Sudhir Ruparelia Seeks $224m in London Case Over Crane Bank Sale

KAMPALA — Ugandan businessman Sudhir Ruparelia and other former shareholders of Crane Bank have opened a major legal battle in London, seeking at least €200 million in damages over the 2017 transfer of the bank’s assets and liabilities to dfcu Bank.

The case, which began before the High Court in London on Monday, October 5, brings to court a dispute that has stretched for nearly a decade and could have significant implications for Uganda’s banking sector, financial regulation and foreign investment.

The 16-week trial pits Ruparelia and other former Crane Bank shareholders against dfcu Bank, dfcu Limited and a number of former executives and international investment partners, including Rabo Partnerships, a subsidiary of Dutch banking group Rabobank, and Norway’s Norfund.

The claimants allege that Crane Bank was transferred through an unlawful and corrupt process and at a substantial undervalue, while the defendants have rejected the allegations and maintain that the transaction was a legitimate intervention to resolve a financially distressed bank.

How the dispute began

The Bank of Uganda placed Crane Bank under statutory management on October 20, 2016, citing capital inadequacy and liquidity concerns.

Three months later, in January 2017, selected assets and liabilities of Crane Bank were transferred to dfcu Bank under a Purchase of Assets and Assumption of Liabilities Agreement.

The central bank’s position has been that the intervention was necessary to protect depositors and prevent wider instability in Uganda’s financial system.

Former Bank of Uganda Governor Prof. Emmanuel Tumusiime-Mutebile subsequently said an inventory carried out after the takeover found Crane Bank to be “massively insolvent”, with core capital of about Shs240 billion in the negative.

Bank of Uganda’s records show that dfcu paid Shs200 billion for the selected assets and liabilities, with the consideration payable over two and a half years.

Ruparelia, however, has consistently disputed the central bank’s account of Crane Bank’s financial position and the circumstances surrounding its takeover.

Ruparelia’s case

According to the claimants, Crane Bank was transferred at a fraction of its true value and without an adequate independent valuation.

They allege that some of the defendants were involved in a scheme that deprived the former shareholders of the value of the bank.

The allegations extend to Rabo Partnerships and former Rabobank bankers Albert Jonkergouw and Willem Cramer, who were involved with dfcu, with the claimants arguing that warning signs surrounding the transaction were ignored.

One of the issues expected to receive significant attention during the trial is an alleged $27.5 million transaction connected to the disposal of a portfolio of Crane Bank loans.

Ruparelia’s side characterises the arrangement as part of the alleged corrupt scheme, while dfcu says the money had a legitimate purpose — repaying emergency financial support provided by the central bank.

The claimants have also referred to the conviction of Hong Kong businessman Patrick Ho in the United States over bribery offences involving Ugandan officials, arguing that his activities formed part of the wider circumstances surrounding attempts to find a buyer for Crane Bank.

These allegations remain contested and have not been established by the London court.

dfcu rejects allegations

dfcu has strongly denied wrongdoing and says the claim against it is without merit.

The bank maintains that it did not acquire Crane Bank as a corporate entity, but instead acquired selected assets and assumed specified liabilities through an agreement with the Bank of Uganda.

It argues that the transaction was undertaken to preserve financial stability and ensure that customers could continue accessing banking services after the central bank intervention.

dfcu also maintains that the claimants never challenged the statutory administration of Crane Bank in Uganda’s courts.

The bank has pointed to valuation and audit work carried out by professional firms, including KPMG, in support of its defence.

dfcu has also stressed that the London proceedings have not resulted in any finding of wrongdoing against it. An earlier High Court ruling concerning security for costs expressly made no findings on the merits of the allegations.

Uganda’s parliamentary scrutiny

The London proceedings revive questions that were also examined in Uganda following the collapse of Crane Bank.

A 2019 parliamentary inquiry by the Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) criticised aspects of the Bank of Uganda’s handling of the takeover and resolution process.

The Auditor General has also previously raised questions about the financial support extended to Crane Bank during statutory management, including the documentation supporting some of the expenditure.

These issues are likely to add another layer to the London proceedings as the court examines the financial condition of Crane Bank, the regulator’s intervention and the subsequent transfer of assets and liabilities.

International dimension

The case has attracted a number of international financial institutions and investors because of their links to dfcu and the transaction.

Rabo Partnerships, a subsidiary of Rabobank, is among the defendants, while Norfund and other investment interests have also been drawn into the proceedings.

The legal representation reflects the international character of the dispute. Greenberg Traurig represents the claimants, while Freshfields represents dfcu. A&O Shearman represents Arise and Milbank represents Rabobank, according to reports on the proceedings.

The case is expected to involve extensive evidence, including internal correspondence, financial records, valuation material and confidential documents exchanged during the transaction and subsequent litigation.

A high-stakes test for Uganda’s banking history

For Ruparelia, the case represents the latest and most consequential attempt to challenge the loss of the banking institution he built.

For dfcu and the other defendants, the proceedings provide an opportunity to defend the legality of the transaction and the role they played in resolving one of Uganda’s most closely watched bank failures.

The outcome could have implications beyond the parties themselves, particularly for questions surrounding bank resolution, regulatory intervention, investor protection and the treatment of distressed financial institutions in Uganda.

The trial is expected to run for about 16 weeks, with a judgment to follow after the court has considered the evidence and arguments from both sides.

None of the allegations of corruption or wrongdoing made by the claimants has been proved in court, and the defendants deny the claims.