The Independent Uganda: You get the Truth we Pay the Price
Kampala, Uganda | THE INDEPENDENT | The state has this week taken over criminal proceedings against businessman Patrick Bitature and his wife Carol Bitature in a $26m commercial dispute with South African money lender Vantage Mezzanine Fund 11 Partnership.
The intervention by the Director of Public Prosecutions (DPP) comes after Kirunda & Company Advocates instituted criminal prosecution proceedings against the Bitatures, who argue that the dispute between Vantage and their companies is a purely commercial one and is being handled under the relevant civil procedures and through negotiations.
Acting on behalf of the DPP Jane Frances Abodo, Buganda Road Resident Chief State Attorney Joan Keko on January 23 wrote to Kampala High Court confirming the state’s takeover of the case.
Article 120 of the Constitution of the Republic of Uganda provides that the Director of Public Prosecutions has complete control and can take over and continue all prosecutions, except those instituted in the court martial.
Background
The dispute arises from a lending agreement entered in 2014, where Vantage advanced $10 to Simba Group.
Bitature explained that his businesses got financially distressed and were unable to meet their payment obligations to Vantage due to economic challenges, including Covid 19, the delay in the government making a final Investment decision for oil extraction and other challenges.
“We engaged Vantage to allow us to obtain further financing from commercial banks to meet liquidity requirements but Vantage was not forthcoming. This prompted us to act under our memorandum and articles to make changes to enable us to get additional funding to capitalise the Group,” said Bitature.
“This was necessary to save the group. We did this under the authority of the Articles for association for the group. The documents were filed and registered with URSB. It is these documents that are the basis of the baseless criminal prosecution filed by Advocate Kirunda,” he added.
In the 2020 case of Vantage v Simba, Justice Wamala determined that the dispute was commercial and referred it to arbitration.
Bitature’s lawyers said instead of going to arbitration, in 2021, Vantage sought to transfer shares in his company to itself. This was rejected by URSB.
Vantage sues URSB
Court found that Vantage had acted illegally to carry business in Uganda without registering under section 4 of the Partnership Act, and that it had committed an offence under section 4(2) of that same law.
Justice Musa Sekaana declared that Vantage was not recognized in Uganda and could not sue or defend a suit. This matter is on appeal.
In 2022, Vantage’s lawyers sought to sell Bitature’s properties and were stopped by the Court of Appeal.
Meanwhile, arbitration proceedings were ongoing in London and ended in July 2023. Simba initially participated but later withdrew from the proceedings.
Bitature was ordered to pay back more than $65.7m (about Shs244b) to Vantage Mezzanine Fund II Partnership, an award Bitature’s lawyers say was exorbitant and intend to object to its enforcement in Kampala High Court.
Sources indicate that Vantage and Bitature have continued negotiating on settlement of the loan obligations.
“While we have concerns of the exorbitant and extortionist terms in the original loan agreement and indeed the exorbitant amounts in the award, we have made progress on what should be a reasonable amount. I have since been engaging different stakeholders and I am soon getting financing to settle this issue once and for all,” said Bitature.
Kampala High Court Judge Rosette Kania on January 8, 2024, ordered the prosecution of the Bitatures who are directors of Elgon Terrace Ltd and Simba Telecom to face prosecution for allegedly altering company shares in 2019 and 2020 with the intent to defraud Vantage Mezzanine Fund 11 Partnership of their security interests. Bitature has since applied to the Court of Appeal to set the order aside.
It is alleged that outstanding debt owed to the South African creditor as of December 2019 is $26,486,634.78, a figure also contested by Bitature.
Bitature’s lawyers said it was a gross irregularity for the High Court to make such orders without hearing his and his wife as required by section 50 (2) of the Criminal Procedure Code.
“It is therefore unfortunate that to dispute this progress, my opponents seek to use dirty tactics to damage my reputation and business. The bottom line is this is a commercial dispute and will be handed through civil courts or through negotiations. There is no basis of using unfounded criminal prosecution to settle it. On the legal part, we also wonder whether a private prosecutor can act under the authority of an entity that has been declared non-existent and unrecognised,” Bitature emphasised.
