By Andrew Irumba Katusabe
After taking his battle over Crane Bank through Uganda’s banking and legal circles, billionaire Sudhir Ruparelia has now taken the fight to Europe, and Rabobank, the Dutch banking giant, is in the spotlight. The battlefield is London.
The amount at stake? At least €200 million (about UGX 880 billion) in damages, and Sudhir’s lawyers expect the claim to increase with time because of costs.
So, How Did We Get Here?
Tycoon Sudhir Ruparelia and other colleagues founded Crane Bank in the 1990s. In 2016, the Bank of Uganda placed the bank under administration, saying it was in serious financial difficulty.
Three months later, Crane Bank’s assets and liabilities were sold to DFCU Bank.
DFCU was indirectly owned by investors including Rabo Partnerships, a subsidiary of Rabobank, alongside development-finance institutions FMO and Norfund.
And this is where the story takes an interesting turn.
Rabobank itself has deep roots in agricultural cooperative banking in the Netherlands. So the question now hanging over the Dutch banking giant is how an institution that began with farmers and horticulturists ended up connected to the controversial takeover and sale of a Ugandan bank.
Sudhir and the other former Crane Bank owners allege that the bank was unlawfully sold for substantially less than its market value and that Rabobank-linked interests benefited from the transaction.
Rabobank and the other defendants have disputed the allegations and declined to comment on the substance while the case is before the courts.
One of the most contentious allegations concerns $27.5 million, approximately €23 million (about UGX 101 billion).
According to Sudhir’s claim, two former Rabobank bankers who sat on DFCU’s board received an email in late 2016 indicating that this money, from the sale of a portfolio of Crane Bank loans, would go to the Bank of Uganda without being recorded.
Dr.Sudhir, who doubles as Nepalese consul to Uganda characterises the alleged payment as bribery.
He further alleges that DFCU acquired Crane Bank without an independent valuation and had been approached by the central bank before the administration, with a promise of a price well below market value.
But DFCU tells a very different story.
In its defence, DFCU rejects the accusations and says Crane Bank was seriously undercapitalised. It says the €23 million (about UGX 101 billion) payment had a legitimate purpose: repaying emergency support provided by the central bank.
DFCU also says KPMG assisted with the valuation and points out that the claimants never challenged Crane Bank’s administration in the Ugandan courts.
Uganda’s Parliament criticises the sale
In 2019, Parliament concluded that the Bank of Uganda had broken the law on several points in relation to the transaction.
Now, years later, the dispute has reached the UK courts.
The question before the London court is whether DFCU and its partly Dutch-backed ownership structure can be held responsible for the alleged wrongdoing.
From Agricultural Cooperatives To A €200 Million Court Battle, there is an almost striking irony in the journey.
Rabobank grew out of Dutch agricultural and horticultural cooperatives. Today, one of its subsidiaries is connected to the ownership structure of DFCU, the bank that acquired Crane Bank after its 2016 administration.
In other words, a financial institution born out of agricultural cooperation in the Netherlands has found itself drawn into a Ugandan banking dispute involving allegations of an unlawful sale, a disputed €23 million (about UGX 101 billion) payment and a damages claim of at least €200 million (about UGX 880 billion).
But beneath the irony is a serious legal fight over money, ownership, banking regulation and corporate responsibility.
The claim currently stands at at least €200 million (about UGX 880 billion).
And according to the report, Sudhir has already spent tens of millions of euros (tens of billions of UGX) on the litigation and vowed to continue funding the case till its logical conclusion.
The claimants have also obtained a large volume of internal emails, presentations and confidential documents, with lengthy hearings expected.
So after the Bank of Uganda and DFCU chapters, Sudhir’s Crane Bank battle has entered its Dutch chapter.
