February 18, 2013

Court Blocks Mbabazi Bank Takeover

Prime Minister Amama Mbabazi
Prime Minister Amama Mbabazi

Court has stopped Bank of Uganda from taking over National Bank of Commerce until the determination of a Constitutional Petition its proprietors filed.

The proprietors; Prime Minister Amama Mbabazi, Information Communications Technology (ICT) Minister Ruhakana Rugunda and businessman Amos Nzeyi petitioned the Constitutional Court challenging the manner in which BoU closed their bank and handed over its assets to Crane Bank.

“The applicant is being deprived of possession of records of his bank, which are being taken away in the process of liquidation, and yet he will be expected to prove his case if he is to succeed in his claim for damages. It is difficult to see
how he will be able to do this when he no longer has records, support
of former staff of the bank, let alone the premises and other facilities that the bank has been having and utilizing and are now being taken away in the process of liquidation/winding up,” Justice Remmy Kasule of the Court of Appeal ruled on Friday.

The judge dismissed assertion by BoU’s lawyer Masembe Kanyerezi that the injunctive order should not be issued because BoU had the capacity to compensate NBC proprietors in case their petition succeeds.

Justice Kasule noted that this argument loses validity where any person has made out a case that his constitutional non-derogable right, like the right to fair hearing, is being violated.

“No one should be let to violate the basic constitutional right of another just because the violator has the capacity to pay damages to the victim of such violation. Further, it is doubtful whether any amount of damages can atone for the damages that an individual and the whole society may suffer, out of tolerance, apparent or otherwise, of unconstitutional conduct of public affairs.
Such conduct leads to anarchism. I am accordingly not persuaded that I should not extend the interim injunctive order on the ground that the applicant is likely to be atoned,” Kasule said concluding that NBC lawyers had made out a prema facie case and the balance of convenience was in their favour.

He however asked the parties to quickly fix the constitutional petition for hearing. Last year BoU closed NBC for failing to raise the minimum capital of Shs100m and immediately ordered that its assets and deposits be handed over to Crane Bank
which decision NBC proprietors claim was reached without being accorded a right to fair hearing.

 Reported By Alex Bukumunhe

 

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