Businessman Kirumira ordered to pay Shs200M for fraudulently acquiring a property

The Commercial Division of the High Court in Kampala has ordered businessman Godfrey Kirumira to pay shs200 million for fraudulently acquiring a property at Kitende in Wakiso district.

Two people including Stephen Ssendagire and Gladys Nanyombi, the former proprietors of Bright Future Vocational Senior Secondary School dragged Kirumira to court for fraudulently buying the school worth shs1.4 billion from DFCU Bank at a cost of only shs300 million.

The school had been mortgaged at shs460 million but the proprietors were given only shs315 million.

On Monday, in a judgment read by the court’s registrar, Lilian Buchana, Justice Elizabeth Jane Alividza ruled that the bidding process for buying the said property was done fraudulently and that Kirumira was not the highest bidder despite winning the process.

The judge ruled that the property was sold below its forced value price and this, she said, was not only wrong but also fraudulent.

“Selling below the forced price was a negligent act. The sale (of the property) to the third defendant (Kirumira) was negligently handled by first(DFCU) and second defendant(Kabiito Karamagi, a lawyer),” the judge ruled.

“The property was sold under value and lacked a high degree of transparency. Though I believe the second defendant (Kabiito) did not act in bad faith, he should have taken reasonable care to document the whole process. The third defendant (Kirumira)’s offer was not the best price and created a loss to the plaintiffs.”

Justice Alividza ruled that the plaintiffs lost their school and it is not possible to put them back to the status they were at before it was fraudulently sold adding that they are entitled to damages.

The court asked DFCU bank to compensate the school proprietors to a tune of shs100 million.

The same court also ordered Kirumira to compensate the former school proprietors to a tune of Shs200 million as general and punitive damages for taking over their property and used highhanded methods that even included arresting one of them.

“He (Kirumira) took advantage of them and eventually took over the property. He committed an act of fraud when registering his ownership on the land claiming that the land was not developed,” Justice Alividza ruled.

The judge ordered for interest at a commercial rate of 21% per year from 2008 until the payment of the money is done in full.

Kirumira was however ordered to retain the school because the matter has been overtaken by events and cannot be handed back to the proprietors.

Background

The case was taken to court in 2008 and according to court documents between May 2005 and May 2006, Sendagire and Nanyombi mortgaged the school at Shs460 million but were given instalments of shs280million and Shs35 million which totals to Shs315 million.

It was also alleged that DFCU Bank connived with Kabiito (a lawyer), who acted as the receiver, and Kirumira to declare that the property as being residential and undeveloped whereas it was commercial.

Karamagi later noted that the bank had obtained a valuation report that valued the property at Shs550 million but he was forced to sell it at Shs330 million.

During the tendering process, Kirumira, who had not been part of the process was sold the property at Shs 300 million.