In early 2018, Ms Ida May Kwesiga borrowed over USD 2.3M from Housing Finance Bank (HFB) to refurbish her family-owned Mayflower Apartments in the upscale Nakasero neighborhood, Kampala.
Kwesiga took over management of the estate following the death of Eng Samuel Mishambi Kwesiga, who supported Museveni’s NRA war.
However, Ms Kwesiga defaulted on the loan.
According to court records, by November 2019, she had not paid a single installment in 18 months.
On account of unpaid loan installments, the loan grew to about USD 3M/ Shs 11bn.
This amount is significant if you consider that the Bank of Uganda (BoU) set minimum capital reserve capital for a commercial bank is Shs 25bn.
What the above means is that HFB had to and continues to provision for the loan – that is to set aside its own capital held with Bank of Uganda as a form of insurance for the non performing loan.
On 19 November 2019, Ms. Kwesiga sued the bank in the Commercial Division of the High Court seeking to stop the bank from selling the mortgaged property.
She negotiated with the bank and the parties agreed a consent Order before the Judge in the Commercial Division.
In this Court-witnessed agreement, Ms Kwesiga agreed to pay 30% of the loan by January 2020.
She also agreed that if she failed to pay, the bank could proceed and sell the property.
The deadline of paying the 30% passed without Ms Kwesiga fulfilling her obligations.
She had not paid a single cent to the bank.
Therefore in August 2020, as Ms Kwesiga had agreed, the bank finally sold the property.
The bank called bids and Balaji Group’s bid was the highest.
Ms Kwesiga, fearing to go back to the Commercial Division where she had made the agreement to pay by January which she had not kept, stealthily filed another case seeking to stop the sell which had already happened in the Land Division of the High Court.
The bank protested and the matter was transferred to the Commercial Division.
The bank, in its court documents, said it was always accommodating of, understanding and patient with Ms. Kwesiga and thus worked out an arrangement with her where the bank allowed her to separately sell apartments at the property to different buyers.
The property was converted into condominiums with each getting its own title.
Thus, at the time of the sale to Balaji, Ms Kwesiga had herself sold ten flats to different buyers.
On her part, Ms Kwesiga alleged that the bank sold the property at $2.4m (about sh8.8b) to a city businessman, yet the property was a couple of years ago valued much higher.
She said the property was valued at $8m (about 29.3b) on open market and $5m (18.3b) on forced market.
The family further argues that the bank, without issuing further default notices, neither re-advertised nor re-evaluated to ascertain the current market value of the property proceeded and sold the property to Balaji Group (EA) Ltd.
In court, the bank argues that Ms Kwesiga’s claim that the bank sold the whole complex are false.
The bank said it “sold only 16 of the 25 apartments/flats. Ms. Kwesiga sold the vast majority of the 3 bedroom flats leaving only the less valuable two (2) bedroom flats that Balaji bought.”
The bank, using East African Consulting Surveyors valued the property with the involvement of Ms. Kwesiga.
An investigation by ChimpReports established they the value per apartment that the bank obtained in the sale to Balaji agreed with her own valuation of the forced sale value of $5m/Shs 18bn if one attributes the same to the 16 two bedroom flats whose forced sale value she valued at about USD 125,000/ Shs 456,000,000 per flat.
Commercial lawyers said close to Shs 500m per 2 bedroom flat cannot be said to be an undervaluation by any stretch of the word.
On the 9/9/2020, President Museveni, to whom all the parties including the investor of Balaji are known, guided the parties that since Ms. May wanted two more months to find a buyer who she said, would pay a better price, the bank grants her the time.
Museveni said he was aware of the bank’s obligation to act in a certain way regarding non-performing loans but urged the bank to exercise restraint and patience.
Both Balaji and the Bank respected the president’s request.
Balaji agreed that Ms Kwesiga uses two months to find her preferred buyer so that she refund their money, pays off the bank and transfers the property to her preferred buyer.
ChimpReports understands Ms Kwesiga was yet to find a buyer or formally accept the President’s advice.
HFB is the only bank wholly owned by Uganda and NSSF.
The bank has since complained of a a smear campaign and blackmail of its officials over the Kwesiga saga.
It has since been established that Ms Kwesiga is heavily indebted.
A one Hamdan Khan who has appeared beside her in many media appearances is said to demand USD 2.3M (Shs. 7BN) from her arising from a loan of USD 700,000 that he says he gave her two years ago.
The rest of the alleged 2.3M is on account of interest.
Actually, Kwesiga was hoping to sell some of the condominiums to raise enough money to pay the moneylender.
Mr Amdan Khan has taken an active interest in the Ms Kwesiga’s case so that his money is recovered.
It’s understood that Khan has been working hard to attract Museveni’s eye to settle Kwesiga’s indebtedness including his usurious Shs 2.3M which grew from only $700,000.
Amdan’s son is a constant attendance in all the court cases.
The future of the case remains uncertain considering that it’s now before the courts of law.