Former Prime Minister Amama Mbabazi and other shareholders in the defunct National Bank of Commerce (NBC) have urged the Constitutional Court to block the sale of Crane Bank.
It will be recalled that NBC, doctor http://chachanova.com/wp-content/plugins/contact-form-7/includes/integration.php whose shareholders included Premier Ruhakana Rugunda and businessman Amos Nzeyi, ailment was taken over by Bank of Uganda four years ago before its management and assets were handed over to Crane Bank.
Interestingly, advice Crane Bank’s administration was equally taken over by the Central Bank in October on grounds that it was a “significantly undercapitalized institution as defined by law.”
BoU further said the commercial bank posed a “systemic risk to the stability of the financial system” and that the continuation of its activities in its current form was “detrimental to the interests of its depositors.”
The Central Bank said new investors were welcome to invest in Crane Bank.
But NBC shareholders want their petition challenging the transfer of the financial institution’s assets to Crane Bank four years ago determined and disposed off before tycoon Sudhir Ruparelia’s bank is sold.
ChimpReports now understands that NBC lawyers Severino Twinoburyo and Mugisha have since asked the Constitutional Court to expedite the hearing of the case that has been dragging on for long.
“Reference is made to the applications and petition which were filed way back on the 28TH September 2012, but have not been heard for more than four years now. As if the above is not enough the main petition has never heard let alone being determined by this court,” said Severino in a letter dated November 4 to the Constitutional Court registrar.
“We wish to express our deep concern that the related application to determine whether the various respondents committed acts of contempt of court has not been disposed of either,” the lawyers further agued.
Severino said an unlawful transfer of NBC assets infringes NBC shareholders’ fundamental rights as enshrined in the constitution.
Observers will argue that the new development could hinder Bank of Uganda’s move to sell the bank as investors would be wary of getting dragged in a protracted court battle whose outcome remains unpredictable.
The new twist also erodes Crane Bank’s credibility, reputation and value hence encouraging depositors to withdraw their money.
If this trend continues, most likely Bank of Uganda will close shop at the third largest financial institution.
NBC lawyers have gone ahead to announce a caveat emptor in the newspapers: “The above matter is subjudice ipso facto the purported intended sale of the said Crane Bank Ltd is therefore null and void and any person or group of persons or company which purports to buy the said Crane Bank Ltd before the Constitutional Court of Uganda disposes of the above cases or without the express consent and/or authority of the shareholders of NBC does so at his/her own risk and peril.”
In September 2012 Bank of Uganda liquidated National Bank of Commerce on grounds that its continued operations were detrimental to the interests of its depositors.
One month later, the Central Bank issued letters terminating services of all the employees of National Bank of Commerce.