Finance (520)

How KCB Bank Laundered $79m & Shs315m Using Illegal Tirupati Bank Accounts

Arguably East Africa’s biggest commercial bank, KCB Bank is in trouble after a client in Uganda went to the high court of Uganda at Kampala (Civil Division) accusing the regional bank of breach of contract, negligence, fraud and money laundering.

According to court submissions, Tirupati Development (U) Limited (the plaintiff) says KCB Bank Uganda and KCB Bank Kenya from whom it had acquired a US$ 7,000,000 loan in 2012 created illegal bank accounts with her consent and used it to launder money.

Tirupati through her lawyers Aegis Advocates and Kirunda & Wasige Advocates say that in August 2016, KCB Bank ‘opened and operate two separate US Dollar-denominated loan accounts the names of the Plaintiff without the Plaintiff’s knowledge or consent.’

These were account number 1059906732 with KCB Bank Kenya and account number 2150226057 with KCB Bank Uganda. Also, in January 2017, KCB Bank Uganda opened and operated another new US dollar current account No. 2290351628 in the names of the plaintiff without the plaintiff’s authorization, consent or knowledge.

Tirupati says they never received any ‘coherent explanation’ for opening these ‘illegal’ accounts and when they demanded a reconciliation of accounts, clarity on the status of their loan repayments, and bank statements, none was honoured causing the plaintiff not to meet her loan obligations.

Inconsistent Loan Statements

Tirupati, between 2018 and 2021, wrote a series of letters to the banks raising several observed irregularities on its bank accounts including committed fraud and conspiracy to defraud. The bank failed to explain the inconsistent loan statements and balances observed by the plaintiff on her accounts.

Tirupati accuses the 2nd and 3rd defendants of misappropriating and occasioning the disappearance of the plaintiff's funds in the sum of US$ 995,466.78 deposited on the plaintiff's current accounts 2150226057 and 1059906732 to aid her loan repayments.

"The facts alleged above show that the 2nd and 3rd defendants on several occasions dealt dishonestly with the plaintiff by acting without the authority and knowledge of the plaintiff, failing to provide explanations for their actions and concealing information about the plaintiff’s accounts," Tirupati said in the plaint.

Fraud And Money Laundering

Tirupati also believes that the banks were using bank accounts they created in their names to launder money thereby exposing the plaintiff and its directors to the potential prosecution for money laundering.

The plaintiff says KCB Bank failed to manage the risk of financial crime and IT fraud when they maintained separate ledgers for the plaintiff’s accounts. Similarly, Tirupati says, the bank utilized her accounts in the manner that made any audit trail difficult to avoid scrutiny by regulators and law enforcement in Uganda and Kenya.

In this claim of fraud and money laundering, KCB Bank facilitated the unauthorized use of the plaintiff’s accounts to transact in varying amounts between 2014 and 2021 totalling US Dollars 79,900,000 and 62 similar transactions totalling UGX. 315,992,747 which transactions bore no relationship to the plaintiff or its businesses for the period evaluated but appear in the names of the plaintiff.

"The plaintiff avers and contends that the 2nd and 3rd Defendant continue to this day to launder money through her named accounts. These actions did and continue to expose the plaintiff, its shareholders and directors to the legal and financial consequences and sanctions arising from the suspicion of engaging in illicit money laundering and probable terrorist financing, likely corruption, or payments procured through drug or child and sex trafficking through the illegal use of her accounts threatening her entire business enterprise."

Tirupati Makes Demands

With this suit, Tirupati wants the court to declare that KCB Bank breached the loan contract, is a fraudulent bank, neglected its fiduciary duties, failed to manage plaintiff accounts, failed to manage the risk of financial crime, cause the bank to return 20 certificates of title, account for all sums misappropriated with interest, declare that bank engaged in money laundering, pay fines and general damages and costs of the suit.

Loan Contestations

While the two entities agreed on a USD 7,000,000, the bank disbursed USD 6,990,000. The bank charged US$35,000 as a loan negotiation fee, a thing the plaintiff says was irregular because it was above the agreed amount and the bank refused to provide breakdowns of how the loan negotiation amount charged was arrived at.

At the time, the plaintiff held only one account with the first defendant vide, Account Number 2201449317 registered in the plaintiff’s name. And as collateral for this facility, the plaintiff agreed to and did provide the 2nd and 3rd Defendants a series of certificates of title to its properties.

Security Minister Jim Muhwezi Refuses To Rescue PPDA Boss Turamye From NWSC Shs17Bn Corruption Scandal

An old age idiom 'You Have Made Your Bed and Must Lie In It' comes to mind when you see Canon Benson Turamye, the troubled Executive Director of the Public Procurement and Disposal of Public Assets (PPDA), fighting hard to vend off an on-going investigation by the Inspector General of Government (IGG) that could see him end up in jail.

The IGG is investigating Turamye and other PPDA officials over allegations that they might have had a hand in a controversial procurement contract in which officials at the National Water and Sewerage Corporation (NWSC) purchased prepaid water meters worth Shs17Bn. Reports indicate that the PPDA boss turned a blind eye and allowed NWSC to proceed with the illegal contract.

To save his face, Turamye, reports reveal, tried to enlist the services of the Minister for Security Maj. Gen. Jim Muhwezi who he thought would influence the investigations in his favor. Unfortunately, the minister, whom Turamye, according to reports met at a hotel in Kololo, refused to have his name dragged in the corruption scandal.

This left Turamye butt naked and exposed to annals of the law. His attempts to frustrate and undermine Kamya’s investigation are yielding nothing and this is having Turamye running scared.

Before Muhwezi’s rejection, the PPDA board of director led by the Chairman Julius K. Ishungisa had similarly abandoned Turamye. Turamye had sought the intervention of the Board in the matter in a bid to use its powers to curtail the IGG from proceeding with the investigation.


Stanbic Bank Earmarks Shs60bn Booster financing To Support Schools Re-Opening

Stanbic Bank Uganda early January announced the immediate availability of Shs60billion in hugely discounted ‘booster financing’ to the education sector a move aimed at supporting the ongoing nationwide reopening of schools after nearly two years of inactivity. 

Under the discounted booster finance, schools are able to borrow up to Shs500M in collateral-free (unsecured) loans to prepare their institutions for reopening. Parents can also access up to Shs250million in unsecured loans processed digitally and dispersed within five minutes at zero processing fee.

Stanbic Bank further revealed that its decision to waive all 2021 unpaid accumulated interest on loans to privately owned schools is a proactive initiative based on the understanding that schools have not been earning and that they need to be supported to regain their ability to settle their liabilities.  

Anne Juuko, the Stanbic Bank Uganda Chief Executive said the ‘bold decision by management even in the face of uncertainty, speaks to our commitment to walk the talk of our business purpose, which is that we drive Uganda’s growth, as such, we have to exercise our corporate responsibility to the country’s education sector.’ 

She added that, “the Covid19 pandemic has left us with an unprecedented challenge; our schools have been closed and teachers have been out of work for two years, many parents and guardians also had their livelihoods interrupted as a result of loss of jobs or business. 

We at Stanbic Bank are taking bold steps to play our corporate responsibility to support the government and other stakeholders in facilitating a successful reopening of our learning centers,” she said. 

Collectively, privately owned schools and teachers, owe financial institutions over Shs1.5trillion in loans, with nearly Shs500 billion in accumulated interest alone. 

According to the Education Ministry, the sector requires Shs500bn in the medium term of which Shs150bn is needed immediately, to support successful reopening of learning centres, countrywide.

PPDA Boss Benson Turamye Turns To Intimidating Whistleblowers In The Sh17bn NWSC Scandal

On seeing that things are going haywire, the Executive Director of Public Procurement and Disposal of assets Authority (PPDA), Canon Benson Turamye, has reportedly, according to media reported resorted to threatening journalists and Whistleblowers behind the exposure of the Shs17Bn corruption scandal that involves the National Water and Sewerage Corporation (NWSC).

Turamye reportedly blocked an investigation into how NWSC officials flouted PPDA regulations when purchasing prepaid water meters at a whooping Shs17Bn. The office of the IGG would later institute an investigation into the matter following a report that was submitted by Whistleblowers about the rot at the PPDA’s office. 

On seeing the anti-corruption people moving in, reports in the media and public domain say that Turamye embarked on sabotaging any investigations.  The latest reports indicate that Turamye has since started using security agencies in the country to intimidate journalists and whistleblowers who exposed his dirty dealings in the contentious NWSC deal. 

“Turamye is now being accused of using security operatives to intimidate whoever is involved in the investigation by threatening them with arrest or disappearance if they don’t back off the matter. We have established that some journalists working with websites that have been exposing the scandal have been threatened with arrests and defamation suits,” Daily Express, a local online publisher, reported.

“The same Turamye is also using security operatives to intimidate the Whistleblowers who compiled the report that the IGG’s office is basing on to investigate the role PPDA officials played in the scandalous purchase, to establish whether or not they were accomplices in the corruption, yet they were supposed to play a watchdog role,” the news website added.

To emphasize his innocence, the PPDA last week issued a press statement in which they denied allegations of Turamye blocking the investigation.

“The PPDA did not block the investigations into the procurement of the prepaid water metres by the NWSC. On the contrary, the PPDA duly undertook an investigation and on 30th July 2020 issued a report citing the irregularities in the procurement process and made appropriate recommendations,” they said in the press statement.

Ham Petitions CJ Dollo Over Bias In Shs120bn Fraud DTB Case

The lawyers of city businessman Hamis Kiggundu have written to Chief Justice (CJ) of Uganda’s Judiciary Alfonse Owiny-Dollo expressing 'apparent bias' in the case between Ham Enterprises Ltd And Others versus Diamond Trust Bank and Another.

Kiggundu's lawyers of Muwema & CO. Advocates and Solicitors and M/S Kimara Advocates & Consultants wrote to the CJ regarding Civil Appeal No. 13 of 2021 and Civil Application No. 51 of 2021 to register their client's 'apprehension of apparent bias which has been exhibited by court's refusal to hear and determine the above application."

The lawyers said Kiggundu has fears that court will not bring an impartial mind to bear on the adjudication of this appeal' for several reasons that they list in the 16 page petition here attached.