Investor cries foul in Shs24b National Bank of Commerce - Daily Monitor

Investor cries foul in Shs24b National Bank of Commerce

Saturday December 17 2011

By Isaac Imaka

A United Arab Emirates investor has complained to Bank of Uganda accusing its business partner – the National Bank of Commerce – of changing goal posts over $9.973m (Shs24 billion) it has paid for a majority stake in the bank.

International Investment House on behalf of its anchor investors from the Emirates and Saudi Arabia, in a letter to Bank of Uganda Governor, claims despite contributing all the required financing, NBC has refused to hand over management of the bank, additional funds to complete the deal.

“It is not correct when National Bank of Commerce (NBC) says further payments need to be made to bring shareholding up to 37 per cent and we believe NBC and some sellers are deliberately delaying the transfer to keep control within the management,” reads the letter.

International Investment House claims that the Shs24b it has paid entitles its subsidiary, the Emirates Africa Link for Strategic Alliance, the company investing in NBC, to 48.7 per cent of the shareholding.

“We request and expect that NBC issues a share certificate to Emirates Africa Link for Strategic Alliance over 48.702519 per cent of NBC share capital immediately as payment towards the shares now stands at more than the 48.702519 per cent bench.”

The investors also say their representatives on the board are suppressed and not allowed to make substantive contributions, threatening that if this goes on they will stop any further investments in the bank.

Saturday Monitor has learnt that the Arab investors initially wanted to start an independent Islamic bank but were persuaded by some high-profile politicians, who happen to have stakes in NBC, to buy shares in the bank instead.
“We will be willing to exit on the basis that the 48.702519 per cent stakes purchased worth $6,053,027 (Shs14b) and the capital injected plus payments made to third parties amounting to $920,000 immediately within the month,” the letter says.

The investors hold the current chairman, the vice chairman and the managing director of the bank responsible for the state the bank is currently in. They also claim the bank’s capital is constantly being drained due to “bad insider lending.”

When contacted, NBC Managing Director Mohameed Wahra yesterday said he was busy and directed that we talk to Mr Amos Nzeeyi, the bank’s vice chair. Mr Nzeeyi, however, refuted the claims. He said the investors, led by one Ahmed Darwish Dagher, have never completed payment for the majority stake.

“We met in 2008 and agreed that he buys the shares but up now, he has not completed buying the shares. He has been fighting to take over management of the bank but he still has minority shares,” Mr Nzeyi said.
He promised to avail this newspaper with detailed information on Monday.