Ugandan tycoon Sudhir Ruparelia-linked Crane Bank loses $212.5 million against dfcu Bank

An English High Court has dismissed an Ush816-billion ($212.5 million) lawsuit brought by Crane Bank and six of its directors, including Uganda’s richest man Sudhir Ruparelia, against the Development Finance Company of Uganda Bank Limited (dfcu Bank), its directors, and shareholders.

According to the Daily Monitor, Ruparelia and other directors of the defunct Crane Bank claimed in a multimillion-dollar lawsuit that the Bank of Uganda illegally confiscated its bank, grossly devalued it, and fraudulently sold a portion of its assets and liabilities to dfcu Bank in a shady bidding process.

The legal representative for dfcu Bank argued before the English High Court that the contentious transaction lacked an international component and that the central bank’s actions in acquiring and selling Crane Bank were legal.

The English High Court, according to the attorneys, lacked jurisdiction over the case under the foreign act of state principle, which forbids foreign tribunals from looking into sovereign acts by countries that are lawful within their boundaries.

As a result, Mark Pelling, acting in the capacity of a judge of the English High Court, rendered a decision in favor of dfcu Bank, declaring that “the applicants (dfcu bank, directors, and shareholders) are entitled to succeed on the Act of State Issue (foreign act of state rule), which means that it is not necessary for me to consider further the other issues that arise.”

The directors also requested that the judge dismiss the defendants’ use of the foreign act of state argument, but Pelling rejected their request on the grounds that the argument was “over-exaggerated.”

The judge further disregarded the plaintiffs’ arguments that the Bank of Uganda is not a part of the Ugandan government because, according to local law, it is an autonomous organization that operates independently of all other individuals and institutions.

The Bank of Uganda’s actions to seize control of Crane Bank, put it under receivership, close it down, and sell it off as a result of claims of a liquidity shortage were also justified by the fact that they fell within the scope of its regulatory authority over the financial industry and institutions.

About eight months ago, a judgment by the Supreme Court in Kampala, Uganda’s capital city, allowed Ruparelia to regain control of the country’s largest commercial bank, Crane Bank.

Ruparelia, one of Uganda’s largest businessmen with a $1.1-billion net worth in 2012, is the chairman and creator of the company. The Ruparelia Group specializes in education, real estate development and management, hotels, resorts, floriculture, and broadcasting.