Fresh details have emerged as to why Bank of Uganda (BoU) dropped lawyers from MMAKS and AF Mpanga in mediation talks between Crane Bank (in receivership/BoU) and property mogul Sudhir Ruparelia.
Daily Monitor reports that it was the Principal Judge Yorakamu Bamwine who advised Bank of Uganda to appoint new lawyers after City tycoon Sudhir Ruparelia and his team threatened to walk away from mediation.
The parties had earlier been advised by the head of Commercial Court judge, David Wangutusi to seek for an out-of-court settlement before it’s too late.
The decision to drop MMAKS Advocates and AF Mpanga Advocates, who represent Bank of Uganda in the case of Crane Bank liquidation (takeover), came after Mr Ruparelia rejected mediation talks involving the two law firms he accuses of conflict of interest.
The businessman had vowed not to take part in any talks when MMAKS and AF Mpanga law firms are involved.
But when justice Bamwine took over from city lawyer, Ms Harriet Magara as the mediator in one of the high-profile cases, he advised BoU to appoint new lawyers.
He also informed BoU officials that Mr Sudhir had raised serious objections bordering on conflict of interest and insisted that MMAKS and AF Mpanga were his witnesses in the main case.
BoU officials according to other sources in Judiciary obliged to hire new lawyers after the meeting with Mr Bamwine.
In the following days, they contracted Sebalu, Lule & Co. Advocates to represent them in the Crane Bank case for mediation purposes.
MMAKS and AF Mpanga are not yet out of the main case before the Commercial Court and they will know their fate on December 21 when justice Wangutusi delivers his ruling in the conflict of interest case filed by Mr Ruparelia.
Mr Ruparelia, who insists that BoU lawyers are his principal witnesses in the Crane Bank case, is represented by Kampala Associated Advocates (KAA).
This newspaper understands that in the November 2017 meeting, the Principal Judge advised authorities at BoU to drop their lawyers and give mediation a chance. He also noted that the case involves alot of money and that an out of court settlement should be taken seriously by both patries.
Mr Ruparelia filed in court an application saying MMAKS Advocates and AF Mpanga Advocates who represent Bank of Uganda in the case of Crane Bank liquidation (takeover), have a conflict of interest because they were his lawyers before.
He argued that representing his seized Crane Bank in the case of Bank of Uganda against him amounts to a conflict of interest.
In his application, Mr Ruparelia states that David Mpanga of AF Mpanga Advocates and Mr Timothy Kanyerezi Masembe of MMAKS Associates, are witnesses in his defence and therefore are not qualified to represent Crane Bank (liquidated), which has sued him.
The tycoon wants the lawyers disqualified from the case. He contends that if the two law firms are allowed to handle the case, it will be breach of trust since they are already privy to information that can prejudice the trial.
Mr Ruparelia has since told court that the two law firms carried out legal analysis for PriceWaterHouse Coopers which was contracted by Bank of Uganda to conduct an independent audit of Crane Bank.
In Mr Ruparelia’s countersuit, the businessman again accuses BoU lawyers (MMAKS Advocates and AF Mpanga Advocates) of conflict of interest and faults Bank of Uganda for breach of Confidential Settlement and Release Agreement (CSRA).
In the run up to the Crane Bank saga, it emerged that Mr Ruparelia and BoU authorities under Clause 7 of the CSRA had agreed not to sue each other. Mr Ruparelia now wants a refund of $8m (Shs28.7m) and the titles on land in Industrial Area and Parliament Avenue.
Mr Ruparelia says some of the lawyers in the aforementioned law firms such as Timothy Masembe Kanyerezi represented him before and David Mpanga are potential witness in this case since his law firm participated in the coming up of PWC report that implicated him in the alleged fraud and that because of that, he should instead be a witnesses and not a lawyer on the opposite side.
Although in a joint defence, MMAKS Advocates and AF Mpanga Advocates disowned Mr Ruparelia in a September 11 rejoinder attached invoices from Mr Masembe to Meera Investments and receipts from MMARKS for the payment of professional fees and stamp duty.
“Any attempt to use the knowledge they obtained to my prejudice as a result of the instructions they received is manifest breach of MMAKS Advocates’ fiduciary obligations.
Mr Sembatya by purporting to reveal the extent of his instructions, moreover falsely, in order to prejudice me and even expand the allegations in the plaint is a clear violation and betrayal of my more than 12-year trust in MMAKS Advocates,” Mr Ruparelia’s defence reads in part.
Although BoU accepted to hire new lawyers, lawyers Mpanga and Kanyerezi, aver that Crane Bank, now in receivership, and Mr Ruparelia are two separate entities and representing the former cannot imply they represented the latter even when he was a shareholder in the defunct bank.
The two law firms separately swore affidavits in defence of their instructions by Bank of Uganda to defend Crane Bank in the case.
On October 25, 2016 Bank of Uganda took over Crane Bank and suspended all members of its board, saying the then biggest indigenous bank was incurably drained financially and posed a systemic risk to the country’s banking sector.
The central bank later sold Crane Bank to Dfcu Bank in January this year.
On July 13, Bank of Uganda opened a suit against Mr Ruparelia and his Meera Investments company, seeking to recover about Shs400b that Mr Sudhir allegedly extracted from Crane Bank. It is also seeking to recover freehold land titles for the Crane Bank branches, general damages and costs of the suit.
But in his defence, Mr Ruparelia denied any wrongdoing in a Shs397b case in the Commercial Court. He also denied responsibility for the collapse of the bank which was taken over by Bank of Uganda (BoU) and liquidated to dfcu bank in October last year.
In his defence, Mr Ruparelia blames the problems of the Crane Bank on the weak economy and said at the hearing of the case he will adduce evidence to prove he did not defraud Crane Bank of the alleged money for his personal gain.
“The first defendant (Mr Ruparelia) shall contend that he did not commit any frauds as alleged or at all and shall put the plaintiff to strict proof. The first defendant further denies any extraction of money from the plaintiff [Crane Bank/Bank of Uganda] as alleged or at all and contends that he is not liable to refund or account for any monies as alleged by the plaintiff,” Mr Ruparelia states in his defence filed in the Commercial Court in August.
Court has since set December 21 to determine whether Bank of Uganda lawyers prosecuting the case against property mogul Ruparelia over closure of his Crane Bank are guilty of conflict of interest in the matter.
Mr Vincent Mugabo, the registrar in the Commercial Division of the High Court, has since issued a notice for the ruling on the preliminary matter raised by Ruparelia.
Mr Mugabo last week warned both parties that should they or their representatives fail to appear on the said date court will proceed to deliver its ruling in their absence.