By Kagenyi Lukka
Bowmans advocates and MMAKS advocates that were controversially paid exorbitant legal fees by Bank of Uganda face a fresh legal suit by a concerned citizen should they fail to honour his demands.
The front legal faces in the illegal sale of crane bank limited include; sacked Buganda Attorney general, David Mpanga is a leading partner at Bowmans advocates while Timothy Masembe Kanyerezi is also a senior partner at MMAKS advocates(Masembe, Makubuya,Adriko, Karugaba & Ssekatawa).
It should be recalled that Bank of Uganda paid about Uganda shillings 25 billion as legal fees for external lawyers.
Whereas BoU spent such huge sums of money to sale crane bank, the report by parliament’s committee on commissions, statutory authorities and state enterprises (cosase) revealed that the sale of crane bank violated the Financial Institutions Act of 2004.
Also, it was noted that Bank of Uganda didn’t have minutes of negotiation meetings with the said external lawyers. External lawyers also drew their terms of reference.
In a demand notice cum notice of Intention to sue dated 28th February 2019 to both Bowmans and MMAKS advocates, a concerned citizen, Steven Masanso makes a series of demands to both firms failure of which to honour will attract lodging of both civil and criminal proceedings against the two firms.
“As you are, it’s on record that as part of resolution of various banks facts of which are well with in your knowledge you continually received various monies in collusion with individual Bank of Uganda officials which sums were charged on received banks.”
“You also routinely billed way beyond permissible scale and in instances for no work done at all. A case In point is with respect on the monies taken out as legal fees for purported drawing of the Crane bank sales agreement even when it clearly shows having been drawn by the Legal Department of Bank of Uganda.”
Mr Masanso further contends that, “You accordingly offered no consideration and per took in an illegal and criminal enterprise”
He also accuses MMAKS of performing a regulatory coup variously significantly advising the banking regulator while at same time sitting on different boards of regulated commercial banks and/or acting for them.
According to Masanso for instance, in the case of cbl, the lawyers acted without authority of the board and the legal department.
All the actions of the advocates were construed in bad faith, self-interest and usurped the constitutional powers of the regulator.
The complainant demands that the accused firms publish an apology in the nations media, refund of all illegally levied fees failure of which will attract both criminal and civil proceedings.
It is evident that the work of regulating Commercial banks had been usurped by external legal advisors who acted for and on behalf of other banks while performing roles for Bank of Uganda.
“There is something they call regulatory capture. I am sure you have heard about it counsel. Do you know what that means? As you go back, you may remind yourself about principles of regulatory capture and I must say that this committee is going to make some opinion, one way or another about that point,” Abdu Katuntu told Masembe in February.
Regulatory capture is a form of government failure which occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or political concerns of special interest groups that dominate the industry or sector it is charged with regulating.
It should be understood that three top advocates of MMAKS are also board directors of 3 different banks. Timothy Masembe, the MMAKS Managing Partner is a board chairman of NC Bank, while Moses Adriko is a board member for Standard Chartered Bank.
Nelson Makubuya also sits on the board of Equity bank whose majority shareholder is Arise B.V with 11.99%. Arise BV is also dfcu Bank’s majority shareholder which bought the defunct crane bank limited at ugx 200 billion.
Conflict of Interest
AF Mpanga (Bowmans) Advocates have been variously involved with BoU, dfcu Bank and Crane Bank.
Bowmans who are dfcu Bank’s official external lawyers had also been handed a mega contract by BoU to represent Crane Bank (in liquidation) in a case filed against Sudhir Ruparelia; Crane Bank’s former shareholder, but were thrown out, by the high court over conflict of interest.
Bowmans, also advised PriceWaterhouseCoopers (PWC) during their BoU-sanctioned forensic audit on Crane Bank, during which time they had access to confidential commercial information about Crane Bank, information if passed on to dfcu would give them competitive leverage over the other banks that would later bid to buy the troubled cbl.
Finally, there isn’t evidence that the two firms offered legal advice but what we see is strive for personal benefit. In any case, they misadvised BoU and didn’t maximize the value of cbl.