NO ESCAPE FROM AUDIT! Court Rejects Magoola’s Bid To Stop ICPAU Probe In Equity Bank Loan Fight
The Commercial Division of the High Court has dismissed an application by businessman Mathias Magoola and his companies, Dei Biopharma Ltd and DEI Industries International Ltd, in which they sought to have the Institute of Certified Public Accountants of Uganda (ICPAU) declared lacking in independence and integrity.
The application arose from an ongoing court case over loan facilities between Magoola, his companies, and Equity Bank Uganda and Equity Bank Kenya. ICPAU had been appointed by the court to nominate an independent audit firm to review the disputed loan accounts.
In 2024, Magoola petitioned the court seeking an account and reconciliation of his loan and current accounts held with Equity Bank. He asked the court to determine the actual amount owed under the credit facilities, examine loan variations, consolidations and restructurings, and order the bank to refund any money that may have been unlawfully debited from his accounts.
On December 10, 2024, the court appointed KPMG to conduct a comprehensive audit of the loan arrangements and establish the outstanding amount due. However, after KPMG filed its report on December 18, 2024, Magoola applied for a review of the firm’s appointment.
The court allowed the application and instead directed ICPAU to nominate an independent audit firm. ICPAU subsequently appointed Clayton & Company to carry out the audit.
Before the firm could submit its report, Magoola, through his lawyer Fred Muwema, returned to court seeking another review. He argued that ICPAU had been compromised by Equity Bank and lacked the independence required to oversee the appointment. He also contended that ICPAU should have consulted both parties before selecting the auditor.
In her ruling, Justice Suzan Abinyo dismissed the application, describing it as an abuse of the court process. She held that the court’s earlier order only required ICPAU to nominate an independent audit firm and did not oblige it to consult the parties. Requiring such consultation, she said, would undermine the very independence the court intended ICPAU to exercise.
The judge further found that the application had been overtaken by events because it sought to challenge a process that had already been lawfully established and implemented.
On the allegations that ICPAU lacked integrity and independence, Justice Abinyo ruled that Magoola had failed to provide evidence to support the claims. She said the burden of proof rested with the applicants and that they had not proved, on a balance of probabilities, that ICPAU had been compromised or had colluded with Equity Bank in appointing Clayton & Company.
The court also found that allegations of a conspiracy between ICPAU and the bank were unsupported and that mere assertions in affidavits and written submissions were insufficient without credible evidence.
Magoola is the proprietor of Dei Biopharma, a pharmaceutical startup that has received billions of shillings in government funding to support the manufacture of medicines for various diseases.
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