electronics, and New Master Electronics, over an equally contested debt in Millions of USDs, allegedly secured from the dead CB.

At the Center: Counsel Timothy Kanyerezi Masembe (Courtesy Photo)

Currently, Dfcu legal brains of MMAKS Advocates are grappling with a case they themselves filed at the High Court`s Commercial Division, against the above-mentioned clients, and the Commissioner of Land Registration. It is a miscellaneous application number 1163/22, arising from civil suit number 0705/22 of the High Court, Commercial Division at Kampala.

In this case, Dfcu sought for an injunction to stop the Land Registration Commissioner from conducting a public hearing and or, make any inquiries whatsoever geared at effecting changes on titles held by them as mortgages. Dfcu further prayed to court, to stop the Commissioner from particularly deregistering MP Electronics and New Master Electronics properties, hitherto registered as mortgages in favor of the defunct CB.

The properties are comprised in LRV 4009, Folio 11, Plot 88 South, LRV 330, Folio 11, Plot 56 along Seventh Street in Industrial Area and, LRV 301, Folio 21, Plot 58, also along Seventh Street. These properties are among the several others worth hundreds of billion shillings from different clients, that were bought as transferable mortgages by Dfcu, from the defunct Crane Bank. For starters, Crane Bank is legally dead and resting in eternal pieces, her demise having been proven and declared real by the Supreme Court on August 26^th 2019.

By filing the application, Dfcu, through MAKKS Advocates, had smelt a rat when the Commissioner Land Registration had been successfully petitioned by MP Electronics and New Master Electronics. The latter, through their lawyers of Muwema and Company Advocates, had sought the Commissioner`s pronunciation on whether mortgages registered under a dead entity like Crane Bank, can legally be retained by Dfcu. After satisfactorily reading the law, the Commissioner summoned Dfcu for a public hearing.

In his August 4^th 2022-dated letter to the Ministry of Finance PS, the Commissioner, Mugaino Baker, narrated in detail how, mortgages registered under Crane Bank could not legally be retained by Dfcu or any other entity for that matter. “In light of the legal position as discussed above, pursuant to the provisions of Section 91 of the Land Act, I hereby invite all the parties for a public hearing in respect of this matter on 29^th August 2022 at 10:00 A.M,” wrote the Commissioner.

Center of Controversy: Dfcu Headquarters in Kampala (Courtesy Photo)

One would wonder what makes these particular mortgages invalid yet other banks have been sold and no such stories came up. Well, when one dies, they mostly leave a Will and the same is passed onto the Administrator General, to grant powers of attorney to the chosen family members. In this case, as Crane Bank was laid onto her death bed, herein termed as receivership, a Will was written in favor of Dfcu.

But for reasons best known to them, both Central Bank, whose external lawyers were MMAKS, and Dfcu lawyers `forgot` to transfer the mortgages in the specified time of twelve months. For the learners` sake, a mortgage is a registrable interest in land which can only be created, transferred, and assigned under a written deed signed by the land owner, in this case a mortgagor. This means that in absence of a registered transfer deed for each particular mortgage still registered under CBL, Dfcu is holding onto hot air.

Unless the law is politically strangled, forgery is made and, or a miracle is performed, all CBL mortgages under Dfcu custody can only qualify as legitimate mortgages only if each of the registered owners sign with them a fresh deed. Initially by law, these deeds would have been signed and transferred, on behalf of the demised CBL, by the Central Bank before twelve moths from the day CBL was declared dead, would elapse. However, they `forgot` to perform this noble exercise, and hence these series…

Their Say

In a bid to verify whether this anomaly was done by mistake, or intended, we labored to reach out to all parties. The Dfcu Ag. Chief Executive Officer, Mr. William Ssekabembe declined an interview and referred us to their Head of Marketing, Mr. Jude Kansiime. Kansiime, after several failed attempts, also referred us to Counsel Timothy Kanyerezi Masembe of MMAKS Advocates.

Masembe, to date, is about to honor his appointments with us. The registered proprietor of the mortgages under review, Salim Hillan, swears upon the living God that even the loan facilities themselves were a total sham and, his lawyer, Fred Muwema of Muwema and Company Advocates vows that his client can only lose this battle over his dead body! Watch this space…

Author Profile

Stanley Ndawula: Stanley Ndawula is a two and a half decades’ seasoned investigative journalist with a knack for serious crimes investigations and reporting. He’s the Founding Editorial Director and CEO at The Investigator Publications (U) Limited