UK Supreme Court Orders DFCU Bank To Pay £170M To Former Crane Bank Owners Over Fraudulent Acquisition

UK Supreme Court Orders DFCU Bank To Pay £170M To Former Crane Bank Owners Over Fraudulent Acquisition

By Spy Uganda

Kampala: The Supreme Court in the United Kingdom has dismissed attempts by dfcu Bank and its shareholders, to block a £170 million (UGX825.8 billion) suit filed by shareholders of the defunct Crane Bank. 

The shareholders of Crane Bank initiated legal proceedings against dfcu Bank, its holding company dfcu Limited, and former dfcu Bank board chairman Jimmy Mugerwa (now dfcu Limited Chairman). The lawsuit also implicated Juma Kisaame, the former CEO of dfcu Bank, along with dfcu’s majority shareholders at the time, including CDC Group Plc, Norfinance AS, Rabo Partnerships B.V., and Arise BV. The directors of these shareholder companies, namely Stephen Caley, Michael Alan Turner, Albert Jonkergouw, Willem Cramer, Ola Rinnan, and Deepak Malik, were also named in the lawsuit.

The Crane Bank shareholders alleged that senior officials at the Bank of Uganda engaged in a corrupt scheme to take control of Crane Bank, selling its assets at an undervalued price and siphoning off public funds.

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UK Court Ruling

Crane Bank and its shareholders claimed that dfcu Bank and other defendants were involved in this fraudulent scheme, purchasing Crane Bank’s assets at a gross undervalue while also allegedly paying a bribe.

Initially, when the case was introduced, dfcu Bank and its shareholders challenged the jurisdiction of the London High Court, contending that the seizure and sale of dfcu was a sovereign act of the government of Uganda. They argued that the claims before the court were debarred by the foreign act of state rule, which prevents English Courts from adjudicating on the lawfulness of executive acts of a foreign state (Uganda) performed within its territory.

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On 19 October 2022 High Court Judge, HH Pelling KC gave dfcu Bank a temporary win and ruled that the matter was bound by the foreign act state of rule and therefore out of his jurisdiction. 

Crane Bank shareholders appealed this ruling and in a unanimous ruling on  26th July 2023, three London appellate court justices Sir Julian Flaux, Lord Justice Popplewell and Lord Justice Phillips overruled the High Court ruling and said that while the act of taking over Crane Bank and placing it under receivership by the Central Bank was a sovereign act, “the BoU, in acting as receiver, must be taken to have owed the usual common law and equitable duties to its principal (CBL) to act in good faith and to obtain a proper price for property under receivership”. 

“Further, the sale to dfcu Bank, as set out in the Agreement, was a straightforward commercial transaction on standard commercial terms: indeed the parties expressly declared that it was a commercial contract,” the Court of Appeal in London ruled.

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