dfcu Limited (‘dfcu’) has become aware of several inaccurate and defamatory reports circulating on various media platforms purporting that it is in chaos following the alleged exit of CDC Group Plc, one of its shareholders, and the resignation of Mr. Deepak Malik, a non-executive director representing Arise BV.
In a July 13, 2018 statement to the media, the bank’s chairman Elly Karuhanga clarified that the “alarmist rumours have been perpetrated and coordinated by certain person (s) with the malicious intent of discrediting dfcu and its successful acquisition of some assets and assumption of some liabilities of Crane Bank (in receivership)”.
Sources privy to the reports identified one of such said malicious people as Muhereza Kyamutetera, a former Vice President of the PR Association of Uganda (PRAU) and the current Chairman of the Uganda Advertising Association.
As we learnt, the rumours are part of the smear campaign aimed at projecting a supposed leadership and liquidity crisis at the bank with the aim of shaking the customers’ confidence to desert dfcu.
Social media has been awash with baseless rumours about dfcu’s supposed leadership crisis tarnishing the name of Mr. William Sekabembe, the bank’s Chief of Business & Executive Director.
In a July 13, 2018 article titled: “Sekabembe Quits Dfcu No.2 Job For KCB Bank”, Kyamutetera writes: “Mr. Sekabembe, who has been the number two boss at dfcu Bank, should be going to KCB Bank Uganda for a Managing Director role”.
He claims that Sekabembe’s “jumping ship” threw “the troubled lender into a leadership crisis” because he had reportedly been groomed since October 2016 for “the top job”.
“Sekabembe has already resigned and is serving a 3-month’ notice…, ahead of Juma Kisaame’s contract expiry sometime this year,” Kyamutetera wrote.
He further claimed that Sekabembe was supposed to take over from Juma Kisaame early 2017 but Kisaame whose contract was due to expire then, was given more time, to manage the Crane Bank-dfcu merger, after which Sekabembe would then fully assume the top job.
Sekabembe responded with a tweet calling the story “fake news” and returned to his duties.
With an illustrious banking career stretching for 18 years, its absurd to suggest that Sekabembe was simply “raised” to fill an executive position as if he had no qualifications to measure up to the task.
Deepak Malik resignation
Kyamutetera further claimed that after CDC Group Plc, the bank’s second majority shareholder, announced it would sell its shares, Deepak Malik, the CEO of Arise B.V; dfcu’s majority shareholder, decided to resign from the board.
In his July 10, 2018 article titled: “More Questions than Answers in Deepak Malik’s Resignation from Dfcu Board”, Kyamutetera openly suggests Malik’s resignation was connected to dfcu bank’s takeover of Crane bank formerly owned by Sudhir Ruparelia.
“So why has Deepak resigned and resigned now? Perhaps he wants to reduce his workload, seeing that Arise B.V is making several acquisitions across the African continent or is there a connection between Deepak’s resignation and CDC’s planned departure?”
He added: “Is there a connection between the exits and the troubled acquisition of Crane Bank? Why is Juma Kisaame, dfcu’s Managing Director and his No.2 William Sekabembe, the two men at the centre of the Crane Bank acquisition suspiciously absent from this drama? Isn’t this the time for them to stand up and stand up tall? Could there be deep divisions amongst the shareholders that we do not know yet?”
He then hinted at a possible “imminent parliamentary report implicating dfcu and Bank of Uganda of collusion in the problematic Crane Bank Sale.”
The bank’s chairman Karuhanga set the record straight while addressing press on July 13.
He said twelve months ago, Mr. Malik informed the dfcu Board of his appointment as the Chief Executive Officer (CEO) of Arise BV, the majority Shareholder in the Company.
Arise BV is a joint venture comprising Norfund (the Norwegian Investment fund for developing Countries), Rabo Development BV and FMO (the Dutch Development Bank) with assets in excess of USD 660 Million invested in over 10 countries across Africa.
“Mr. Malik’s appointment as CEO is an engaging function that would not enable him apply sufficient time and attention to dfcu as a Board member. Mr. Malik therefore, plans to step down from the dfcu Board,” Karuhanga explained.
“Further, Mr. Malik also plans to step down from the dfcu Bank Board in order to enable the Bank meet the regulatory requirement of ensuring that at least 50% of its Board members are persons resident in Uganda.”
Mr. Deepak Malik has served on the Boards of dfcu Limited and its subsidiary, dfcu Bank, for over ten years.
Malik himself issued a statement saying Arise BV continues to play a significant role in the dfcu’s activities, both at the Board and operational levels.
He confirmed that Arise BV’s involvement as an anchor shareholder of dfcu would continue.
Arise BV’s commitment to dfcu is evidenced by the USD 50 Million bridging financing it provided in 2017 to enable dfcu Limited diversify its service offerings to its clients.
“The public is advised to ignore the malicious rumours that have been circulating in the media. Dfcu is considering the legal options at its disposal for holding accountable the persons responsible for the defamatory publications. In the meantime, dfcu would like to reassure the public that both dfcu Limited and dfcu Bank shall continue to offer services to the public at all their outlets in line with dfcu’s commitment to its customers and stakeholders,” Karuhanga warned.
Plot to shake customer base
According to sources, Kyamutetera’s endless tirade against dfcu is calculated to instil fear and distrust in the bank’s clientele.
“In the end, the customers will come to believe that their money is not safe in dfcu. As a result, they will withdraw their deposits and affect the bank’s day-to-day operations,” the source told us.
“His [Kyamutetera] articles are baseless and not true. He is up against a bank that is on its way to becoming the biggest bank in the country, second only to Stanbic bank.”
The rumours claimed dfcu was in a liquidity crisis. They claimed the bank has no cash necessary for lending and paying its customers.
It was further alleged that clients applying for loans are getting less than what they have applied for.
Karuhanga, the bank chairman flanked by George Ochom, the DFCU Ltd general manager, was forced to address press at Kampala Associated Advocates offices in Nakasero, Kampala.
Ochom explained that liquidity is very critical in the bank market and that banks can’t operate normal business without enough liquidity.
“It is critical in the interbank market because you know there are always payments that go for daily basis. So, in normal cause of banking business there is a lot of movements of funds.”
He explained that banks have to maintain a certain liquidity ratio in order to be able to pay out their customers.
“Karuhanga and Ochom were explaining the importance of liquidity in daily operations of a bank but their message was misinterpreted as an admission that the bank had no funds,” the source explained.
The rumours then circulated claiming dfcu had exhausted its limits within the interbank lending market and thus can’t borrow from them—allegedly prompting resignations of 69 staffs from different branches across the country including Sekabembe himself [yet he remains in office].
In a recording of the press conference, Karuhanga explains that one bank may have some more liquidity than another depending on its normal course of business, citing taxes and salary payments.
He said borrowing and lending is a normal course of business. This leaves the question as to how the bank is still operating if it faces a liquidity crisis as the rumours alleged.
Confusion regarding shareholders
In his July 04, 2018 article titled: “Dfcu Bank’s 2nd Largest Shareholder to Quit Amidst Bittersweet Crane Bank Takeover”, Kyamutetera wrote:
“There is a possibility that although CDC has had a planned exit out of dfcu, signaled by the 2013 disposal of 27.54% stake to Rabo Development B.V and 17.48% to Norfund, CDC could have been riled by Dfcu’s recent troubled acquisition of Crane Bank. The acquisition that has sparked off several law suits from Crane Bank’s former shareholders, as well as a parliament inquiry, is likely risk to CDC’s reputation, thus precipitating their exit.”
Yet he contradicts himself by including in the same article an email in which Rhyddid Carter, CDC’s Communications Manager, explains that in 2013, CDC made the decision to significantly reduce its stake in dfcu by selling to other like-minded investors who could bring in a new phase of growth.
If CDC had made the decision by 2013, then how did the takeover of Crane bank which happened in 2017 influence their sale of shares, as alleged?
Karuhanga once again set the record straight, saying that CDC Group Plc has been a shareholder of dfcu from 1964 when it was established, and has played a significant role in dfcu’s growth.
Following the exit of the other founder shareholders, DEG (the German Development Bank), IFC (the International Finance Corporation) and UDC (Uganda Development Corporation), during the USE listing of dfcu in 2004, CDC increased its stake in the Company from 25% to 60%.
In 2013, CDC Group plc confirmed that it had reached its investment horizon in the Company, and would begin to systematically divest its stake in dfcu over a period of time.
It was, however, agreed that CDC’s stake would be transferred only to investors whose objectives were aligned to the Company’s interests, and who would support the Company’s long-term growth.
Since 2013, CDC has reduced its stake in dfcu from 60% to the current 9.97%.
The bulk of this stake was transferred to Norfund and Rabo Development BV. (the Development Finance arm of Rabo Bank), and is currently held by Arise BV., a joint venture involving the two entities.
He said CDC may, as planned, continue to divest its stake in the Company. CDC’s divestiture has not negatively affected dfcu’s underlying strength, but has rather, brought on board partners that are aligned with dfcu’s long term growth strategy.
“I think at this point, Kyamutetera is pushing a personal vendetta. He has a grudge against the bank he blames for losing his daily bread,” the source said.
According to the source, Kyamutetera, a former PR of Ruparelia Group, had worked with Crane bank and has been vocal ever since its takeover by dfcu.
He has written scores of articles either defending Crane bank, on one side, or attacking dfcu, on the other.
“His aim is to project a leadership crisis and make customers lose trust in dfcu bank,” the source said.
On May 10, 2018, he wrote an article in Daily Monitor titled: “To blame collapse of Crane Bank on shareholders alone is not accurate” in which he attacks Joseph S. Kitamirike for “unsuccessfully seeking to assign winners and losers in the takeover and rushed sale of Crane Bank’s assets and liabilities by Bank of Uganda to dfcu Bank”.
He adds: “These attempts may be interpreted as an ill-timed cover-up for what now many have come to believe as the Central Bank’s heavy, rushed and sometimes non-strategic hand in the closure of banks- an issue that is now being investigated by the Office of Auditor General, at the instigation of Parliament.”
On February 14, 2017, he wrote on social media: “Everyone seems to love to gossip and rumour that Sudhir took people’s properties fraudulently. To the contrary, the Sudhir Ruparelia I know is a good generous man, who has helped many budding entrepreneurs by showing them the way and providing credit finance. I also know him to be a no-nonsense man when it comes to holding people accountable.”
He went on: “Ironically the same people accusing him of harshly recovering loans are the same people seemingly celebrating the failure of the bank due to unpaid loans. Now let’s shame the devil, If Sudhir, has ever taken yours or your relatives’ property wrongfully, put here the details, circumstances and evidence.”
He then exposed himself: “I will also ask those who have been beneficiaries of Sudhir’s generosity, me inclusive, to share their testimonies. IT IS JUST WRONG TO BEAT SOMEONE WHEN THEY ARE AT THEIR LOWEST.”
Kyamutetera did not betray earlier sentiments shared by New Vision in its May 2, 2013 article titled: “Sudhir to spend sh5b For daughter’s wedding”.
New Vision suggested that among “potential Meera Ruparelia’s stalkers” would include Muhereza Kyamutetera (fireworks advertising) himself!
“He is happily married with children, but at one time before he walked down the aisle; his closeness to Sudhir’s family was the source of gossip among peers,” New Vision wrote of Kyamuteteera.
It added: “Anyone who attended the annual Ascot Goat races told the closeness he had to the family; he shared free Cuban Cigars with Sudhir and took to dress like an oil sheikh just to look the tycoon part. This got tongues wagging, but alas, the rumours have come to pass.”