Ham Enterprises (U) Limited and Diamond Trust Bank had a 10-year long term banking relationship where Ham Enterprises (U) Limited as the client made huge transactions on its accounts with the bank equally extending loan facilities to the company and the company would promptly pay off these loans until an outstanding balance of $10,000,000 which the company claims was not reducing despite having paid huge amounts of money towards loan clearance over time.
The company, therefore, decided to carry out a figurative and legal audit on all its accounts through which audit reports from the company’s accounts and loan statements availed from the bank records revealed that all loans were already paid to zero balance and instead the bank had excessively unlawfully debited Ugx34 billion and $23 million from the company’s accounts over that period of time.
The legal audit further revealed that Diamond Trust Bank was carrying out illegal transactions in a bid to avoid paying government taxes contrary to the laws of Uganda specifically as guided by the Financial Institution Act and equally contrary to the Bank of Uganda customer consumer protection guidelines. Hence, on the 17th of January 2020, Ham Enterprises (U) Limited filed a suit at the commercial court for recovery of the excessive money unlawfully debited from its accounts, equally bringing these acts of illegalities committed by the Diamond Trust Bank to the court’s attention.
On the 7th of October 2020, judgement was entered against the bank based on fact that its on-court record admitted to committing illegalities by carrying out financial institution business in Uganda without a license as required by section 117 of the Financial Institution Act, and DTB Uganda acting as DTB Kenya Agent without approval in contravention of Regulation 5 of the Financial Institutions (Agent Banking) Regulations 2017 and Section 126 (3) of the Financial Institutions Act as well as the relevant laws of Kenya, making the bank to become a principal offender as provided for under section 19 of the Financial Institutions Act having taken part in and facilitated the commission of an offence. There was also no counterclaim by Diamond Trust Bank in regard to any outstanding unpaid loans by Ham Enterprises (U) Limited to the Bank. The judgment equally directed the bank of Uganda to protect the Ugandan economy from illegal haemorrhages and uncontrolled flows of financial resources and to ensure that financial institutional business in Uganda is operated within the letter of the law to protect the nascent banking business industry in Uganda
On the 20th of October 2020, the bank appealed against the judgement of the commercial court on grounds that there was no illegality committed contrary to the Financial Institution Act. On the 5th May 2021, a panel of three Honorable Judges headed by Hon. Justice Richard Butera, Hon. Justice Kenneth Kakuru and Hon. Justice Christopher Madrama ruled in favour of the Diamond Trust Bank, setting aside the High Court judgment without addressing the issue of illegality despite it being the substantial ground of appeal as filed by Diamond Trust Bank. The Court of Appeal concluded by ordering a retrial at the high court while excluding the amended plaint that had raised the point of law of illegality committed by Diamond Trust Bank thereby promoting and shielding the illegalities as committed by the bank contrary to the Financial Institutions Act.
On the 10th June, 2021 Ham Enterprises (U) Limited appealed against the court of appeal’s decision at the supreme court. On the 12th November 2021, the supreme court allowed the bank’s request to highlight submissions on grounds not contained in their memorandum of appeal on a matter not subject of appeal and parties were asked to submit on the same within 13 days. Diamond Trust Bank in their submissions admitted that the Court of Appeal failed to address the substantial point of illegality upon which judgement was rightfully entered at the high court specifically stating in their submissions that: “The learned justices were entitled to first deal with the grounds regarding the procedure adopted by the trial Judge in striking out the defendants’ pleadings and granting the impugned orders before dealing with the other grounds” and on 23 November 2021, Ham has applied, and awaits judgement on the admissions by the bank.