Following a recent ruling by the Court of Appeal in London, shareholders of the defunct Crane Bank have expressed determination to seek justice. The Court of Appeal overturned a previous decision that had exonerated DFCU Bank and its shareholders from accusations of fraudulently taking over Crane Bank.
In a statement released by the board of directors on 28th July 2023, the shareholders welcomed the ruling and affirmed their commitment to recovering the hundreds of millions of dollars awarded by the London-based court. The statement highlighted the Court of Appeal’s acknowledgment that the claim against DFCU Bank, its executive directors, non-executive directors, and shareholders is valid and can proceed in the English courts.
Crane Bank, along with its shareholders, alleges that senior officials from the Bank of Uganda were involved in a corrupt scheme to gain control of Crane Bank and sell its assets at an undervalued price, while also embezzling public funds. The lawsuit further accuses DFCU Bank and other defendants of participating in the fraudulent scheme and purchasing Crane Bank’s assets at a gross undervalue, while allegedly offering bribes.
The Court of Appeal found that the claim presents serious issues for trial and falls outside the foreign act of state doctrine. It relies on the commercial activity exception and the argument that the executive acts in question contradict English public policy against bribery and corruption.
In light of the ruling, DFCU and the other defendants cannot rely on the foreign act of state doctrine to evade liability. Crane Bank and its shareholders intend to continue vigorously pursuing their claim through a fair legal process in the English courts.
Background: The case stems from the sale of tycoon Sudhir’s Bank assets to DFCU, following which Bank of Uganda (BoU) filed a suit against Sudhir and Meera Investments to recover over Shs400 billion and 48 land titles. The High Court dismissed BoU’s case with costs, stating that a bank under receivership cannot sue. BoU appealed the decision to the Court of Appeal, which upheld the findings of the High Court.
In previous court rulings, BoU has been ordered to pay costs to Sudhir, who has won multiple legal battles against the Central Bank. The conflict revolves around BoU’s decision to shut down Crane Bank due to liquidity problems, while Sudhir countered with a claim for compensation for breach of contract.
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