Stanbic bank fraudulently sells off client’s building to employees

Stanbic Bank Uganda is under fire for fraudulently selling a city property without the knowledge of the owner , the Nile Post has learnt.

According to a September, 23, 2020 letter to the Special Investigations Division of the Criminal Investigations Director, Beatrice Odongo, one of the directors for Macdowe Limited mortgaged five plots  in Luzira to Stanbic Bank as security for a loan advanced in 2017 and that they paid off the entire loan but the bank refused to return their titles.

“Initially,  the bank’s lawyer claimed it had sold the property by public auction advertised in the Monitor to take place on December,6, 2019  there was in fact no auction. Our properties were actually grabbed through an insider dealing scheme between the bank and its employees using a front called Myriad Investment Club Limited,” Odongo’s petition to CID reads in part.

According to the letter, the shareholders for Myriad Investment Club Limited include Kenneth Kitungulu, the Executive and Head Global Markets at Stanbic Bank, Lawrence Kaweesa, the Global Business Manager, Daisy Nitwe, the Corporate- Treasury Sales Dealer, Emmanuel Rukeeba, the head of Products and Analytics, Maureen Kembabazi Katwebaze(works with Stanbic IBTC bank, Nigeria)  and Thaib Lubega, formerly Treasury Manager at Stanbic Uganda.

The letter also points out Kenneth Kitungulu and Daisy Nitwe as signatories to the sales agreement, a move the petitioners say further shows it was an insider job in the bank.

“The sale agreement was drawn by the bank’s legal department, colleagues of the buyers’ directors or shareholders and it bears the stamp of the head of PBB Credit, Stanbic Bank and the signature of Denis Lugoloobi, the Senior Manager Credit Evaluation signing for the bank.”

Odongo that owns the property insists that Stanbic Bank conspired with its employees to grab the property at a low price of only shs1 billion for the five plots in the city.

“Stanbic bank even game them opportunity and time to obtain credit from DFCU to finance the purchase. The sale agreement indicates a public auction and sale was concluded on March,23, 2020 during the Covid-19 lockdown,” she says

The owners say the process is contrary to section 39(2) and (3) of the Mortgage Act that punishes the sale   mortgaged property by a bank to its employees.

The letter is also copied to the BoU governor, and Lt.Col.Edith Nakalema, the State House Anti-Corruption Unit head.

Another bank

This is the second bank to be accused of fraudulently selling property used as security to acquire loans from the financial institutions.

Kampala businesswoman, Ida May Kwesiga who owns Mayflower apartments sitting on an acre of land at Nakasero ran to the Land Division of the High Court in Kampala to sue Housing Finance Bank together with Balaji Group East Africa Limited.

The businesswoman says she entered into an agreement with the bank in 2013 to develop her property by erecting the apartments and the bank approved a loan of $2.7m to her, which was to be paid back in 10 years.

According to court documents, the loan facility was secured by property located along Luthuli Avenu in Bugoloobi.

“Due to unconscionable terms of payment, the plaintiff(Kwesiga) defaulted and the first defendant(Housing Finance Bank) issued her with a notice of default on July,3, 2019.The first defendant subsequently issued the notice of sale against the said mortgaged property on September 9, 2019 and on October,15, 2019, the first defendant published an advert for the sale of the mortgaged property,” the court documents say.

The businesswoman avers that in November last year, she applied to the High Court to have the mortgage reviewed on ground that it was given on unconscionable terms, misrepresentation of facts by members and not being given chance to be represented by an independent financial advisor.

She argues that court later issued an order restraining the bank from selling the said property but during the Coronavirus lock-down, the property was sold to Balaji Group East Africa Limited.

“The first defendant without re-issuing default notices, re-advertising or re-evaluating to ascertain the current market value, proceeded and sold the suit property to the second defendant. The plaintiff has just come to learn that the property was sold to Balaji Group East Africa Limited despite having a court order and being aware of the current Covid-19 situation that has affected the entire economy,” court documents say.

The businesswoman argues that the property at $2.4million (about sh8.8bn) yet it had earlier been valued at $8 million(about sh33bn).

President Museveni recently ordered the bank to allow the businesswoman sell the property herself and pay the bank within a period of two months,

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