Unmasking the Politics of banking in Uganda You’ve listened to so many “experts” on Ham this & Ham that. You’re probably confused: which legal opinion is correct? So what? In this thread, we urge that you ignore all of them. It’s about the politics, stupid!
This spillover from the Commercial Court has exposed the various elements of the Comprador: – Local custodians of foreign banks, – Comprador-lawyers (corporate/commercial law wiseacres), and – A comprador regime in power, overseeing an exploitative commercial environment.
It would therefore be too elitist, and inexcusably dishonest, to look at Ham v DTB purely in terms of a right and a wrong. Let’s look at it more critically in terms of how the facts affect the hitherto elite cast of neo-liberal capitalist clowns that have ended up with egg on face.
Before Ham v DTB, what was the financial landscape like for the average Ugandan? The ruling was given on the eve of Independence day : what’s the meaning of this timing? What are the hidden lessons that we should seek from the brouhaha of the past week? The thread probes…
Before Ham v DTB, banks had used the same judiciary (which they are now bashing as ‘reckless’) to enforce foreclosure on defaulters, even when there may have been valid arguments for a stay of execution, or a cancellation. A recent example will suffice.
Again, before Ham v DTB, banks had often operated completely outside the law, or had been happy to take advantage of unlawful practices by Bank of Uganda which used unlawful means to shut down African-owned banks. The ink hasn’t yet dried on COSASE report!
Lastly, since Ham’s puberty years, neo-liberal forces have conspired to create banking laws (Bank of Uganda Act 1993, Financial Institutions Act 2004 , etc) that tilt the scales of justice in favor of foreign banks operating in Uganda, having elbowed out the indigenous banker.
Dr Justice H.P. Adonyo, head of Commercial Court, delivered the seminal ruling on the eve of Independence day. Why? Timing is everything. If it’s meant to happen, It will, at the right time. At the right place. For the right reasons. Sam Mayanja SC says “TRUST THE PROCESS!”
So what are the real lessons from the brouhaha of the past week? In the “Main Course”, we’ll share Ten Lessons from the HAM v DTB imbroglio. Are you ready for the class, sorry course?
Lesson 1: “Once the millet has sprouted, it is not afraid of the weather.” ‘Uganda Bankers Association’ is a misnomer: its members are neither Ugandan, nor devoted to the interests of the people of Uganda. It should be called the Association of Foreign Banks Operating in Uganda.
Uganda Bankers association has issued a series of indecorous press statements since the filing of the Ham case which leave no doubt about its members’ contempt for the sovereignty of our laws, legal institutions and business culture. Typical case of “us” versus “them”.
Before Ham, Uganda Bankers Association (UBA) had tricked the impressionable @FGimara, @SPKinobe2018&@PheonaWall into creating an obscure arbitration syndicate @ICAMEK1, hoping to co-opt @ug_law society into imperialist schemes to undermine indigenous legal systems & rig the resolution of banking cases.
Of course we fought back against the marauding bankers and their collaborators, but there’s certainly no love lost between “us and them.”
Ham v DTB has shown us ‘ true colours as an entitled, racist comprador that didn’t hesitate to hold Government of Uganda to ransom by threatening to ‘down tools’ for all pipeline deals, because a ‘native court’ had dared to show independence. “Natives should only sing for Jesus.” L1
Lesson 2: “It is survival, not bravery that makes a man climb a thorny tree.”There are 2 remarkable legal implications Ham v DTB: one specific & clichéd, one general & unfathomable.
Specifically, the otherwise bank-friendly legal regime did not favor a particular bank regarding a particular transaction. But there’s always going to be bumps in the road. So this adversity for the banks is not novel.
Generally, Ham v DTB means that a bank outside Uganda should not be able to lend to a borrower inside Uganda *without regulatory oversight*, and this has rung enough alarm bells to suggest that most corporate loans are probably structured in this way.
CRYING WOLF: Bank of Uganda reacted impulsively by floating a scarecrow figure of $1.5 billion as syndicated loans (which is false & misleading), and by arrogantly trying to blackmail the Government of Uganda (which is actually a sovereign borrower unlike Ham & Co who were private borrowers).
Lesson 3: THE FLOODGATES MYTH Contrary to UBA unfortunate propaganda, blackmail & smear campaign vs the Judiciary and Government of Uganda, Court did not ‘open the floodgates’ by banning foreign-sourced lending. This doomsday scenario was invented by the Banks for PR purposes.
Hence the expected litigation in appellate courts is going to rotate around the question whether the foreign-sourced lending in Ham’s case was in compliance with the Financial Institutions Act. It is extremely premature & irresponsible to speculate about other transactions.
Lesson 4: FOOLS PARADISE – ANI AKALENGEDDE? The most important lesson is how the financial landscape became a three-ring circus. Why has it been constantly necessary to source loans from lenders abroad & then present them as ‘syndicated loans’ in partnership with a local agent?
Why do the resident banks always have inadequate liquidity for lending to Ugandans? Besides ‘syndicated loans’, are there no other methods possible to raise credit for indigenous Ugandans to build real wealth and achieve economic freedom in their lifetime?
Could the borrower (Ham) not have received the money in Kenya and brought it home at his discretion? Or, could DTB UGANDA, instead of trying to act as an agent, not simply have borrowed the money itself from DTB KENYA and then lent it on, with interest, to the borrower?
Since DTB K &DTB U are in the same corporate chain, then could they not simply have acted as ‘one entity’ overseen by @BOU_Official& lent out the money on that basis? What has been the #hidden advantage of these arrangements that have now been challenged by one judge?
Lesson 5: “No matter how good you are to a goat, it will still eat your yam.”
GOTCHA: Ugandan bank lending rates are ridiculously high, reaching 27%, in many cases. A very lucrative lending opportunity that is enforceable only within Uganda where such racist exploitation of the ‘native’ is still acceptable. Hence the need for a local ‘agent’ eg DTBu.
Lesson 6: Everything old is new again! The reaction of UBA & comprador lawyers & bank of Uganda to Ham v DTB is a crashing reminder that the INVADER CAPITALIST is above our ‘native laws’ of banking. Legal niceties are a side issue, so let’s rehash our history.
“Mwanga … was demonstrably unequal to the task of controlling the foreigners who were subverting his kingdom under his very nose. He did not have the experience or the prestige that had enabled his father to keep foreigners in their place within his kingdom.” Prof Karugire ’80
“And don’t throw the past away You might need it some other rainy day, Dreams can come true again When everything old is new again When everything old I might fall in love with you again” Peter Allen, Aussie-American singer-songwriter (1944-1992)
The perception of risk historically attached to investing in the former colonies Africa is still the same nearly 60 years after Independence. Colonialism secured extreme exploitation by physically controlling us using religion, intelligence, military force & propaganda.
Independence threatened Colonialism. Hence the neocolonial contestations, in which Western capital constantly sought to undermine African independence by destabilizing the new governments or imposing Western-friendly politicians who can then only rule as Dictators.
In Uganda, Recolonization finally fully succeeded through the imposition of the NRA/NRM government in 1986. Unlike previous regimes, Museveni’s NRA was fully in favor of the (re)imposition of Western-friendly economic terms of trade & commerce. Loans Galore!!
Comprador Museveni has since 1986 introduced a raft of neoliberal policy changes, with legal back-up, drastically changing the economic landscape to your detriment: wholesale privatization, liberalization & in particular for our argument here, changes in monetary policy.
Basically, the FOREX market was completely “liberalized & deregulated”, another way of saying that Museveni surrendered govternment’s historical control over capital from abroad and Bank of Uganda too lost power to determine the value of the national currency. Imperialists Rule!
Historically most post-colonial countries had laws requiring foreign firms to retain around 30% of their profits within the local banking sector, in effect creating a substantial capital base for lending to indigenous Africans on terms regulated by the State. Billionaires Galore!
Today, foreign firms enjoy 100% profit repatriation, and many of them do this on a daily basis. These are among the specific measures Museveni & his NRA/NRM Junta agreed to as a condition for Western support to acquire power.
The New Imperialism, c/o NRA, has led to the steady depreciation of the UG shilling against Western currencies. But it provides the best possible risk avoidance for the owners of foreign capital: they can move their cash immediately & their local companies can’t be nationalized.
Lesson 7: “Those who want rain must also accept the mud.” DTB LOAN EXPLAINED: It’s now fashionable to have a local division of a foreign bank set up in Uganda, but have it domicile as little capital as possible & repatriate all profit from local loaning, on the daily.
UBA exist to scout, attract & target people like Ham. Once seen, then money held ‘offshore’ & raised from shareholders & venture capitalists (‘syndicated’) is brought in to attend to Ham’s loan, and any repayments/profits received against it are immediately wired back out.
This is now where the confusion about Section 117 of FIA sets in. Could a foreign-registered bank lend money locally, or was it legally obliged to operate through a local branch? In Ham’s case, was DTBU a partner or merely a collection agent of DTBK in the loaning at hand?
Look, it was the BANKS THEMSELVES that wanted Section 117 of FIA deliberately vague & ambiguous so that they could design differing arrangements according to what suited them at any given time. On this occasion, however, the very vagueness of the law has come back to bite them.
The How-To Guide for UBA: Use a local brand as bait, swoop in like a ‘Kamunye’ to grab up any Hamful opportunities as these yield a much higher rate of return than elsewhere & then repatriate the money ASAP. Very opportunistic. One-sided. Exploitative. Just like YKW!
Lesson 8: “Now you see it. Now you don’t.”
The other important issue, which seems to have received less focus, concerns the accusation by Ham that unauthorized withdrawals & transfers (UGX 120 billion) had been made against funds on his accounts by DTBU. Another such case lurks in court:
The creation of a capital-starved local business class on the one hand, and secondary, secret and often illegal capital markets on the other, is not by accident. These are the direct effects of neoliberal policies of the NRA/NRM Junta.
We see this every day, whereby finance-related employees in large organizations often hold up or slow down payment operations and the like because they have diverted cash authorized for release to their own private business they run outside the company.
Could this be an actual off-the-books loans policy of the local bank (so as to make some cash of its own out of all these ‘syndicated’ loans coming in), as was to an extent the case with Greenland Bank, or malpractice by a few unscrupulous managers? More likely the former.
Lesson 9: “If money were to be found up in the trees, most lawyers would be married to monkeys.”
What began life as a relatively humble branch of law here known as Commercial Law, acquired a whole new status and importance with the liberalization of the economy and conversion of state enterprises into private concerns in the late 1990s & early 2000s.
Immediately the Advocates Act 1970 was amended to tighten the essentially cartel nature of the legal profession (as with medicine, engineering & architecture) so that only Ugandan lawyers could provide the legal services (and inside knowledge) needed by the foreign investors.
Non-Ugandan lawyers would have to jump through hoops to get admitted temporarily “for the purpose of one case or matter”.
As the invading capitalists were not able to come with their own lawyers, they invested in weaponising the Ugandan lawyer. For this reason, very little has been done on the legal front to challenge the inherently pro-capitalist nature of Ugandan laws and their interpretation.
“Law”, as inherited from Imperial Britain, evolved there as partly a product of the struggle first between the exploited serfs and feudal power, and then the proletariat and capital. It comes with an in-built tension where justice is partly attainable, but never fully realized.
Burdened by the persuasions of the colonial legacy and his/her tenancy in what formerly was white-only estate, the Ugandan lawyer has never fully embraced Independence, and is actually afraid of the justice system of tomorrow which promises to be decolonised& more egalitarian.
So because the Ugandan lawyer (including the hack in law school & apparatchik in government and the judicial franchise) takes immense pride in being transactional rather than transformational, we’re stuck with a justice system that is terminally corrupt & below par.
In Ham v DTB, justice is not the concern of any of the parties concerned with this legal matter. The only arguments seem to be among the capitalists themselves.
Much comment around the case is between those commercial lawyers who are worried about its impact on how attractive Uganda will continue to be to foreign capital. The aficionados forecast a collapse of the banking sector, nay the collapse of Uganda as we know it today. Whoa!
On the other side, there is simply a defence of ‘the law’ in general, without critiquing its imperialist origins – which effectively means that, should the Supreme Court then reverse the decision, these lawyers too will support that. They are not in it for Decolonization.
In short, there is NO discussion (among compradors) of the ethical question of state-sanctioned foreign-owned predatory banking and lending per se, and what impact it has had on the Africans here. But THAT is the real issue we need to be concerned with
Lesson 10: Meet Mr. Loophole — Champion of the Underdog. To mega-borrowers like Ham Kiggundu& Peter Kamya (Simbamanyo House), he’s a knight in shining armour. To UBA, he’s a menace to society. But one thing is certain: Fred Muwema is no ordinary lawyer.
Muwema v GOLIATH On 3 Sept 2020 Court of Appeal acquitted Muwema’s clients — Amir Ummah Sheikh Mohammad Yunus Kamoga& 5 others — of terrorism charges, quashing their life sentences. Before that, Fred had been busy taking on Facebook in courts abroad.