Sudhir rejects lawyers in Central Bank case

Affidavit. I,Sudhir Ruparelia c/o M/S Kampala Associated Advocates, KAA House, Plot 41 Nakasero Road, P.O. Box 9566, Kampala do hereby affirm and state as follows;-

That I am a male adult Ugandan of sound mind, the applicant herein and the defendant and counterdaimant in HCCS 493 of 2017, and I depone this affidavit on my own behalf in that capacity.
That I am also a shareholder and member of the Board of Directors of Crane Bank Limited, which is now in receivership by the Bank of Uganda,
That with the help of my lawyers, Kampala Associated Advocates, I have read and understood the contents of the plaint, the written statement of defence and counter claim and the reply to the written statement of defence and the defence to the counter claim which was filed out of time and I know that all the matters in issue in HCCS 493 of 2017 raise issues of conflict of interest as against the law firms of MMAKS Advocates and AF Mpanga Advocates.

The plaint, the written statement of defence and counter claim and the reply to the written statement of defence which was filed out of time are attached as annexure Al, A2, A3 respectively.
That the reply to the written statement of defence which was filed out of time, alleges that the 3rd Respondent’s entire case is based on a so called forensic report (the PWC document) dated January 13, 2017 written by Price Waterhouse Coopers and is attached to the 3rd Respondent’s late reply to the written statement of defence as annexure M.
That at page 3 of 153, and page 13 of 153 of the PWC document, PWC alleged that it is not a legal practice. PWC states that the comments on the possible legal implications, options and considerations contained in the PWC document were based on independent legal analysis and advice given by Bowmans Uganda, another name for the law firm of AF Mpanga Advocates.

That I have read the PWC document and note that each allegation made by PWC is backed up by alleged “Independent Legal Advicd’ or “Legal Analysis all of which were as per the document authored by the 2nd Respondent, I have been advised by my lawyers, Kampala Associated Advocates, which advice I believe to be true, that AF Mpanga is a necessary, material, competent and compellable witness to speak to the veracity of the contested PWC document.
That examples of the legal advice include but are not limited to;

A. At paragraph 4.45, Page 53 of 153, under the heading “Independent Legal Assessment’ there is a conclusion that I owned 96 per cent of the shares of the 3rd Respondent. The allegation therefore that I owned 96 per cent or 100 per cent is clearly an allegation that was made as part of the alleged Independent Legal Assessment which PWC attributes to AF Mpanga.
B. In paragraph 4.62, at page 56 of 153, there is an allegation that the leases between the 3rd Respondent and Meera Investments Limited were drawn up to a single template without the endorsement of the person which drew and registered the leases.

C. Paragraph 4.85 to 4.91, at page 60 to 61 of 153, under the heading; “Legal Assessment of the Transfer1’ it is alleged that the transfer of the leases was at undervalue and this amounted to causing a financial loss and further that some land files at the land registry show that the 3rd Respondent held some freeholds that it transferred to Meera Investments Limited. The 2nd Respondent also concludes that the alleged decision to transfer the land was not motivated by business efficacy reasons.

D. At Paragraph 4.148 to 4.153, page 74 and 75 of 153, under the heading “Analysis of the Legal Implications1’ regarding the alleged “hole” the legal advisor concluded that there was a falsification of accounts and that in all years there are misstatements which the Directors signed off and are liable for. I he 2nd Respondent also alleges that there was manipulation of the 3rd Respondent’s financials to show growth whereas not.
E. At Paragraph 4.197 to 4.199, under the heading “Legal Analysis of the Payments the 2nd Respondent claims that they noted that they witnessed irregular withdrawals of funds by Technology Associates. The 2nd Respondent also claims that the monies were withdrawn whereas no software had been supplied. (A Copy of the excerpts of PWC report are attached as annexure “A4”).
That the plaint alleges that I extracted USD9.2 million dollars through Technology Associates (TA). The plaint further alleges that I am a director and shareholder of the said company which allegation is a question that would only have been made as a result of the legal anyalsis of AF MPanga referred to in the PWC document.

That in the plaint, the plaintiff attached as purported evidence of that allegation, annexure “H (vi)” which I have read and understood. The said annexure contains email correspondences between Jacqueline Lule, William Kasozi and David FK Mpanga, all of AF Mpanga Advocates, with M/s PWC and Temenos. The email correspondences/exchanges between AF Mpanga Advocates, PWC and Temenos which were attached as evidence of the alleged extraction of funds using TA are an integral part of the plaintiff’s claim regarding my alleged involvement in the extraction of money through TA. (Attached are the email correspondences marked as annexure B).
That I have been advised by my lawyers, M/S Kampala Associated Advocates, which advice I believe to be true, that by virtue of Annexure “FI (vi)” of the plaint, William Kasozi, David FK Mpanga and Jacqueline Lule are potential witnesses for the purposes of proving that the allegations with regard to my alleged ownership of Technology Associates and any alleged extraction of money through Technology Associates are false. I have also been advised that the said email correspondence comprising Annexture “H(vi)” was attached to prove the that the said lawyers had corresponded with PWC and Temenos, and the result of that correspondence was the false allegation that I used TA to extract USD 9.2 Million.
That on the March 20, 2017, I entered into a Confidential Settlement and Release Agreement (“CSRA”) with the 3rd Respondent and 4th Respondents. On the April 4, 2017, the 2nd Respondent availed to me an Implementation Agreement that had been drafted and signed by David FK Mpanga for AF Mpanga Advocates and on behalf of MMAKS Advocates, both acting as the agents of the 4th Respondents(Bank of Uganda).

The Implementation Agreement detailed the steps and obligations that each party had to undertake to implement the CSRA, and both the Implementation Agreement and the CSRA are annextures “Zl” and “A” respectively to the pleadings in HCCS 493/2017. (A copy of the Implementation Agreement is attached as annexure Bl)
That I have been advised by my lawyers, Kampala Associated Advocates, which advice I believe to be true, that AF Mpanga and MMAKS Advocates shall be required as witnesses to tender in the Implementation Agreement and/or testify on matters relating to its negotiation, execution, implementation and breach, as well as its effect on the CSRA.
That in their late defence to the counter claim, the 3rd and 4th Respondents have clearly indicated that they will rely on emails written by Mr David F K Mpanga of AF Mpanga Advocates and have listed them as annexures GG, HH, II, LL, MM, PP to mention but a few, explaining the circumstances regarding the negotiation, execution and subsequent breach of the CSRA.
That I have been advised by my lawyers, which advice I verily believe to be true, that in order to reach a just resolution of the dispute regarding the CSRA, on account of the averments in the counter claim and the defence to the counter claim, Mr David FK Mpanga of AF Mpanga Advocates-Bowmans Uganda is a necessary, competent and compellable witness. (The annexures GG, HH, II, LL, MM, PP mentioned above are attached as annexure B2)
That after the implementation agreement was signed, issues arose with regard to the list of properties handed over as part of the obligation I had under the CSRA. In particular, issues arose over the list of properties handed over by Mr Mahmud Bharwani of Infinity Investments Ltd.
That according to paragraph 6.9 of the Defence to the Counterclaim, on the April 7, 2017, Mr David FK Mpanga held a meeting with Mr Mahmud Bharwani, wrote minutes of the meeting and sent an email forwarding the said minutes. In that meeting it was agreed that the parties would not rely on the unilateral valuation of one party but would strictly follow the CSRA.

The email and minutes are attached as annexure “Z5” to the counterclaim. As part of my defense and counterclaim I shall rely on Mr. David FK Mpanga’s minutes to show that all the issues related to the property list that I handed over in relation to the CSRA and Implementation Agreement were resolved. (Copies of the email and minutes are attached and marked annexures D1 and D2 respectively)
That I am advised by my lawyers, Kampala Associated Advocates, whose advice I verily believe to be true that the said Mr. David F.K Mpanga of AF Mpanga-Bowmans Uganda as the author and sender of the above mentioned minutes is the best placed person to testify on them as a witness. He is both a competent and compellable witness.

That I have been advised by my aforesaid lawyers that Mr David FK Mpanga and the firm of AF Mpanga- Bowmans Uganda cannot act as counsel in matters relating to the CSRA, the implementation agreement, the property list, the Bharwani properties and from his engagement with Mr Bharwani on the loans of Infinity Investment Ltd, ail of which constituted a significant part of the defence and counter claim in HCCS No. 493 of 2017.

That on the night of June 28, 2017 at 11:18pm, Mr David FK Mpanga sent an email to me and attached to the email was a letter of demand. The email and the letter are an integral part of my defense and counterclaim since they constituted a breach of the CSRA and are attached as annexure Z8 to the counterclaim. Mr David FK Mpanga shall be required as a witness regarding this document. (A copy of the letter is attached hereto and marked Annexure E)
That on July 10, 2017, the 2nd Respondent wrote to me a letter proposing a settlement of HCCS 493 of 2017 and concluded the letter by threatening that if I did not sign off a consent judgment by July 12, 2017 they would commence criminal proceedings against me. I intend to use this letter at the trial to show that the Bank of Uganda and the plaintiff were using HCCS 493 of 2017 to blackmail me, and that the suit had been filed in abuse of court process. Mr David F K Mpanga is a witness as the author of the July 10, 2017 letter. (A copy of the letter is attached hereto and marked annexure F)
That in its reply to the Written Statement of Defence, which was filed out of time, the 3rd Respondent seeks to rely on a letter dated 24th January 2017 written by AF Mpanga Advocates to purportedly contextualize annexure F. As authors of that letter, AF Mpanga Advocates will be required to lead evidence on it. AF Mpanga Advocates will need to be cross examined on it. (A copy of the letter is attached and marked annexure FI.)
That I have been advised by my lawyers, Kampala Associated Advocates, which advice I verily believe to be true, that the actions of Mr. David FK Mpanga are binding on all the partners and indeed the firm of AF Mpanga Advocates.

That I also know that AF Mpanga Advocates were lawyers for the 3rd Respondent, including a case filed in the Constitutional Court by the former shareholders of the National Bank of Commerce and lawyers from AF Mpanga will be required as witnesses in HCCS 493 of 2017 to prove that in their interaction with 3rd Respondent, they witnessed that I was not in charge of the Bank’s day to day operations, and that the allegations against me in FICCS 493/2017 are false.
That I further know that in the conduct of the matter against the former shareholders of the National Bank of Commerce, the 2nd Respondent as our lawyer became aware of facts which may be prejudicial to me in HCCS 493 of 2017.

That in paragraphs 3 and 4 of the late reply to the written statement of defence, the 3rd Respondent admits that AF Mpanga Advocates and MMAKS Advocates have for a long period of time acted as lawyers for the 3rd Respondent, a company in which they allege that I am the sole and beneficial owner of.
That I have been advised by my lawyers, Kampala Associated Advocates, which advice I verily believe to be true that by virtue of being a shareholder and director of the 3rd Respondent I was a client of the 1st and 2nd Respondents within the meaning of the Advocates Act and that all times there was an advocate-client relationship and a fiduciary relationship between me and the 1st and 2nd Respondents.
That the 1st Respondents are the longest serving Advocates of Crane Bank Limited and personally act and have acted for me or other companies in which I have an interest including Meera Investments Limited, the 2nd Defendant in HCCS 493 of 2017 and Goldstar Insurance Company Ltd wherein I am a substantial shareholder.

That MMAKS Advocates appear as the Bank’s Solicitors in the Annual Reports for 2013, 2014 and 2015 and those financial statements are all in issue in HCCS 493 of 2017. It is alleged in the plaint and the PWC document that these statements contained a “hole” from which I allegedly extracted USD 80 million. (Copies of the excerpts of the Annual statements are attached hereto and marked G, H and I).
That I know that as Crane Bank’s Solicitors and Lawyers, the 1st Respondents were in charge of perfecting, registering and enforcing securities, structuring transactions, general corporate advisory work, litigation, recovery and providing all manner of legal assistance to the Board and Management of Crane Bank Limited.

The firm advised the Board and Management on a daily basis since 2005. During the course of this intense advocate-client relationship the Board shared with MMAKS Advocates all matters pertaining to the management, shareholding, directorship and business of Crane Bank Limited.
That on the September 29, 2007, Crane Bank Limited instructed the 1st Respondent to conduct a training to the directors on the duties of Directors under the Financial Institutions Act, 2004 and in particular under Regulation 6 (7) (k) of Financial Institutions (Corporate Governance) Regulations 2005.
That I know that prior to the training of the Board, (of which I am a member), in a frank disclosure under the confidence of advocate-client privilege, we shared the entire corporate governance structure, the organisational structure, matters relating to the day-to-day running of the Bank, and other confidential and proprietary information regarding the shareholders and directors of the Bank and thus MMAKS are aware of facts which may be prejudicial to my case in HCCS 493 of 2017.
That following the said training, the Board thanked MMAKS Advocates for the training they had conducted regarding the roles of the directors. Under Section B Paragraph 10 at page 9 of the Plaint in HCCS 493/2017 a number of allegations regarding my duties to Crane Bank Limited are made.

At all material times, we as board members believed that MMAKS Advocates as our advisors were in fiduciary relationship with us and had an ethical duty of fidelity, loyalty and confidentiality and by accepting and prosecuting instructions in HCCS 493 of 2017 MMAKS Advocates is in breach of its fiduciary obligations to me. (A copy of the Board Minutes thanking MMAKS Advocates is attached and marked 3).

That I also know that HCCS 493/2017 alleges that I was the one conducting the day-to-day running of Crane Bank, and breached corporate governance principles, and these are the matters which MMAKS Advocates conducted training on. The said advocates are necessary, competent and compellable witnesses regarding their findings in relation to the daily running of Crane Bank and its adherence to the principles of corporate governance since they interacted with the Bank and its officials on a regular basis since 2005.
That I know that Crane Bank Limited sought and received specific advice from MMAKS Advocates regarding the structure and shareholding of the Bank. MMAKS Advocates conducted a due diligence of the Bank and confirmed its shareholding.
The plaint makes a number of false and wild allegations about my shareholding in the Bank, contrary to the due diligence carried out by MMAKS Advocates. MMAKS Advocates will be required at the trial as witnesses to testify as to their findings regarding the said shareholding, and to adduce documents evidencing their findings. (A copy of MMAKS’ findings with regard to shareholding is attached and marked K).
That I know that in paragraph 11.2 of the reply to the written statement of defence, which was filed out of time, the 3rd Respondent admits that the shareholding in Crane Bank was confirmed by MMAKS Advocates.

That I am advised by my lawyers, Kampala Associated Advocates, which advice I verily believe to be true, that by virtue of its opinion regarding shareholding, MMAKS Advocates were in a fiduciary relationship of trust and confidence with me and cannot seek to use whatever facts they obtained to my detriment and further, since the shareholding is in issue MMAKS Advocates shall be required as witnesses at the trial.
That the plaint makes a number of false allegations about the “day to day” running of the Bank and my being a “dominant executive force” and that nothing could have happened without my knowledge and approval. As the lawyers of the bank I will require MMAKS advocates, in particular Mr Timothy Masembe Kanyerezi, among others as witnesses to defend me from these false allegations. As my personal lawyers, they are witnesses to the fact that I only sat on the Board of Directors and did not run the said bank on a day to day basis, nor was I the dominant executive force.
That the said MMAKS Advocates were Crane Bank’s lawyers until the date of its take-over by Bank of Uganda on 20th October, 2016. During the management and conduct of the affairs of Crane Bank, the executive directors regularly consulted and wholly relied upon the advice of MMAKS Advocates and in that consultation, the Board and the management shared facts which are in issue in HCCS493 of 2017.
That according to the plaint, it is alleged that I caused the 3rd Respondent (Crane Bank) to loan money to Infinity Investments Ltd, a company I allegedly owned and/or controlled, and that enormous loan amounts were lent to the company on a highly irregular basis. The 3rd Respondent falsely claims in the suit that there were no recovery efforts against the said company when it started defaulting, and attribute this anomaly to me.
That I know that the 3rd Respondent loaned money to Infinity Investments on the basis of the work done by MMAKS Advocates as follows:

A. In 2010, 2011, 2014 the 3rd Respondent approved a loan facility to be granted to Infinity Investments Limited. Following the approval of the loan facility, MMAKS Advocates were instructed to conduct a due diligence and prepare the security documents for the loan facility. MMAKS Advocates prepared the security documents which included a debenture and mortgage for Infinity Investments Limited. (A copy of the facility agreements is attached as annexure L)
B. Infinity Investments Limited defaulted on its loan obligations and, contrary to the allegations that no recovery efforts were made, the 3rd Respondent (Crane Bank) instructed MMAKS Advocates to undertake recovery measures against Infinity Investments Limited.

C. I know that 1st Respondent wrote demand notices to Infinity Investments on the February 6,2016, September 21, 2016 and October 6, 2016 demanding for the outstanding amounts. Following the failure of Infinity to pay the outstanding amount, MMAKS Advocates, on the instructions of the 3rd Respondent, instructed their auctioneers to advertise and sell some of the properties offered as security by Infinity Investments Ltd. (Copies of the demand notices and advert issued by MMAKS Advocates are attached as annexure Ml)
D. That the said Infinity Investments Limited were further mentioned in the letter dated January 24, 2017 and MMAKS Advocates will be required as witnesses to testify with regard to Infinity Investment’s Limited

That in paragraph 17.1.6 of the Reply to the Written Statement of Defence, which was filed out of time, MMAKS Advocates admit that they drafted the mortgage and debenture documents that are in issue with regard to the Infinity Investments Ltd facilities. That in the Plaint it is alleged that Infinity Investment Limited’s worthwhile securities were released and the worthless ones retained by the 3rd Respondent.
That in Paragraph 17.1.6 of the Reply to the Written Statement of Defence, MMAKS Advocates alleges that it was only instructed to sell worthless securities after the valuable securities had been released.

That having been instructed to make a recovery against Infinity, MMAKS Advocates is now attempting to use its fiduciary role to my prejudice for the benefit of the 3rd and 4th Respondents case.

1 have been advised by my lawyers, Kampala Associated Advocates, whose advice I verily believe to be true, that in so far as MMAKS Advocates seek to disclose information as to the extent of their instructions, they are acting in flagrant violation of their fiduciary obligation to me. The aforementioned is done to prejudice my defense.
That I have been advised by my lawyers, M/S Kampala Associated Advocates, which advice I believe to be true, that the information pertaining to the transaction between Infinity Investments Ltd and the 3rd Respondent arose out of a fiduciary relationship to me as a director and MMAKS advocates by representing the 3rd Respondent on an issue related to the said transaction are breaching their fiduciary obligation.
That I have also been advised by the said Kampala Associated Advocates that having done due diligence on Infinity and drafted the facility documents, and undertaken recovery efforts, MMAKS Advocates will be witnesses to prove as false, the allegations in the Plaint, (drafted by the same MMAKS) that I caused
Crane Bank to irregularly loan enormous sums to Infinity and that I caused Crane Bank not to undertake recovery of the said amounts.

1 have been further advised that the 3rd Respondent can only prove the said pleading in paragraph 17.1.6 of the Reply to the Written Statement of Defence which was filed out of time, by calling MMAKS Advocates as competent and compellable witnesses.
That in my written statement of defence and counterclaim, I have provided a list of witnesses and listed Mr Timothy Masembe Kanyerezi and Mr David F K Mpanga whose evidence is necessary for the court to reach a just conclusion on the matters in issue and who are necessary, competent and compellable witnesses. (A copy of the summary of evidence is attached as annexure M2)
That I have been advised by my lawyers, M/S Kampala Associated Advocates, which advice I believe to be true, that MMAKS Advocates and AF Mpanga Advocates cannot appear as counsel in a matter in which they have potential to be witnesses and are conflicted, and that they cannot appear against former and current clients, or in matters where they will be in breach of their fiduciary relationship.
That what is stated herein is true to the best of my knowledge, save that which is based on the information/advice from my lawyers as herein disclosed.