UGANDA AND Kenya's central banks face a massive law suit as more than 1,300 members of the Nubian community move to recover millions of dollars in accounts that were frozen in the two countries, soon after the government of late Ugandan dictator Idi Amin fell in April 1979.

The accounts, which had between $35 million and $50 million at the time of the seizure, were frozen by the Bank of Uganda in an act lawyers argue was illegal and unconstitutional because it was discriminatory and not backed by any law at the time. 

The Central Bank of Kenya (CBK), acting on instructions from Uganda, froze an unknown number of accounts, mainly belonging to Ugandan businessmen who were thought to have been close to the Amin regime. Lawyers representing the petitioners say they are seeking means of enjoining the CBK in the suit against the Bank of Uganda, since a number of their clients who held accounts in Kenyan banks suffered a similar fate after the CBK froze them without any legal backing.

"We are weighing the possibility of suing the CBK in Kenya since they are outside Ugandan jurisdiction, or enjoining them in the suit here," said Richard Omongole of Kasozi, Omongole and Company Advocates, which is representing the petitioners.

He added that another alternative would be to register the Ugandan courts' judgement in Kenya for reciprocity by Kenyan courts. 

CBK officials in Nairobi, however, said they had not been officially informed about the case.

According to documents made available to The EastAfrican, the CBK froze the accounts as early as April 6, 1979, five days before a new regime was announced in Kampala.

In Uganda, most of the accounts were held in Uganda Commercial Bank, and Grindlays Bank, which have since been taken over by Stanbic Bank as well as the Libyan Arab Uganda Bank. 

According to a copy of the minutes of a confidential meeting between the Bank of Uganda and representatives of commercial banks on August 8, 1979, chaired by the then governor of the BoU, G.B. Nkojo, the freeze order came from the Minister of Finance, who feared that the funds in the accounts could be used for subversive activities against the post-Amin regime.

Although the managers expressed reservations about implementing the directive, Mr Nkojo told the meeting that it had to be carried out and instructed that the balances in the respective accounts be transferred to BoU.

Among those targeted were accounts of people who had fled Uganda in the wake of the war that overthrew the Amin regime, an action that mainly affected Muslims and Nubians in particular. Following successful legal challenges by some of the affected individuals against their bankers, the government of President Milton Obote sought to legalise the freezing orders retrospectively in legal notice No 2 of 1982 and No 3 of 1984, which spelt out criteria for freezing accounts.

Obote, who doubled as finance minister, hurriedly issued legal notice No 2 of 1982, after a court ruled in favour of Juma Kenyi, who had sued Grindlays Bank for freezing his savings and current accounts in June 1979 totalling Ush 1,479,108.60, equivalent to $211,000 at the time of closure. The court also awarded the petitioner costs of the suit and interest at the rate of 10 per cent from June 30, 1979 until full payment.

A handful of other petitioners also successfully sued their banks in Uganda, but Milton Obote's government, which deployed police to block court bailiffs, frustrated execution of the judgments. 

The amounts being claimed by the 1,300 petitioners range from Ush100,000 (currently $54) to more than Ush10 million (currently $5,400) in 1979 value when the exchange rate was Ush7 to the dollar.

Former President Idi Amin who held account No. 1 in the Libyan Arab Uganda Bank and three other accounts in Uganda Commercial Bank, his son Taban Amin, who recently returned from two decades of exile in the Democratic Republic of Congo, and First Deputy Premier and Minister for Disaster Preparedness Moses Ali, appear on the list of account holders seeking restitution. 

According to legal notice No 2 of 1982, the order applied to account holders who had fled Uganda as a result of the liberation war of 1979; had defrauded the government, bank or credit institution; used their connection or positions in the military government of Amin to acquire property unfairly; had been members of the regime's intelligence and security services. It also applied to account holders who were non-citizens and had left the country as a result of cancellation of immigration status or had acquired the funds as a result of business malpractices or corruption. 

In constitutional petition No 2 of 2004 filed on April 30, the petitioners, who are seeking restitution from the Bank of Uganda argue that both legal notice No. 2 of 1982 and legal notices No.2 and No. 3 of 1984 contravene the current constitution, since they targeted and deprived the petitioners of their property on the basis of their political, tribal and religious affiliations.

Mustapha Ramathan, Ismail Dabule and Kassim Ramathan, who are leading the 1,300 petitioners, table evidence to show that they were in business long before the military regime came to power in January 1971; they were neither in the employment of the security nor government services, they earned their money through open and legal business and they did not flee the country.

Some of the petitioners demonstrate that they were bonafide businesspeople engaged in such activities as transport, services and general merchants.

They further argue that the two notices are unconstitutional as they precluded the right to a fair hearing and the right of presumption of innocence until proved guilty. The retrospective effect of the notices to December 25, 1980, is also being contested on the grounds that the accounts were already inaccessible to the petitioners by 1979.

The BoU and Attorney General Francis Ayume, who has been enjoined in the suit, are also being taken to task for failure to open the accounts even after the Finance Minister had ordered all the accounts to be freed in February 1995.

The petitioners are seeking compensation, general damages, payment of compounded interest, payment of interest and profits from the money, which is said to have been invested in Treasury bills, and costs of the petition. They are asking the constitutional court to refer the matter to the high court for determination of damages, interest, compensation and specific orders.

Speaking for the Attorney General, the Director of Legal Services in the Ministry of Justice, Billy Kainamura, told The EastAfrican that the accounts were legally frozen "given the circumstances." He said it would be a misnomer to say that the action only targeted Nubians.

"This a multifaceted issue and one would have to look at the politics of the time to appreciate it. But we are keeping our options open," Mr Kainamura said.

BoU spokesman Juma Walusimbi said the bank was not contesting the presence of the accounts with it and was already reconciling its records with the commercial banks involved to ascertain how much was transferred to its custody.

"The Governor, Tumusiime Mutebile, has already asked the banks to present relevant records so that the matter can be settled expeditiously," Mr Walusimbi said.

But lawyers are anticipating problems as some of the banks have written to say that they may be unable to produce records, as the general practice is to archive records for only 10 years.

At issue also is the 1987 currency reform under which all money deposits were affected by a 30 per cent conversion tax, which the petitioners want waived and the conversion of money values based on the 1979 fixed exchange rate of Ush7 to the dollar. The current exchange rate is about Ush1,900 to the dollar.

Mr Walusimbi said the Central Bank would be guided by precedent on the question of conversion rate although in correspondence from the finance minister to a handful of individuals, whose accounts were freed after preferential intervention between 1987 and 1995, the idea was rejected on the grounds that it would be unfair to the general population who were subjected to the tax.
 

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