Hammis Kiggundu, a city tycoon won a landmark case against Diamond Trust Bank, Kenya and the Ugandan branches leaving Ugandans unable to understand the meaning of the case.
Here is a break down of the chronology
Ham borrows USD 50 Million and Ugx 100 Billion from Diamond Trust Bank, Uganda.
The bank, Diamond Trust – Uganda books the loan in Diamond Trust Bank – Kenya just like many Ugandan banks do, because of their limited capital investment.
Hammis Kiggundu signs the agreement with Diamond Trust Bank – Kenya in 2011.
He (Ham) starts paying well his loan (obviously system deducting monthly installments as per the loan offer contract.
Kiggundu goes to the Law Development Center, studies law. Since he was in borrowing business he concentrated on business law.
He realizes a loophole in the loan agreements (after reading Diamond Trust Bank – Kenya yet he applied for a loan in Diamond Trust Bank – Uganda).
He later withdraws all his money from Diamond Trust Bank, starts defaulting installments he was supposed to pay as part of the loan contractual fees.
Diamond Trust Bank – Uganda puts tycoon Kiggundu’s collateral on the market to recover the loan funds.
The tycoon later runs to court claiming the bank deducted his money from his account without his consent (the installments that the bank had recovered at first before the loan went bad) i.e the USD 23M and Ugx 34 Billion.
Ham Kiggundu’s biggest score in this case: Diamond Trust Bank – Kenya has no license from Bank of Uganda to do financial lending business in Uganda, neither does it pay taxes in Uganda. So, the loans extended to Mr Hammis Kiggundu by Diamond Trust Bank – Kenya are of no obligation on Ham Kiggungu to pay them.
Diamond Trust Bank Uganda also did not register Diamond Trust Bank – Kenya as the agent neither did Diamond Trust Bank Kenya register Diamond Trust Bank Uganda as its agent as per Kenyan banking laws.
Therefore judgement was that both Diamond Trust Banks should repay Ham USD 23 million and Ugx 34 billion which he had repaid on the loan with interest of 8% since it was not procedurely right for the two banks to work together in offering the loan.
Bank of Uganda and Uganda Bankers Association get worried as the business of banks booking loans in foreign banks is the order of the day in the sector so many borrowers may recheck their agreements and run to courts.