Embattled tycoon Sudhir Ruparelia has filed his defense on fraud related cases brought against him by the Bank of Uganda (BoU).
This follows BoU’s decision to sue Sudhir, the founder and shareholder of the defunct Crane Bank and his investments firm Meera Investments Ltd on June 30 to recover about Shs400bn extracted fraudulently from Crane Bank together with Freehold titles of Crane Bank’s branches, general damages, interest and costs.
Crane Bank is also accused of not remitting US$1.4 million staff contributions to the National Social Security Fund (NSSF).
In the defense filed in Uganda’s High Court (Commercial Division) on Thursday through his lawyers Kampala Associated Advocates, Sudhir denies engaging himself in fraudulent transactions, arguing that BoU was well aware of all the transactions that Crane Bank carried out.
He adds that he wasn’t involved in the day to day running of Crane Bank since he was a non-executive director.
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of transferring titles from Crane Bank to Meera Investments, Sudhir says since Crane Bank had expansion plans, it had acquired a number of leases with different tenures; some seven years, 10 years among others.
He adds that the bank then took a commercial view that it was better in the long term to obtain freehold titles in lieu of the said leases.
“After the Plaintiff (Crane Bank) obtained over 14 freehold titles, it was considered that pursuant to the Land Act, the Plaintiff (Crane Bank) could not hold the land as a freehold owner since the Plaintiff is a non-citizen within the meaning of the Land Act,” Sudhir says in the 64-paged defense obtained by Business Focus.
He adds that the effect was that Crane Bank would have to extend its leases, pay fresh premiums with different landlords and negotiate new terms with different landlords around the country.
He explains that Crane Bank and Meera Investments (2nd Defendant) entered into a sale-and-lease back arrangement in order to protect Crane Bank’s long term interests.
“The Plaintiff (Crane Bank) still owns the buildings subject to the agreed ground rent,” he says, adding that the ground rent wasn’t exorbitant as alleged, but was reached on mutual understanding of both parties.
“At all material times, BoU was aware of these transactions,” Sudhir says.
He says the allegations are presumptuous, speculative and founded on fanciful reasoning and do not reflect realities of obtaining leasehold titles in Uganda.
While BoU claimed that Sudhir was related to Infinity Investments Ltd, one of the companies allegedly used to extract money from Crane Bank, Sudhir said he has never been a director, shareholder or beneficial owner of the company in question.
Bou Lawyers On The Spot
Sudhir further exposes BoU lawyers, who used to work for and advice Crane Bank. He says MMAKS Advocates was instructed by Crane Bank to conduct the recovery, sell the security and sue Mahmoud Bharwani, the owner of Infinity Investments Ltd after failing to pay back the loan.
“At all material times, the Plaintiff (Crane Bank) received legal advice and had the transaction structured by MMAKS Advocates, “ he says adding that the law firm handled the securitization, documentation and registration of credit and security documents of Infinity Investments facility and raised none of the issue to the Board that is now raised in the plaint.
He adds that the write-offs of loans were in accordance with Credit classifications and Provisioning Rules and didn’t absolve Infinity.
He blames the write-offs and high Non-Performing Loans (NPLs) to the poor performance of Uganda’s economy.
“The 1st Defendant (Sudhir) was a non-executive director and was by law not permitted to be involved in the day-to-day management of the Plaintiff (Crane Bank),” he says.
Sudhir reveals that some time in January 2017, through his representatives Kakembo Katende and Azim Tharani attended a meeting at the offices of MMAKS Advocates together with Masembe Kanyerezi and David Mpanga. The purpose of the meeting, he explains, was to share an alleged PWC forensic report indicating the alleged extraction of US$80m.
“At the said meeting, Mr. Masembe and Mr. Mpanga declined to share the PWC forensic report but instead rang the PWC “auditor” who allegedly made that allegation, put him on speaker phone and allowed only a few questions.
“The Auditor confirmed on a speaker phone that US$80m did not leave the Plaintiff in this alleged transction,” Sudhir says, adding that he has established that the alleged forensic report is actually a draft document created by PWC on 13th November 2014.
Sudhir says in case of any wrongdoing by his employees, they did it without his knowledge, but adds that they were approved by BoU as fit.
Sudhir also wants BoU to disclose details of dfcu’s acquisition of Crane Bank especially the transaction amount for the bank’s assets.