After years of legal and financial disputes surrounding the collapse and sale of Crane Bank in Uganda, businessman Sudhir Ruparelia has taken the fight to the United Kingdom, where Rabobank, the Dutch banking group, has become part of the wider legal dispute.
The case is being heard in London, with Ruparelia and other former Crane Bank shareholders seeking at least €200 million (about Shs880 billion) in damages. His legal team expects the value of the claim to rise as litigation costs continue to accumulate.
How the Dispute Began
Crane Bank was established in the 1990s by Sudhir Ruparelia and other shareholders and grew to become one of Uganda’s notable privately owned banks.
However, in 2016, the Bank of Uganda placed the lender under administration, citing serious financial difficulties. About three months later, Crane Bank’s assets and liabilities were transferred to DFCU Bank.
At the time, DFCU had an ownership structure that included Rabo Partnerships, a subsidiary linked to Rabobank, as well as development-finance institutions FMO and Norfund.
The involvement of Rabobank-linked interests has since become a significant part of the dispute now before the London courts.
Rabobank has its origins in the Netherlands’ agricultural and horticultural cooperative banking sector. Its connection to DFCU has therefore drawn the Dutch financial institution into a legal battle arising from one of Uganda’s most closely watched banking interventions.
Ruparelia’s Allegations
Ruparelia and the other former Crane Bank shareholders contend that the bank was sold unlawfully and at a value substantially below what they believe it was worth.
They further allege that interests connected to Rabobank benefited from the transaction.
Rabobank and the other defendants have rejected the allegations and have declined to comment on the substance of the dispute while the proceedings remain before the courts.
A major point of contention is a payment of $27.5 million, equivalent to approximately €23 million (about Shs101 billion).
According to Ruparelia’s claim, two former Rabobank bankers who served on DFCU’s board received an email towards the end of 2016 suggesting that money generated from the sale of a portfolio of Crane Bank loans would be transferred to the Bank of Uganda without being recorded.
Dr. Sudhir, who doubles as Nepalese consul to Uganda, characterises the alleged payment as bribery.
He also claims that DFCU acquired Crane Bank without an independent valuation and that the bank had been approached by the central bank before Crane Bank was placed under administration, with an indication that the lender could be acquired at a price significantly below its market value.
DFCU Disputes the Claims
DFCU has rejected the allegations and has presented a different account of the events surrounding Crane Bank’s takeover.
The bank maintains that Crane Bank was seriously undercapitalised at the time of the intervention.
On the disputed €23 million payment, DFCU says the money had a legitimate purpose and was intended to repay emergency financial support provided by the Bank of Uganda.
DFCU has also said KPMG was involved in the valuation process. It further argues that the former Crane Bank shareholders did not challenge the bank’s administration through Uganda’s courts at the time.
Parliament Raises Questions
The controversy surrounding the transaction was not confined to the courts.
In 2019, Uganda’s Parliament concluded that the Bank of Uganda had breached the law in several aspects of its handling of the transaction.
Years after the original intervention, the dispute has now shifted to the UK courts, where the parties are continuing to contest the circumstances surrounding Crane Bank’s administration, valuation and eventual sale.
At the centre of the London case is whether DFCU and entities linked to its ownership structure can be held legally responsible for the alleged wrongdoing raised by the former Crane Bank shareholders.
Rabobank’s Unexpected Chapter
The involvement of Rabobank adds another dimension to a dispute that began with a Ugandan bank nearly a decade ago.
Rabobank developed from Dutch agricultural and horticultural cooperatives and has grown into a major international financial institution. Through Rabo Partnerships, one of its subsidiaries, it became connected to DFCU’s ownership structure during the period surrounding the Crane Bank transaction.
That connection has now placed the Dutch banking group in the middle of a legal dispute involving allegations of an undervalued sale, a contested €23 million payment and a compensation claim of at least €200 million.
The case is therefore not simply about the collapse of one Ugandan bank. It raises wider questions about banking regulation, the valuation of financial institutions, ownership structures and the responsibilities of parties involved in bank acquisitions.
A Costly Legal Battle
The claim currently stands at at least €200 million (about Shs880 billion).
According to the report, Ruparelia has already spent tens of millions of euros, equivalent to tens of billions of shillings, on the litigation and has indicated that he intends to continue financing the case until it reaches its conclusion.
The claimants have also obtained a substantial collection of internal emails, presentations and confidential documents as part of the proceedings, with lengthy hearings expected.
For Ruparelia, the dispute that began with the Bank of Uganda’s intervention in Crane Bank and continued through Uganda’s legal and political circles has now entered a new phase in London, with Rabobank-linked interests among those facing the claims.
The outcome of the case will determine whether the former Crane Bank shareholders are entitled to the compensation they are seeking and whether the allegations raised against the defendants are ultimately established in court.
