ANALYSIS: Sudhir, BoU fallout

Sudhir, BoU fallout: An inside account of the politics behind the tycoon’s troubles

Kampala, Uganda | HAGGAI MATSIKO | On July 6, President Yoweri Museveni chaired a meeting at which tycoon Sudhir Ruparelia and officials from Bank of Uganda (BoU) sought to resolve a crisis resulting from the takeover of Crane Bank. The meeting was poised to be an intense fight even from the sitting arrangement. Finance Minister Matia Kasaija, Attorney General William Byaruhanga, BoU Governor Tumusiime Mutebile, his Deputy Loius Kasekende and their lawyer, Timothy Masembe of MMAKS sat on Museveni’s left. And Sudhir, his wife and his lawyers, Alex Rezida and Kakembo Katende, sat on his right.

Museveni who was seated at the head of the table was to act as the referee to resolve a stalemate between the two camps.

Going into the meeting, the two parties had each submitted briefs to the president. The central bank was accusing Sudhir of fraud at Crane Bank. And Sudhir had detailed how BoU’s mistakes were to blame for the closure of Crane Bank. And how the existence of fraud should not have led to the closure of the bank.

Sudhir hoped the president would restrain the central bank officials from proceeding with court. On the other hand, the central bank officials hoped the president would get Sudhir to submit to their demands or give them a nod to proceed with the suit.

The central bank had launched a suit against Sudhir who it also accused of breaching a March 20 agreement. The deal offered the tycoon immunity from prosecution as long as he paid BoU some $ 60 million to cover for the losses allegedly registered under Crane Bank.

In countering, Sudhir said he had met his end of the bargain as per that agreement by paying BoU some $8 million and giving them some 32 properties. But, he said, rather than also meet their end, BoU was now threatening to sue him.

“ But isn’t your role to ensure a healthy financial sector and that businesses grow?” Museveni asked the BoU camp at some point, “So if that is your role, why don’t you find a way to resolve this?”

In response, BoU officials reiterated the fraud allegations against Sudhir like how he  had allegedly extracted $ 80 million from the bank.

“You mean he lied?” seemingly upset at the allegation of fraud, the President asked.

And so on, the two sides sparred before the President for about an hour. As the sparring went on, the president got frustrated and said that in Runyankole they say that when two parties fail to agree, they are left to fight.

He warned that if the matter wasn’t handled well, there would be consequences. After, he asked Sudhir’s team to leave and stayed with the government team.

On July 10, four days later, Sudhir received a letter from the lawyers—the last attempt to get Sudhir to submit to BoU’s demands.

“The above letter is required to be signed off in a consent judgment to be filed in the Commercial Division of the High Court no later than Wednesday 12th July to forestall the filing of a criminal complaint which we are currently instructed to file on or by Thursday 13th July 2017,” reads the letter in part.

Bank of Uganda Governor Tumusiime Mutebile later confirmed that President Museveni okayed action against Sudhir.

There had been multiple efforts from Sudhir to try and get President Museveni to save him. These efforts had ended up into the signing of the March 20 agreement in which Sudhir agreed to pay $ 60 million in exchange for immunity from prosecution.

But when disagreements emerged over the implementation of this agreement, the President wasn’t ready to help any more.

Yet in the past, President Museveni has gone out of his way to protect investors even where the central bank had a strong case against such investors.

For instance, sometime in 2014 when the Central Bank decided to close Global Trust Bank, former Nigerian President General Yakubu Gowon, who had interests in the bank, visited Uganda. While here, he visited the President at State House Nakasero.

Apparently, he told the president that he had been capitalizing the bank but the Central Bank had decided to close it.

President Museveni drove his car from State House and came to Yakubu’s Hotel suite at Serena Hotel. While there, he called Mutebile and Justine Bagyenda, BoU’s director banking supervision. Normally, this meeting should have taken place at his office at State House. That the meeting was taking place here was a clear sign that the President was trying to send a signal to the two officials.