KCB Bank taken to court by Ugandan firm for breach of contract

NAIROBI, Kenya Jan 28-Ugandan privately owned real estate development and construction company Tirupati has taken four financial institutions to court, including KCB Bank Kenya and KCB Uganda, for breaching a contract signed while seeking a loan ten years ago.

Documents filed before the High Court in Kampala revealed that Tirupati sued two banks under KCB Group alongside Bank of Uganda and Financial Intelligence Authority.

In the lawsuit filed on January 19, Tirupati noted that on July 17 2012, KCB Uganda and Kenya agreed to advance a syndicated loan of $7million.

The construction company said that in 2012, the banks disbursed $6.99 million but did not disburse the remaining funds.

Further, Tirupati argued that in 2018 it noticed and complained to the banks about several suspicious transactions on its current and loan accounts.

The banks did not provide an explanation for the transactions.

“The plaintiff (Tirupati) also made demands for a reconciliation of accounts, clarity on the status of their loan repayments, and requests for the issuance of the bank statements. None of these requests were honoured. This inevitably led to the plaintiff’s failure to meet her loan obligations,” the court documents read.

Tirupati sued the Bank of Uganda and Financial Intelligence Authority for negligence, breach of statutory duty and misfeasance in public office.

In the documents, Tirupati said Bank of Uganda and Financial Intelligence Authority are statutory bodied empowered to carry out an oversight function over financial institutions such as the sister banks and ensure that they are compliant with the provisions of the law.

“The two have the statutory duty to detect, investigate and sanction financial institutions for money laundering. They failed in this duty, thereby facilitating the occurrence of these events,” read the court documents.

Tirupati wants the court to declare the banks’ actions amounted to breach of contract and fraud.

It also wants the authority to tender in court measures to ensure no further suspicious activity goes on through the plaintiffs’ accounts.