Rédaction Africa Links 24 with Uganda Monitor
Published on 2024-03-30 08:56:05
The High Court has recently made a ruling against a Ugandan businessman and his company, compelling them to pay over Shs10 billion owed to a lender based in Mauritius. This case highlights a growing trend where Ugandan businesses and individuals borrow from international lenders but later dispute the legitimacy of the lending agreements to avoid repayment.
Kare Distribution Ltd, managed by Geoffrey Karegyeya, has been instructed by the court to pay back the debt owed to African Rivers Limited (ARL) with an additional 11.5 percent interest from August 2019 until the full amount is settled, bringing the total owed to over Shs17.2 billion.
Court documents reveal that Kare Distribution Limited initially sought a loan of $1,650,000 (Shs6.4 billion) from ARL through its local agent XSML Capital Uganda Limited to finance the purchase of a property in Kampala. ARL agreed to lend the money at an interest rate of 11.5 percent per annum, and Kare acknowledged the terms of the loan agreement.
The loan was secured with a legal mortgage over the property in Kampala, and Kare executed a personal guarantee for the loan. Subsequent loan agreements were made between ARL and Kare, with disbursements made according to Kare’s instructions. However, Kare defaulted on repayment, leading ARL to demand payment of the outstanding amount.
Despite claiming that the lending agreements were illegal, Karegyeya and his company failed to present evidence to support their claims in court. Ultimately, the court ruled in favor of ARL, stating that the lending agreements and guarantee deed were legal and enforceable.
This case is reminiscent of the Supreme Court decision involving businessman Hamis Kiggundu, where the court upheld the legality of syndicated lending transactions between foreign institutions and Ugandans. The ruling affirmed that foreign financial institutions can legally offer credit facilities to individuals and institutions in Uganda.
In recent years, there have been several high-profile cases of Ugandan businesses and individuals disputing loan agreements with international lenders to avoid repayment. These disputes have led to complex legal battles with significant sums of money at stake, as seen in cases involving Ham Enterprises Ltd and Kiggs International Ltd, Patrick Bitature, and Aya Investments (U) Limited.
These cases serve as a cautionary tale for businesses and individuals engaging in loan agreements with international lenders, emphasizing the importance of honoring contractual obligations and seeking legal advice to avoid costly disputes.
Read the original article on Uganda Monitor
