Genesis of Kagimu, Stanchart property row

Kampala. Like any relationship, the Standard Chartered Bank, Habib Kagimu affair started in earnest before it collapsed two years later, according to email correspondences and letters seen by Daily Monitor.
On January 3, 2013, Rachel Rwakatungu, the then Standard Chartered relationship manager, wrote to Habib Oil, in which Mr Kagimu is a director, notifying the company that the $4.08m (current value Shs15.8b) loan application had been approved.
Habib Oil had obtained the loan facility to facilitate its activities which, among others, included supplying petroleum products to Electro-Maxx, which had been (and still is) contracted by Uganda Electricity Transmission Company Limited to supply electricity to the national grid.
The loan, which had a prime interest rate of 7.5 per cent, had been secured against a combined asset value of $9m (Shs34.8b).
Therefore, Standard Chartered and Habib Oil had kicked off a relationship whose end has, years later, resulted into a strenuous court battle and has left in its wake a sharply severed course of events.

First point of collapse
On September 1, 2014, slightly two years into the loan servicing, Mr Richard Suuna, the then Standard Chartered account manager, wrote to the managing director of Habib Oil notifying him that they had fallen back on the loan repayment obligation.
“Take note that you have defaulted on your obligation … if you do not pay the amount in arrears … within five working days ... we shall recover by alternative means including legal action. We trust that you understand the implication of this …” he wrote in a notice of default.
The notice could have been the first pointer of a debilitating relationship resulting from failure by Habib Oil to sufficiently service the loan.
Between there, efforts were made to clean the loan account that now had an outstanding balance of about $2.914m (Shs11.3b) and a combined arrears of $1.193m (Shs4.6b).
The efforts, which included seeking permission from the bank to sale some of the properties already in its possession, putting pressure on Habib Oil’s debtors such as Electro-Maxx and different engagement between the bank and the directors (of Habib Oil) provided a temporary reprieve, but only for a short while.
Indeed, on February 15, 2016, Standard Chartered issued a demand notice, notifying Habib Oil that it would proceed to sale collateral, much of which are properties of Mr Kagimu, a Kampala-based businessman, to recover the outstanding loan balance.
Key among the properties included residential houses in upscale Kampala in Kololo, Bugolobi, Makerere and Central Kampala (Old Kampala) as well as upcountry plots in Jinja and Mbarara.
The notice, which followed a number of correspondence had been the last from the bank, before the matter was handed to Kampala Associated Advocates (KAA), Standard Chartered’s lawyers.
Indeed, on April 13, 2016, KAA wrote to Mr Habib Kagimu bringing the distressed loan relationship to his attention, warning that they would use all means necessary within the law to recover the outstanding amount.
“This is to notify you that the facility [loan] has now been recalled [cancelled] and we have instructions to demand, as we hereby do, the repayment of total monies outstanding together with legal fees,” the notice reads in part.
“If the default is not remedied …. the client shall be entitled to … appoint a receiver, lease or subleases, enter into possession or sell the mortgage land”.
On August 25, 2016 after a series of failed negotiations, KAA wrote to Habib Oil, notifying the company that it had proceeded to put on sale properties secured to recover the outstanding loan facility that had been minimally reduced to $2.539m (Shs10b).
Subsequently, after failed negotiations, several properties including a house in Bulogobi, another in Kololo and a plot of land on Sir Apollo Kagwa Road where advertised through a public notice.
The moved sparked off the start of a legal battle in which Mr Kagimu sought to save his properties that had been used to secure the loan.
On September 2, 2016 Habib Oil, acting through Muwema & Company Advocates instituted a law suit seeking to compel court to declare that Standard Chartered Bank had “irregularly, prematurely and illegally recalled the loan facility [thus the pending sale of Habib Oil] mortgaged properties is irregular and illegal”.
According to Mr Kigumu, the outstanding loan quoted by Standard Chartered is in dispute therefore, he wants an audit and full access to his loan account, which request, according to notices seen by Daily Monitor, has been denied.
Mr Kagimu, Mr Muwema maintains, has seen suspicious transactions on his account and efforts to clarify them have been futile.
“For example, our client [wants the bank to explain] a $3.8m [figure]. We asked for statements and there was a mismatch. We want an audit to understand this,” Mr Muwema says.
Ms Cynthia Mpanga, the Standard Chartered Bank corporate affair, brand and marketing manager at the weekend told Daily Monitor the “matter is subject to ongoing litigation and as such, we are unable to comment on the same”.
That said, she added: “We wish to reiterate that [we] operates within the confines of the law and regulatory requirements whilst upholding the highest standards of governance.”