Shs 39bn HAM CASE: DTB Lawyers Appeal as Judgement Sets Precedent to Challenge Syndicate Bank Loans

Kampala High Court has ruled that DTB Kenya (DTBK) acted illegally in lending money to Ham Enterprises owned by businessman Hamis Kiggundu, a landmark ruling with major implications on syndicate lending in Uganda.

The Commercial Division Judge, Henry Peter Adonyo on Wednesday ruled that DTB Kenya didn’t have the license from Bank of Uganda as provided for under the Financial Institutions Act 2004.

DTB is battling flashy businessman Hammis Kiggundu over Shs 39.7bn which the businessman acquired to facilitate his businesses and defaulted on payment.

Ham later dragged DTB to court, saying the money was deducted from his accounts.

Ham had acquired the money in four tranches: $6.2m, $3.2m, $458,604 and Sh2.8b from both DTB Uganda and DTB Kenya between February 2011 and September 2016.

The loans were consolidated later in 2018 and were to run for five years, ending August 23, 2023.

In a letter dated April 11, 2019 to DTB, Kiggundu admitted the debts and promised to repay them by selling off his complexes at Makerere.

He, however, later went to court to secure an injunction against DTB from selling off his interest in the land and properties comprised at Kawuku, Victoria Crescent and Makerere Hill Road until determination of the main suit.


Kiggundu, through his lawyer, Fred Muwema, argued that DTBK, was carrying out illegal banking business in Uganda by lending money to the first Plaintiff, Ham Enterprises.

Kiggundu further stated that Diamond Trust Bank Uganda was “facilitating and abetting the illegal conduct” of Financial Banking Business in Uganda contrary to the Financial Institutions Act.


During today’s court session, Justice Adonyo faulted DTB Kenya for appointing its counterpart in Uganda to collect the loan facility from Ham Enterprises without fulfilling the set legal requirements.

The judge described the appointment of agents as “illegal, unethical and breach of trust.”

Justice Adonyo further said the “The Act contravened Financial Institutions Regulation number 5 and the first respondent (DTB Uganda) is culpable of breaking the law and is penalized for taking part in an unauthorized transaction.”

DTB Bank was also ordered to refund all the money it collected from Ham’s accounts to pay for the loans on top of returning to him all the titles which he had surrendered to the financial institution in form of collateral security.


The ruling, which DTB Uganda lawyers have vowed to challenge, sets a risky precedent for Uganda’s banking industry where players have majorly relied on syndicate funding to raise money for clients.

Clients who have benefited from syndicated loans can now challenge the legality of the loans using today’s ruling, sending the banks into unfathomable debt and the economy in a tailspin.

For example, Equity Bank Kenya and Equity Bank Uganda pooled $2.5m each to lend to Simbamanyo Estates in Kampala.

After utilising the $10m credit facility, Simbamanyo later claimed that it was only aware of $7.19m and accused Equity Bank Uganda of providing Equity Bank Kenya with an “illegal cover to conduct business in Uganda where it has no jurisdiction.”

Simbamanyo said there was no way it could be indebted to Equity Bank Kenya where it had never applied for a loan or even run an account.

While Equity Bank Kenya can argue that Simbamanyo was aware of its obligations, the real estate company can rely on the ruling in the DTB Bank- Ham case to challenge the legality of the $10m facility.

Loan syndication is the process involving a group of lenders in funding various portions of a loan for a single borrower.

Pooling resources

Uganda Bankers Association (UBA) Executive Director, Wilbrod Owor recently said loan syndication most often occurs when a borrower requires an amount too large for a single lender to provide or when the loan is outside the scope of a lender’s risk exposure levels.

“Financial markets provide other frameworks through which capital can be mobilized including through the stock exchange and numerous players exist in this space depending on the level of development and attractiveness of the market,” said Owor.

“So commercial banks are just part of a wider financial eco-system and may not necessarily always address every single need and requirement of the market for the simple reason that they are not designed to do so. Development Banks play a big role in long term development finance and these are typically owned by government and institutional long-term investors,” he emphasised.

For example Uganda’s electricity distributor, Umeme Limited in 2019 secured a syndicated USD70m (Shs 258 bn) funding to support its planned investments in the electricity distribution network.

The International Finance Corporation (IFC) was the lead-arranger in the syndicate including Stanbic Bank Uganda Limited, Standard Chartered Bank and the Dutch Development Bank (FMO).

In 2016, MTN successfully closed a USD114 million syndicated credit facility for the development of telecommunication infrastructure in the country.

This was the second substantial credit facility of this nature that MTN Uganda had secured in the past seven years and one of the largest private sector debt raise.

In 2009 MTN secured a $100 million facility that was arranged by Absa Capital, the investment banking division of Absa Bank Limited as sole Global-Coordinator, together with Barclays Bank of Uganda Limited, KCB Bank Uganda Limited, Standard Chartered Bank Uganda Limited and Stanbic Bank Uganda Limited as Mandated Lead Arrangers.

On his part, Owor said banks in Uganda like any other market are part of a global financial web that benefits from international flow of skill, technology, standards and capital among others.

“Limiting financial institutions to indigenous resources be it human or capital would work against growth and development of an economy not to mention the risk it puts on Ugandans abroad and overseas who equally provide and share skills, mobilize resources and deploy themselves for the good of the institutions and geography within which they work,” he said, without necessarily quoting the DTB case.

A jovial Kiggundu described today’s decision as “landmark judgement which is going to liberate all Ugandans from oppression of foreign banks”

DTB’s legal team said it was already processing its appeal to challenge Adonyo’s ruling.

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