Stanbic Bank Defeated In Multimilion Fraud Case, Ordered To Cough Over UGX180M To Christian NGO

Stanbic Bank Defeated In Multimilion Fraud Case, Ordered To Cough Over UGX180M To Christian NGO

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By Spy Uganda

Stanbic Bank Uganda has been defeated in a multibillion case for being negligent and failing to vet a community-based organization staff member who fraudulently withdrew over Shs 150 million of the organization’s money.

READ ALSO: Court Orders Stanbic To Cough Over UGX400m For Fraudulently Selling Customer’s Properties

This was in Justice Musa Ssekaana’s ruling in which he ordered the bank to cough €40,000 (about Shs 153 million) and interests to Christian Rural EyeSight Promotion Limited.

It all started sometime in 2017, through Xova AMPH GmbH as the processing agent, the Plaintiff (Christian Rural EyeSight Promotion Limited) applied successfully to M/S Novartis Pharma AG of Switzerland for a grant of Euros 40000 (Euros Forty Thousand only) for the sole purpose of improving Children Vision and EyeSight care in Mbale-Manafwa district.

CLICK TO READ FULL RULING

On the 12th of July 2017, the plaintiff issued invoice No.200 for the sum of 40000 (Forty Thousand Euros) excluding the sum of reimbursable local contribution on equipment of 6500(Euros six thousand five hundred only). Plaintiff signed a grant Agreement with M/S Novartis under which the project was to be implemented and further furnished its accounts details to which the funds were to be credited held with Centenary Bank Limited, Mbale Branch A/C NO.3110300715. M/s Novartis remitted the funds to the plaintiff but the same were intercepted, converted/ diverted, and credited onto Account NO. 9030013785278 held by the 5th Defendant on the 12th December 2017 in the sum of UGX 159,100,500/= and a further sum of UGX 27,638,880/= on the 13th April 2018.

The said account belonged to James Mwesigwa, a staff of Christian Rural EyeSight Promotion Wakiso while the money was withdrawn by a one Shafique Nkengero who had been endorsed by Christian Rural EyeSight Promotion Wakiso, as the sole signatory to the bank account.

READ ALSO: Stanbic Bank Rocked By Sex Scandal As Legal Boss Dumps MP Kasumba To Wed City Accountant

In 2018, Christian Rural EyeSight Promotion Ltd, which had sought the grant went to court seeking to recover its money. The organization sued Stanbic bank and Nkengero, James Mwesigwa, Julius Kabanda, and Sandra Mutesi all of whom were associated with the organization in Wakiso. Of the five accused parties, only Stanbic bank defended itself in court.

In their complaint, Christian Rural EyeSight Promotion Lwakhakha, Manafwa accused Stanbic bank of failing to vet its said customer, the Wakiso organization which impersonated them, and Nkengero who withdrew the money. The bank was also faulted for allowing Nkengero to withdraw the money as an individual yet the constitution of the organization stipulated that there shall be two signatories to the bank account.

Another issue was that when the funds were diverted to Stanbic bank, they were clearly indicated to belong to Christian Rural EyeSight Promotion Lwakhakha, Manafwa. This account was given by Stanbic bank itself and yet they proceeded to deal with another organization said to be from Wakiso.

In its defence, Stanbic argued that it did due diligence on the organization and Nkengero before dealing with them. It argued that Nkengero presented to the bank, documents with a special resolution of the central executive committee of Christian Rural EyeSight Promotion Wakiso, appointing him as the sole signatory to the bank account.

CLICK TO READ FULL RULING

Stanbic also argued that its customer had informed them that it had two branches and that’s why although the money was destined for the organization in Manafwa, they permitted access to the Wakiso branch. In his judgment, Ssekaana ruled that indeed Stanbic failed to carry out due diligence in opening an account and later accepting money transferred from a foreign bank.

He ruled that there was no single letter of introduction from Wakiso District Local Administration or local councils of the area introducing the organization or its membership and especially directors to the bank. The bank didn’t seek such information even after learning of the differences in the address of the original organization and the said branch in Wakiso.

“…In line with the doctrine of clear last chance, the receiving bank operates the account into which the funds are deposited. It is in the best position to compare account names with account numbers and to detect discrepancies or fraud as opposed to the sending bank,” said Ssekaana.

He further ruled that it is common knowledge that a community-based organization (CBO) is tied to a specific area and, it wouldn’t be possible that this particular one to have two branches, one in Lwakhakha and another in Wakiso.

“It should have aroused enough suspicion to decline the transaction for having a CBO in Wakiso and another in Mbale,” ruled Ssekaana.

“Notwithstanding the theft of identity of the Plaintiff, the remitter’s information noting the beneficiary as Christian Rural EyeSight Promotion Lwakhakha road, Manafwa District and not Christian Rural EyeSight Promotion Wakiso would still make the 5th Defendant liable for misappropriation/application of the funds.”

Who Is To Pay Who & How Much?

Ssekaana on costs ruled;

”Plaintiff brought this suit and severally against the Defendants for conversion of its funds in the sum of Euros 40,000. Plaintiff further sought a declaration that the 5th Defendant acted with negligence in consequence at which the 5th Defendant facilitated the fraud to be committed. The plaintiff, therefore, sought special damages, general and aggravated damages.”

CLICK TO READ FULL RULING

Ssekaana further ruled that according to Black’s Law Dictionary 7th Edition, every breach gives rise to a claim for damages and may give rise to other remedies. He added that even if the injured party sustains no pecuniary loss or is unable to show such loss with sufficient certainty, he has at least a claim for normal damages.

”The plaintiff has awarded Euros 40,000. Given that the 5th Defendant is a commercial bank; The plaintiff’s special damages shall attract an interest of 8% per annum from the date of filing the suit until payment in full,” he ruled.

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