Crane Bank’s £200m London Trial Puts Uganda’s Rescue Deal Under Scrutiny

A bank rescue that shifted selected assets and liabilities from Crane Bank to dfcu in Uganda is now at the centre of a £200 million damages battle in London. Former shareholders led by businessman Sudhir Ruparelia say the 2017 transaction stripped away the business through an unlawful, corrupt and undervalued deal. The defendants deny wrongdoing. According to Daily Monitor Uganda, the High Court trial has begun at the Royal Courts of Justice and is expected to last 16 weeks.

The claim, worth roughly 1 trillion Ugandan shillings, reaches beyond the two banks. Defendants include dfcu Bank, its holding company dfcu Ltd, current and former directors, and international investment partners. Court filings identify Norwegian investment company Norfund, Rabobank subsidiary Rabo Partnerships, and former Rabobank bankers Albert Jonkergouw and Willem Cramer, who served on dfcu’s board. The claimants expect the amount sought to rise as proceedings advance.

A rescue or an undervalued transfer?

Crane Bank was once Uganda’s largest locally owned commercial bank and its fourth-largest lender overall. The Bank of Uganda placed it under statutory management—taking control under banking law—on October 20, 2016. The regulator cited inadequate capital and liquidity problems after a bank run, when customers rush to withdraw deposits. In January 2017, it transferred selected assets and liabilities to dfcu under an agreement covering what dfcu would acquire and which obligations it would assume.

Ruparelia and his fellow claimants allege that acquisition discussions began secretly before the central bank intervened. They say there was no proper independent valuation and that dfcu obtained the business for a fraction of its worth. They also cite a 2019 parliamentary inquiry by Uganda’s Committee on Commissions, Statutory Authorities and State Enterprises, which found that the central bank breached several legal provisions during the takeover and resolution.

One disputed element is a $27.5 million arrangement linked to the disposal of a portfolio of Crane Bank loans. The claimants describe it as bribery, citing an internal 2016 email that they say indicated money would reach the central bank without being recorded. Dfcu says the funds instead repaid emergency support supplied directly by the Bank of Uganda. It maintains that the deal was lawful, negotiated in good faith and intended to preserve financial stability. It also says KPMG and other valuation specialists worked on key parts of the transaction.

Dfcu stresses that it bought selected assets and assumed specified liabilities, not Crane Bank as a company. It says extensive document disclosure has produced no evidence of corruption or conspiracy among the defendants. The central bank’s earlier explanation came from its late governor, Emmanuel Tumusiime-Mutebile, who said an independent inventory found negative core capital of 240 billion shillings. He argued that emergency funding could not save the bank and that the transfer was needed to protect depositors.

Former Bank of Uganda Governor Emmanuel Tumusiime-Mutebile said the post-takeover inventory showed Crane Bank was “massively insolvent”.

Missing records add to the scrutiny

The London case also comes against questions over the central bank’s handling of support funds. A special audit by Auditor General John Muwanga reported that officials withdrew more than 478.8 billion shillings from an undisclosed account and injected it into Crane Bank as liquidity support. Muwanga said missing supporting records and recovery plans prevented him from verifying or justifying the spending. Without a valuation, he also could not establish how the transfer terms had been determined. Bank of Uganda communications director Charity Mugumya said the institution undergoes annual audits and had fully cooperated with the special audit.

The trial will test competing accounts of Crane Bank’s condition: financial statements showing positive equity and profits, central bank examination reports, and a 2016 memorandum in which Crane Bank acknowledged undercapitalisation. The key development to watch is how the court weighs that evidence alongside the disputed transfer process. A judgment is expected after the trial concludes.