By Andrew Irumba
CDC, Britain’s oldest Development Finance Institution has announced it is quitting its business partnership with the Development Finance Company of Uganda (DFCU).
CDC Group plc (formerly the Commonwealth Development Corporation (CDC), and previous to that, the Colonial Development Corporation (CDC) is a development finance institution owned by the UK Government. The Department for International Development is responsible for CDC, with shareholder duties managed by the Shareholder Executive.
CDC has an investment portfolio valued around £4.8 billion and since 2011 its main focus is on the emerging markets of South Asia and Africa.
In Uganda’s DFCU Bank, CDC owns 9.97% shares.
CDC on June 14, 2018, wrote to the DFCU’s board, indicating it was intending to sell its stake. According to sources, their exit from CDC is more connected to the controversial acquisition of city tycoon Sudhir Ruparelia’s Crane Bank in 2017.
Dr.Sudhir Ruparelia is the wealthiest East African and 18th richest person in Africa, according to a 2012 research by Forbes Magazine. He is Internationally connected businessman.
It is said that after Crane Bank shareholders led by Dr.Sudhir protested the takeover of their 48 branches controversially by DFCU, it upset the board after CBL insisted that the 48 Branches weren’t part of the Bank as they fall under Meera Investment Ltd,an independent company from Crane Bank from whom Crane was renting premises for the Bank. CDC and other two partners opposed the deal and accused DFCU bosses especially Juma Kisaame for not carrying out enough due diligence during the process of take over. This, according to them is a sign of unprofessionalism exhibited at the top level of the management and can’t be ‘swept under the carpet’.
Accordingly, CDC’s Investment Director in charge of Financial Institutions, Irina Grigorenko, said it was “undertaking a review of its investment in DFCU Limited which may lead to the disposal of some or all of its shares in DFCU over a short or medium term.”
DFCU and CBL took their battles to court. CBL accuses a number of top officials at Bank of Uganda for ‘connivance’ with DFCU and sale their Bank at ‘a samosa’
Immediately after the acquisition of Crane Bank, DFCU Bank’s total assets increased to a record Shs3 Trillion up from Shs1.7 Trillion in 2016. The bank explained in their annual report that the boost in assets was a result of the acquisition of Crane Bank assets. There is a pending case in court where former owners of Crane Bank are seeking recovery of assets, more so fixed assets.
The statement shows that DFCU’s core capital increased to Shs362 billion in 2017 up from Shs188 billion in 2016.
The management has earmarked Shs51 billion for dividends compared to Shs18.5 billion in 2016, meaning each shareholder will have more cash on their accounts.
Bank of Uganda transferred the liabilities (including deposits) of Crane Bank to DFCU Bank in 2017.
The leaked agreement between Bank of Uganda and DFCU indicated that the external owned Bank got Crane Bank with assets valued at Shs1.3 trillion for just Shs200 billion (payment for liabilities).
The Agreement did not state the amounts of money paid by DFCU as a net purchase price, or the payment terms for monies or the assets (outside branches) that DFCU was taking over.