Masters of the con game

Around March 2019, Pastor Kato Walakira of Clear Minister of God Church received a call from an old brethren he had lost contact with many years ago.
In their chat, this brethren Andrew Kaggwa Kulumba told him he was now engaged in buying and selling oil, and gold online trading. 
“He said I could also invest in online trading if I gave him Shs1m and he would give me 40 per cent interest in a month’s time. I didn’t believe him at first. He convinced me and I invested Shs1m and got a receipt,” Pastor Kato recalls. 

At the end of the month, he got his interest in time. Interest of the second and third month was also delivered on time. 
“The deal looked good,” he says.
Kaggwa later told him that he should get more people from the church to invest in Global Crypto Currency Limited so that they could be uplifted from poverty. 

“I was hesitant to drag the church into business,” he said, but when Kaggwa started visiting the church and even praying and taking crucial roles as an elder, church members started investing in the business. 
By October 2019, more than 200 church members and the church entity were investors in the Global Crypto Currency Limited with more than  Shs300m invested. 
“After the end of the month, he would give you Shs400,000, the 40 per cent of Shs1m. Then he would say if you top up Shs600,000 on the interest and invest again, you would make Shs800,000 (which is 40 per cent) per month. People continued to inject money,” he said.
Then in November 2019, the investors didn’t get their interest. Kaggwa switched off his phones and disappeared.

“All church members froze. No one was left with a penny since each had reinvested the whole money. Members hated me because I introduced them to people who took their money. I have remained with no friends,” Mr Kato says. 
Pastor Kato is one of more than 780 people that have reported loss of money they invested in Global Crypto Currencies, a pyramid scheme. 
This is one of the several cases in which organisations started by Kaggwa have been accused of fleecing people of their money.

Long history
Since 2001, Kaggwa and his associates Nixon Balikowa, Mpologoma Kagimu, Efrance Saano, Oliver Nanziri, Seddy Kansiime and Pius Kyagaba, have been accused of involvement in a number of fraudulent deposit-taking schemes. In almost all the cases the victims did not recoup their money and the accused escaped with at worst light prison sentences.
The police estimate that the group has fleeced Ugandans from different parts of the country a total of Shs100b in two decades.
Like during the times of Charles Ponzi, an Italian who was identified by a fraudulent investment scheme, the Ugandan group are said to thrive on publicity and strong legal teams that exploit loopholes in the law and also defend the existence of their organisations in the courts.

Mr Paul Kiggundu, a lawyer representing the victims of Kaggwa’s company, said it is not an easy task to prosecute these pyramid scheme managers since they often hide under the company name to get away with crime.
 
“The trick the directors of these companies do is to hide behind the company name. That is why they tell their victims to deposit money on the company’s account. To get them, you have to lift the veil to see if the directors are liable to the loss,” Mr Kiggundu says.
This is what the police and Director of Public Prosecutions have often been unsuccessful at in the prosecution of directors and managers of such organisations. The companies include Caring for Orphans, Widows and the Elderly(COWE); Dutch International; Dutch International Tea Project; TEAM (Together Everyone Achieves More) and other forex trading companies. 

How Kaggwa started out
On July 27, 2001, Kaggwa, Balikowa, Mpologoma, Saano, Nanziri and Kyagaba registered a non-governmental organisation named COWE. 
It started by helping vulnerable people, attracting the attention of many people, including politicians, civil servants and religious leaders, who associated with it. After gaining trust, they convinced members of the public, especially in western Uganda, that one way of escaping poverty was to invest their money in a scheme that would make them 30 per cent returns every month. 

Thousands in western region joined. Each would pay Shs65,000 to be a member and as his or her first investment. 
The way it worked was to pool money from several people and giving it to one person, who would use it and pay the agreed interest. It seemed to work.
Months later, complaints started emerging of people who were unable to withdraw their savings or even receive the promised returns. 
Sensing that the government would move to halt their operations, the directors of COWE registered a company under the name M/S COWE Ltd (Caring for Orphans Widows and Eldery Limited) on January 3, 2002, but also left the other COWE in operation. 
 
Although they continued to receive money from unsuspecting members of the public on the pretext that the contributors became part owners of the organisation, court documents show that in reality and legally, the contributors were just clients.
The directors and managers of COWE would later exploit this to escape refund of victims’ funds. When the government, under the NGO Board, took action and revoked their NGO license on April 4, 2002, they had a fallback position to continue operating.
 
Kaggwa and his colleagues petitioned the Internal Affairs minister and when he didn’t give them a hearing, they appealed to the High Court. 
On October 14, 2002, Justice Fredrick Egonda-Ntende ruled that COWE’s registration had been revoked illegally.
“In the circumstances of this case, effective redress must include a direction to the National Board for Non-Governmental Organisations to reinstate the registration of COWE as a non-government organisation. Accordingly, I award the applicants costs of these proceedings,” Justice Egonda-Ntende ruled. With a court win, they resumed operations, but this time using M/S COWE Ltd through which they continued to receive deposits. 

Four years later, they ceased operations and went into hiding. 
The police tracked Balikowa and Kansiime, arrested them and charged them with embezzlement of Shs450m belonging to COWE Limited at Kabale Chief Magistrate’s Court.
In 2006, Kaggwa moved to India, where he reportedly introduced new crypto currency schemes. 
At the same time, Bank of Uganda froze the bank accounts of COWE Ltd for receiving deposits yet they didn’t have a licence as per the law. 
Bank of Uganda had earlier ordered COWE Ltd to refund money to each victim, but this was not implemented. COWE Ltd would later seek judicial review in the High Court to unfreeze their account and they won the appeal. 
Bank of Uganda petitioned the Court of Appeal and the judicial review was quashed in 2009. 

Changing face
As COWE Ltd was dogged by criminal cases, the directors opened another company – Dutch International – which carried out similar activities.
On the other hand, the prosecution for Balikowa and Kansiime proceeded and they were convicted of embezzlement. Each was sentenced to four years in jail and ordered to refund the stolen funds. 
They both appealed in the High Court in Kabale, where the conviction on embezzlement charges was quashed.  

In the judgement, Justice Wilson Kwesiga quashed the conviction on embezzlement since the company directors, namely Kaggwa, Frankline Gessa, Mpologoma, James Kibalama and Efrance Jaano, the employers of the accused, had not complained of any loss of money in their company (COWE Ltd) and no one else was competent to prove that the company had indeed lost money.
The judge said the contractual relationship between the victims and the accused was like that of a bank and depositors.
 
“The aggrieved depositors should pursue COWE LTD and Bank of Uganda for recovery of the money based on the contracted relationship disclosed by their testimonies in court, which did not portray the intention to permanently deprive the depositors of their money. The solution does not lie in criminal penalties. The complainants are entitled to their money if proved satisfactorily,” Judge Kwesiga ruled.
With COWE Ltd’s image dented, they continued their operations using Dutch International as a new vessel until Bank of Uganda intervened to stop them from transacting financial business without a licence in which members of the public lost Shs3b.

Mr Balikowa and other employees, except Kaggwa, were arrested on charges of transacting financial institutions businesses without a license under the Financial Institutions Act, 2004, and embezzlement under the Penal Code Act. 
Again, Kaggwa fled to Rwanda, where he reportedly started a bakery. 
Balikowa and Joshua Kasagga were convicted and sentenced to seven years in jail, and also ordered to compensate the victims.
This time round, the Chief Magistrate’s Court disqualified Mr Balikowa from obtaining a future licence to transact business of a financial institution. 

Balikowa unsuccessfully appealed in  the High Court.
“I hope that when the appellant leaves prison, he will find a better job to do than fleecing the unsuspecting public of their resources. The complaint against the sentence is not justified,” Judge Lawrence Gidudu said in his judgement.  
Balikowa then ran to the Court of Appeal. In the judgement on February 28, 2020, the Court of Appeal quashed his conviction on the offence of embezzlement.
“In the present case, for the offence of embezzlement to be proved, the prosecution has to show that the appellant stole money belonging to the company (his employer). This wasn’t the case,” the judgement read in part. The Court of Appeal said the company stole the members’ money through its employees and that the company didn’t complain about it.  
The court, however, upheld the charge of operating a financial business without a licence since he had already served the sentence, disqualifying him from acquiring such a licence.
 

Balikoowa was released since he had already served time for the offense of operating a financial institution without a licence. 
Another company is born
The spokesman of the Criminal Investigations Directorate of the police, Mr Charles Twiine, says as Balikowa was in jail in 2018, Kaggwa returned to Uganda and started Global Crypto Currencies Limited, dealing in similar transactions. 
“Each member was investing not less than Shs2m, expecting to get 40 per cent interest at the end of each month, which many didn’t get. He (Kaggwa) later closed the offices and went into hiding,” Mr Twiine says.

Kaggwa’s victims engaged the Internal Security Organisation (ISO) and Maj Gen Elly Kayanja, who arrested Kaggwa and took him to Mwanga II Court for a privately instituted prosecution. Kaggwa was sent to Luzira Prisons. 
Pastor Kato says he visited him in prison to see how he could get his money back.
“He told me that he was willing to pay after a friend had given him a loan of Shs200m. I was shocked when he wanted to con me again by saying I lend him Shs20m to top up and get the said loan,” Pastor Kato says.
 
Legal battle
Pastor Kato lamented that whereas Kaggwa has all the money to spend, especially on paying expensive lawyers, his victims cannot even afford a lawyer and are depending on pro bono services. 
“He was using our money to fight us,” Pastor Kato said.
The privately instituted prosecution was dismissed two weeks ago.
The only hope the victims now have lies in the offence of obtaining money by false pretense that the CID is investigating. Information available indicates that Kaggwa faces 781 claimants so far. Kaggwa is currently on remand at Kitalya prison.  
Pastor Kato’s lawyer, Mr Kiggundu, says compensation of the victims will depend on court. 
“In such criminal cases, the court can decide to give a sentence alone or a sentence and a compensation. We will wait. If we get a conviction without a refund then we shall go for a civil suit,” Mr Kiggundu says.