How the DTB 120Bn Fraud Scandal will transform the Banking Sector in Uganda.
Insights about the “Alleging” Bank Collapsing reports and reasons why the Bank Management is panicking!
As widely known, DTB has since march been on Spot for defrauding its customers among whom include General Charles Angina, Yiga Musa and incumbent Ham Enterprises among others, Huge sums amounting to over 127 Billion.
Following mass media reports indicating that the bank is no longer a viable financial institute for Ugandans to trust with their deposits, as a result of the ongoing Court case (Suite 43 of 2020) in which Ham Enterprises scored a partial win against the bank last week (3rd August 2020). Some Customers of the bank allegedly stopped depositing whereas others started withdrawing their money for fear of losing it in case the bank finally collapses.
This caused a state of panic at Diamond trust bank thereby forcing it to make a non-satisfactory and FALSE clarification before the Public with hope to regain the public trust and as well as retaining customers. The bank further concluded by ‘assuring’ it customers as they are fully viable against the actual reality at hand.
The Actual Facts
It has always been clarified in the media following facts with respective attached proof:
- First and foremost, it is not true that Ham Enterprises denied never getting loans from the Bank as the Bank falsely stated in its clarification above. According to Ham’s earlier letter dated 16th November 2019 and received by DTB on 18 November 2019, in which Ham Enterprises clarified no indebtedness to the bank, as a result of a 10-year audit carried in respect to “all their previous settled and current facilities with DTB as of November 2019:“Facilities” as used by Ham Enterprises in the letter bellow meant “Settled and Current loans” that had been disbursed by the bank to the company and associated entities then.
- Hence the bank’s clarification is full of lies, thus more evidence to the bank’s usual fraud policy this time witnessed by the entire public.
- This audit was made after the bank had demanded unknown sums from Ham Enterprises according to the Companies Letter. However, the Audit findings as in the copy of the Executive summery analysis bellow; revealed that the company had since paid all the Existing loan facilities that had been disbursed to them by the bank then.
Instead the bank had been extortionately making vigorous, irregular, fraudulent, unscrupulous, unregulated, unfair, schemed debits from Ham’s accounts using their superior bargaining position to unjustly enriched themselves jointly or severally, forcing the Company to terminate all contracts with the bank as a result of complicated, stifled dealings that had frustrated their contractual Obligations and Duties with the Bank with a threat to use legal action would the bank make any attempts to any money from the company.
For unknown reasons, the bank went silent and made no correspondence to Ham Enterprises in regards to their termination notice.
- Having not received any correspondence from DTB in regards to their termination notice within a period of 55 days, Ham Enterprises resultantly issued a demand notice to the bank on the 10th January 2020 and received by the bank on 11th January 2020: clearly stating the money which the bank had fraudulently withdrawn from their accounts.
The money was over, above and in excess of 29,035,682,682 Billion Uganda Shillings unlawfully debited from their company shillings accounts and 22,938,528.29 Million United States Dollars unlawfully debited from their United States Dollar Account as per the account statements for a 10-year banking relationship that they had operated those accounts.
The notice further demanded for: a full accounts Figurative audit, Account Reconciliation and a full detailed explanation on the same or otherwise make a refund of the money to their respective accounts and return of their certificates of titles within Five days from the 10th January 2020 failure of which would leave them with no choice but to seek legal redress from the Regulator or Constitute Legal action for Remedies against Diamond Trust Bank for Recovery of their money.
Ham Enterprises also attached a summary of their independent company audit findings.
As demanded, the Five days elapsed without the Bank: making any a full accounts Figurative audits, Account Reconciliation or a full detailed explanation on the same, neither did it refund the fraudulently withdrawn money on the company’s accounts nor return the Certificates of Tittle to the company which prompted Ham Enterprises to constitute legal action against the bank for recovery of their money.
- Ham Enterprises and associates Filed a fraud case against Diamond Trust Bank (H.C.C.S No.43 of 2020) in the Commercial Division of the High Court of Uganda on the 17th January 2020 as in the Plaint bellow.
Diamond Bank resultantly Filed a defense on 23rd January 2020, requesting that regulation 13 of the Mortgage act 2012, be imposed upon Ham Enterprises.
The said Regulation 13 requires that if a person is to file proceedings against a Bank, they should first deposit 30% of whichever amounts are involved, with the Mortgagee (Bank).
An injunction was however granted to Ham Enterprises stopping the Bank but with the 30% condition in place.
Ham Appeals
Ham Enterprises (U) Limited however appealed against the order as this was contradictory to Article 28 of the Constitution of Uganda that provides to every Ugandan a right to a fair hearing, claiming they were the victims from which the Bank had stolen money off their accounts and they had come to court seeking justice and recovery of the same urging the court not to let them pay 30% to the same fraudulent Bank with full evidence of the fraud presented to court in the audit records provided, and the statements.
Ham Enterprises Scores Partial Win against Dtb
On 3rd August 2020, Diamond Trust Bank was hard-pressed to the wall when an order was granted in favor of the company with the Bank conceding that in the interest of justice the 30% condition be vacated and that the matter be left to court to determine the case on its merits.
Background of the battling parties
Ham Enterprises and Associates.
Ham Enterprises also trading as Ham Group of Companies International is a Ugandan multinational industrial privately owned conglomerate, founded in 2010 by a 36-year-old Ugandan native businessman Hamis Kiggundu, also know as Ham. He is the majority shareholder in each of the companies in the group.
Ham Group is one of the largest conglomerates in Uganda with 15 subsidiaries among which include Kiggs International Ltd and Kiham Enterprises (U) Ltd, operating in Uganda, England, United States and South Africa with interests in Real Estates, Manufacturing, Logistics, Hospitality, Agro-Proccesing, Education and Consumer goods.
The Company is currently Undertaking the redevelopment of Nakivubo Stadium in a private-public partnership with the Uganda Government. It is also currently setting up agro-processing factories in all the 10 agro zones of Uganda as well as setting up a contemporary luxury 500 housing project at Akright City. The group directly employs about 3,500 people.
Diamond Trust Bank.
Diamond Trust Bank Uganda Limited (DTBUL), is a commercial bank in Uganda licensed and supervised by the Bank of Uganda, the central bank and national banking regulator. It is a Subsidiary Diamond Trust Bank Group (DTB GROUP), with headquarters in Kenya, the largest economy in the East African Communality. DTB group is also an independent subsidiary of Aga Khan Development Network, one of the largest private development networks in the world founded and headed of the by Switzerland born 83-year-old Prince Shāh Karim al-Husayni also as known as His Highness the Aga Khan IV, outside Ismaili Muslim communities. He is the 49th Iman of the Nizari Ismaili Religion from 19th October 1957.
The bank was founded in 1945 as the Diamond Jubilee Investment Trust (DJIT), to primarily extend credit to the East African Ismaili Community and mobilize their savings. In 1968, the rapid economic development of post-independence Uganda saw the founding of Diamond Trust Properties Uganda Limited. In 1972, Diamond Trust (Uganda) Limited (DTU) commenced operations as a non-bank financial institution. Between 1972 and the early 1990s, DTU was largely moribund because of political instability.
In 1995, the institution was recapitalized with the participation of the Aga Khan Fund for Economic Development and Diamond Trust Bank (Kenya) Limited. In 1997, the bank became a full-service commercial bank and was renamed Diamond Trust Bank (Uganda) Limited. Diamond Trust Bank (Kenya) Limited owns at least 56.97 percent of the shares in Diamond Trust Bank (Uganda) Limited
The Bank’s Total Assets
As at December 2018, the bank’s total assets were valued at about UGX:1.606 trillion (approximately US$438.574 million), with UGX:1.2 trillion (approximately US$325.96 million) in Customers Deposits.
DTB’S side of the Story
According to Diamond Trust Bank, Ham received a credit facility totaling to over sh41b a few years ago and he still owes them about sh39b. Ham, is accusing the banks of fraudulently siphoning over sh100bn from his accounts without his knowledge and consent over the past 10 years.
The bank further states that between February 2011 and September 2016, Ham was granted various credit facilities by the bank.
Through Ham Enterprises Limited, Ham obtained a loan of $6,663,453 and later sh2.5b from the DTB (U) to finance his projects in the real estate business.
He also obtained another facility worth $4.5m through Kiggs International (U) Limited from DTB (K) and mortgaged his properties, which include Plot 328 located at Kawuku on Block 248 Kyadondo, three plots that include 36, 37 and 38 on Folio 1533 Victoria Crescent II situated in Kyadondo and land on Makerere Hill Road on LRV 3716 Folio 10 Plot 923 Block 9.
The bank continue to state that, as of January 21, 2020, Ham was in default on payment obligations of $6.298m on the loan facility of $6.663m, as well as sh2.885b on the demand overdraft facility of sh1.5b and the temporary demand overdraft facility of sh1b.
They continue to claim that he was in default on the payment of another $3.662m out of a total loan facility of $4m and another $458,604 on a loan facility of $500,000, as of January 21, 2020.
The DTB consequently served him with a demand notice to either pay up or lose the assets that he submitted as collateral security. The bank threatened to attach a plot on Makerere Hill Road and other prime commercial properties.
The bank concludes that Ham responded by writing to the Diamond Trust Bank, alleging financial fraud involving over sh100b.
OUR INDEPENDENT INVESTIGATIVE FINDINGS
Confirmations from our analysis and consultations with credible city auditors reveal that the Bank’s defensive arguments and their side of stories are unsatisfactory basing on the following evident facts:
First and foremost, Ham Enterprises claims and allegations are always backed by evident documents including a comprehensive 900-page analytical report whereas the bank’s allegations and claims lack visible evidence apart from a promise of providing evidence in court at the right time.
Most claims by the bank against Ham Enterprises keep contradicting the actual facts at hand; for instance, the bank has publicly made a false allegation that Ham Enterprises denied ever getting loans yet in the company’s clarification, Ham acknowledge receiving loan facilities, but however elucidated to have settled to zero balance according to findings in the company’s 10-year bank statements and instead the bank just dubiously and fraudulently withdrew their money in excess of the amount own.
Ham enterprises first communicated their termination of all contracts with the bank giving respective reasons on the 16th November 2019 and later a demanded for refund of their money, return of their certificates of titles and a detailed explanation regarding the fraud in addition requesting a Full Audit and Accounts reconciliation through a formal notice on 10th January 2020, the bank just decided to go silent, despite the company’s prior threats to take legal action against the bank in an effort to make recovery until the company finally served and plaint to court on 17th. This has left us wondering why the bank just went Silent and why it never accepted to make a demanded audit and reconciliation as earlier demanded by Ham Enterprises.
It is now public information that Ham Enterprises run to Court as the only remedy for recovering their fraudulently withdrawn money. However, the bank continues to allege that Ham Enterprises went to court with false claims that the bank never disbursed them with loans, not having seen or heard Ham denied getting such disbursements in any way.
Ham Enterprises terminated all contracts with the bank through a formal notice of 16th November 2019. However, in its story the bank says Ham Enterprises owed the bank 39Bn as of 21st January 2020 to date, we are left wondering what contracts other than the ones earlier terminated by Ham are being used by the bank to allege indebtedness before matters are determined in court.
Diamond Trust Bank Alleges disbursing a total of 41 Billion Shillings to Ham Enterprises and associates and then after a couple of years, Ham Enterprises was stilled indebted to a tune of 39 Billion, this has left us wondering what was happening to the money the bank was taking from the company’s accounts throughout that time as witnessed in Ham Enterprises comprehensive report and statement of accounts.
Insights about the current Bank Collapsing allegations
Media Rumors have since been circulating revealing that Diamond Trust Bank Uganda is on its death bed as a result of mass fraud cases including the Ham Enterprises 120Bn fraud Scandal.
For fear of loss, a state of panic among the stake holders including the bank management itself and has been inevitable. As a result, the bank has decided to join the media with a campaign to revive its swiftly decomposing public image whereas some customers had “allegedly” started to rush and withdraw their funds deposits from the reportedly “collapsing” bank.
How true are these claims?
Given the fact that DTB is a Purely foreign Bank with origins from the Ismaili, established to primarily extend credit to the East African Ismaili Community and mobilize their savings as explained in its history above.
The board of directors and top management in the Bank is purely composed of foreigners mostly of Asian Origin who got no national interest at heart as they came to Uganda in search for green pastures by a way of exploiting the Ugandan Nationals. Such banks always serve their masters’ interest first at the cost of Uganda nationals’ deposits. Usually Interest and people’s funds have been siphoned to their country of Origin leaving the Ugandan economy very dry. In addition to their discrimination policy of operations against Uganda. Yet the largely Operate in Ugandan nationals deposits: which later unfairly disbursed to fellows against our national interests which some times stops Uganda customers from first reasoning out in case of such rumors there by making uncontrolled withdraws.
In case DTB miscellaneously goes into the receivership as a result of the ongoing media reports, then eventually gets closed or given/sold out by Bank of Uganda. There is no doubt that the top management will flee back to their origin without leaving a trace. The looser in this case will be the Ugandan entrepreneurs, Uganda shareholders and depositors.
Sample Screenshots of the circulating Media Rumors
Can Such on going media reports cause the bank like Dtb to Close shop in Uganda, How?
Well Evident Fraudulent claims backed by a publicly covered court case and media financial rumors can lead to uncontrolled funds withdraw by the existing customers who fear to lose their money, this is followed by massive selling of shares hence reduced shareholders portfolio values thus the bank runs in difficulties.
A case in question is the KENYAN CHASE BANK, Social media rumors caused this bank’s ‘closure.
It began with a rumor. Late on the night of Sunday, Apr. 3, 2016, messages tore through Kenya’s numerous Whats App groups that one of the country’s best known mid-sized banks–Chase Bank–was in trouble.
By Tuesday, Apr. 5, the news leaped onto Twitter. User Mumbi Seraki (@Mumbi Kenya) tweeted ‘After Imperial, CBK focused ON forensic audits and found a similar ALLEGED FRAUD at Chase Bank where close to 15b is missing from the books.’ Each of the 14 tweets responding to Seraki demanded evidence and called on her to prove her allegations, with some going as far as inviting Chase Bank to prosecute Seraki for allegedly defaming the bank.
Even though Seraki is a well-known personality, the initial instinct was to disbelieve her because Chase Bank was no small outlier bank. Unaffiliated with the US bank of the same name, the Kenyan bank was incorporated in 1995 as mid-sized bank primarily serving low-income earners, small and medium-sized enterprises and other underserved communities. It had one of the largest sharia compliant banking units in the region and served many businesses in Kenya that traded primarily with the Middle East. At its peak, Chase Bank was one of the most successful indigenous banks in the largest banking sector in East Africa.
Bank’s Shortcomings
Under Capitalization
The Bank’s total assets are valued at about UGX1.606 trillion (approximately US$438.574 million) but with customers’ deposits making up UGX 1.200 trillion of that value. This means that the bank only has equity of four hundred six billion, most of which Value is Basically held in the bank’s fixed assets hence the bank is currently operating largely on customers’ deposits.
Such foreign Bank come to Uganda as investors yet with very limited capital that can’t see this country take off, for as long as they deposit the Ugx 25 Billion requirement with Bank of Uganda , use Ugx 5-10 billion to establish structures with a maximum total of Ugx 40 – 50 billion spent, then start advertising luring Ugandans to bring deposits and savings with the Bank which makes the core base of their operational capital meaning these Banks operate within our limited capital yet disguising as foreign investors which is absolutely economically exploitative. They receive our money in one hand from Ugandans as a deposit or savings and release it through the other hand as a loan at very high interest rates with zero capital input yet they additionally easily extend loans to foreigners as compared to Ugandans.
One wonders whether DTB has taken to defrauding its customers to facilitate its survival.
The bank has been struggling for many years to survive without success.
In 2016, Bank of Uganda nearly took it over or closed it due to undercapitalization.
Bank of Uganda Governor Emmanuel Mutebile once hinted that two banks in Uganda were on close watch.
“DTB is said to have been top on the list. With the ongoing scandals, BOU is said to be reviewing is its position to take over the bank or shut it down.”
A report previously showed that all commercial banks in Uganda were operating above the minimum capital of Shs25b, except Diamond Trust Bank, which was below par.
Closure of Branches
Viable and Success banks and Fincial Institutions tend to expand at a very high rate hence open several branches in different localities, however this is not the case with Diamond Trust Bank as the rate at which it is closing Branches is very frightening. The Bank has so far closed up three city center branches in a very short period of time, the said branches Include: Freedom city, Nateete, and Owino with three more upcountry branches rumored to be soon closing as a result of unrealistic performance.
Social Media Myth about the bank closure rumors:
Some stake holders are circulating fake rumors that this bank can’t collapse given the fact that 60% of the Government income through luring is received through this bank, Others having it that given the banks huge total asset Value, and Shareholding portfolio, the bank can’t just close Shop.
However they may have the facts wrong, referring to the American Lehman Brothers collapse, this is a company which used to perform way far better than Dtb with $19,257,000,000 revenue and $4,000,000,000 net incomes but disappeared in the blink of an eye , another reference case as already talked about is the neighboring Kenyan CHASE BANK that used to be among the most performing in East Africa. It simply collapsed as a result of Whats App and twitter rumors, the social media holds too much power, they cause panic in customers leading to uncontrolled swift withdraw of deposits and savings followed by mass selling of Shares which highly drops shares values. The bank Instantly gets into a state of financial quagmire and constantly gets taken over by the central bank etcetera. Fraudulent Claims and Financial rumors greatly affect the shareholders portfolio values.
Imagine DTB customers rushing to uncontrollably withdraw their 1.2 trillion deposits out of the banks total 1.6 trillion assets!!!
Dtb Customers should not underestimate the power of social media rumors.
Violation of the Consumer Protection Guidelines (FCPGs)
By siphoning money from customers’ accounts, DTB violates the Consumer Protection Guidelines (FCPGs) that were issued by the Bank of Uganda (BOU) to protect the interests of a bank customer.
On the other hand, BOU which is mandated to regulate and discipline banks in Uganda has not performed as expected on its role to reign in on unauthorized theft of customers’ money by Commercial banks. BOU remains silent on repeated cases of fraud by DTB.
Leaking Client Confidential Information
In 2018, a staffer at DTB leaked confidential bank details of Justine Bagyenda, the former executive director of supervision at the Bank of Uganda. The leaked bank account details of Bagyenda, showed how she allegedly over the years made several fixed deposits at the bank, making billions of profits in the process. DTB confessed that one of its own staff had been compromised to access Bagyenda’s account in the bank’s system hence leaking the confidential details to outsiders, information that was used against Bagyenda.
How the DTB 120Bn Fraud Scandal will transform the Banking Sector in Uganda
Since Ham Enterprises successfully challenged the 30% deposit requirement in his case on grounds that it’s repugnant and inconsistent to Article 28 which provides for the right to a fair hearing and this Regulation, he additionally petitioned the constitutional court challenging this regulation with support from Article 2(2) of the constitution which nullifies any other law that is inconsistent with any of the provisions of the Uganda constitution hence the regulation that has always been used by Banks as a clog against seeking justice by their clients as previously outlawed in the tax laws resulting from the Feulex (U) Ltd Vs URA case (Petition No. 3/2009).
This is the same court hearing the Constitutional Petition filed by Ham Enterprises (U) Limited against Diamond Trust Bank Constitutional Petition No. 11/2020 which quotes similar injustices but this time under the Mortgage Regulations. This kind of injustice in Uganda are yet to stop since courts of laws are conduits of Justice as Ugandans go to courts of law seeking justice not rather to be turned into victims.
He opened the eyes of many business people who have over time been denied justice and their right to fair hearing. There will always be free and fair hearing in the commercial court as this case will be used as a reference in future hearing hence no more exploitation of Ugandans by Commercial banks as it has always been before.
Ham Enterprises (U) Ltd C.E.O proposed banking reforms to the Government of Uganda through the ministry of Finance among which reforms include all Banks operating in Uganda having local Ugandan ownership in their shareholding with a reasonable number of Ugandan directors that seat at their board of directors with direct involvement in decision making from the top to cater for Ugandan interests as a country since Banks are the major link in all money transactions in the country and Ugandan should hold these top management positions in these institutions to protect the interest of the masses and in line with the realistic reasonable fact that they understand the Ugandan community better, right from cultural and social values as well as eliminating general discrimination of Ugandan nationals in all banking aspects.
Audit Recommended
In summary, If the bank has been able to defraud its big customers, analysts recommend that even small-time customers, who have maintained loan accounts for about 5 years are advised to carry out audits of their accounts to ascertain whether they have not fallen victim yet.
Even those who save as low as 5000shs should check their accounts as this money could already have been withdrawn by the bank.
Do you have a hot story or scandal you would like us to publish, please reach us through [email protected]
