12 more face charges over Crane Bank mess

KAMPALA. More than 12 individuals and entities will, alongside businessman Sudhir Ruparelia face a range of charges over the alleged mismanagement and fraud in the defunct Crane Bank, a report commissioned by the Bank of Uganda indicates.
The report, authored by the accounting firm PriceWaterhouse Coopers PwC, dated December 2016, points at the board of the bank, which was chaired by Mr Sam Muwanguzi, and Mr Ruparelia as his vice chairman, other board members, former top executives of the bank and “specific borrowers and the corporate entities and principals”.
The report is titled “Report on the preliminary forensic review at Crane Bank.”
The central bank is understood to have relied on the secret report, a copy of which Daily Monitor has seen, to close Crane Bank and eventually hand it over to DFCU.
The other members of the board who should face charges according to the report are Tom Mugenga, Jagdish Nagrecha, Jyotsna Ruparelia, Fred Opio, former Electoral Commission vice chairman Joseph Biribonwa and Rasik Kantaria.
Former Crane Bank managing director A. Kalan, and his deputy Ajay Kumar, who acted as managing director when the bank was taken over by BoU in October last year should also face charges, the report says.
Mr Kalan went conspicuously missing from the bank and the country about a year before Crane Bank was taken over, although the bank’s management consistently argued that he was on extended leave and would return.
The executive summary to the forensic investigation report, signed by PWC director Francis Kamulegeya, “summarises the role of various individuals in the matters investigated as part of this review and an assessment of their possible criminal culpability based on the preliminary findings, subject to interviews and further legal advice.”
The possible charges against the different players suggested by the investigators are drawn from the Financial Institutions Act, Penal Code Act, The Anti Money Laundering Act and the Anti-Corruption Act.
The board members, the report further suggests, may also have civil proceedings brought against them, in addition to being sanctioned by the Bank of Uganda.

The Bank of Uganda has already instituted civil proceedings against Mr Ruparelia, demanding about Shs400b from him, which the central bank says he fraudulently acquired from Crane Bank.
We were unable to reach the parties named in the report by press time.

Summary of findings
CBL board/each individual director
The Board failed to uphold the statutory responsibilities required of financial institutions.
The Board failed to uphold the statutory responsibilities required of financial institutions.
The Bank’s directors failed in their primary responsibility and fiduciary duty to ensure that the Bank is run properly. This failure allowed the systematic plunder of the Bank.
The Board also oversaw the preparation and presentation of false and misleading financial statements which misrepresented the bank’s performance.
The Board also oversaw the preparation and presentation of false and misleading financial statements which misrepresented the bank’s performance.
The Board also oversaw the preparation and presentation of false and misleading financial statements which misrepresented the bank’s performance.
The Bank’s directors are responsible for proper corporate governance and for the preparation and fair presentation of financial statements.
The Bank’s directors systematically flouted their AML Act responsibilities, including, failure to do appropriate KYC, The Directors did not ensure that all relevant documents were kept for at least ten years.
The Board were complicit in the irregular shareholding of Dr Ruparelia.
The Board approved the transfer of CBL titles to MIL.
The Bank’s Directors and officer participated in the unlawful extraction of cash and assets from the Bank in various ways.
The Board oversaw the irregular credit practices which caused loss to CBL.
The Board did not ensure that there was board charter and that the requisite committees were in place and effective.
Possible charges
Financial Institutions Act
Failure to take reasonable steps to secure compliance with the requirements of the FIA.
Failure to uphold statutory responsibilities of a Bank’s Board
Breach of fiduciary duty.
Making false entries on financial ledgers.
Making false statements or furnishing false information for FIA purposes.
Causing financial loss.
Failure to comply with corporate governance requirements in FIA, and FIA Regulations.

The Anti-Money Laundering Act
•Money laundering
Penal Code Act
• Conspiracy to defraud CBL, in respect of irregular shareholding; the prohibition on shareholding under the FIA; the sale of bank branch transfers to MIL; the cash extractions from the Interdico account; and the cash payments to TA.
The Anti-Corruption Act
Embezzlement.
Causing financial loss to CBL.
False statements by officials of CBL.

Civil Proceedings
Breach of a fiduciary duty, S.219 Companies Act 2012, fraud, or in the alternative, gross negligence in order to obtain compensation, restitution, disgorgement and equitable tracing.

BOU Sanctions
Under the FIA to remove the Board or any individual director.

Sudhir Ruparelia
As a Director, major shareholder, vice chairman and generally as a person that exerted the greatest control over the Bank, Mr Ruparelia, concealed his true shareholding in the Bank; he oversaw the irregular transfer of the bank’s branches to MIL, he benefitted from irregularly declared dividends, ‘due’ to White Sapphire; he conspired with others to embezzle/cause financial loss to CBL by use of cash extractions from Interdico, AI and TA; he was instrumental in the approval of credit facilities for related companies and associates, when there was no intention the loans would be repaid; and he failed to disclose his interests.

In addition to the above charges:
Receiving stolen property in respect of bank branch transfers, and White Sapphire dividends.
Embezzlement.
Influence peddling.
Nepotism.
Receiving and possessing property for himself or related parties, otherwise than in payment for the full value, in respect of the branch transfers, (FIA S126 (6).
Breach of the Prohibition on insider transactions.

Meera Investments Limited
As a company that is fully owned by Mr and Mrs Ruparelia and therefore related to the Bank, MIL irregularly benefitted from the fraudulent transfer of land previously owned by the bank to itself (MIL) and payments of its utility bills.

Possible charges:

S126(6) FIA, as above.
Receiving stolen goods conspiracy to defraud.
Civil Proceedings, as above.

Mr Rasiklal Kantaria
In addition to being a director of the Bank, Mr Kantaria played a central role in deceiving the BoU and the general public as to the real ownership of CBL.
Possible charges:
In addition to the charges against the Board of directors, as set out above;
Money laundering - Concealing and disguising sources of funds.
Embezzlement.

Jagdish Nagrecha
Participated in the charade/scam of sale of shares to Kantaria. He passed the proceeds of sale back to Premier Commodities.
Possible charges:
Conspiracy to defraud.

A. R. Kalan
In addition to being a director, as the MD of the Bank from 2006 to 2014, Mr Kalan played a key role in the mismanagement of the Bank and in false accounting.
In particular, he, as involved in concealing the true ownership of the Bank as evidenced by his settling White Sapphire’s expenses and directing the transfer of funds from Mr Kantaria’s account; he moved the motion to transfer the ownership of the Bank’s land to Meera in 2012; he authorised the fraudulent payments to Interdico, A1 and TA; he oversaw the procurement of T24, CBS, and Misys International Banking systems, by TA and Temenos, without proper procurement, approval, at a price out of all proportion for the service and he oversaw irregularities in loan approvals and loan impairments.
Possible charges:
As per charges against the Board of Directors.
Ajay Kumar
In addition to being a director, as the Deputy MD of the bank and the executive director in charge of Finance from 2006 to 2013, Mr Kumar played a key role in the mismanagement of the Bank and is alleged to be the mastermind in respect to false accounting. In particular, he is alleged to have manipulated the Bank’s financials in order to give a false impression of its performance, and authorised the fraudulent payments to Interdico, A1, and TA.
Possible charges:
As per the charges against the Board of Directors.
Vivek Sharma
Mr Sharma was a director of the Bank from April 2014 and its head of Finance. In addition to his role as a Director, he signed and backdated the TA contract that was used to support the fraudulent extraction of cash from the Bank; he was directly involved in White Sapphire affairs; he was involved in passing false accounting entries in relation to accounting misstatement; and he received or facilitated the withdrawal of USD 250K from the Bank’s internal accounts in unclear circumstances.
Possible charges:
As per the charges against the Board of Directors.

Rakesh Gupta
Mr Gupta is a senior manager in the Finance department a position he has held since 2014. Before then he was in Internal Audit though he was still responsible for passing financial transactions, a clear conflict in responsibility.
As an officer within finance, he, generated fictitious Interdico invoices; directly involved in White Sapphire affairs, and was involved in passing false accounting entries during the misstatement of accounts.
Possible charges
Causing Financial Loss and Fraudulent False Accounting, contrary to The Anti-Corruption Act.
Making false entries on financial ledgers
Making false statements or furnishing false information for FIA purposes.
Conspiracy to defraud.

Girisch Nair/ TA
Mr Nair is the Chairman of TA and signed the contracts with CBL that facilitated the fraudulent transfer of funds from CBL to TA, in circumstances where TA did not even provide the licences paid for.
Possible charges
Conspiracy to defraud,
Receiving stolen property.
Embezzlement.
Money laundering.

Nitin Vekaria
Mr Vekaria is the proprietor of Veksons. He received payments of $1.8m through Interdico in unclear circumstances.
Possible charges:
Conspiracy to defraud.
Receiving stolen property.
Embezzlement.
Money-laundering.

Specific borrowers
In several instances, companies appear to have been formed for the sole purpose of obtaining loans at CBL.
These companies then misrepresented the intended use of the funds, obtained loans without giving adequate security and are said to have conspired with insiders to obtain loans when there was no intention to pay, and, the loans were then written off or ever-greened, thereby causing loss to CBL
Possible charges
Conspiracy to defraud.

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