“Syndicated Loan is Illegal” declares Justice Henry Peter Adonyo
The Ugandan High
Court on Wednesday ruled that a loan granted to a local company was illegal in
a shock judgment that has banks fearing a spike in debt defaults.
The case relates to a loan Diamond Trust Bank Kenya Ltd. provided
to a Kampala-based firm with interests spanning real estate to agriculture,
using its Ugandan subsidiary as the agent. Lenders in the East African nation
were taken by surprise when Judge Henry Peter Adonyo said the transaction was
illegal because the Kenyan bank didn’t have a domestic license to conduct such
business in Uganda.
The judgment enables the applicants, Ham Enterprises Ltd., Kiggs
International Ltd. and Hamis Kiggundu, to recover more than $32 million from
the bank, according to a copy of the judgment seen by Bloomberg.
Diamond Trust Bank disag...