Overview:
BoUin a May 18, 2022 letter demanded clarification about the background to the auction notice.
Bank of Uganda is investigating circumstances that led to the loan standoff between Simba Group of companies owned by businessman Patrick Bitature and Vantage, a South-African based equity and debt firm.
Kikubolane.com has obtained a letter written by the Executive Director in-charge of Supervision at Bank of Uganda, Dr Tumubweine Twinemanzi, to Vantage’s lawyers of Kirunda and Wasige Advocates after the latter put Bitature’s properties on sale seeking to recover their money.
Dr Twinemanzi in a May 18, 2022 letter demanded clarification about the background to the auction notice, as well as “any further but related information, which in your view, Bank of Uganda as a financial sector regulator, should be made aware.”
“The potential market valuation of the listed properties for sale and their commonality in ownership, together with our own market intelligence, makes it highly probable that the affected debtor is a systemic borrower within the financial sector,” the letter reads in part.
“The potential market valuation of the listed properties for sale and their commonality in ownership, together with our own market intelligence, makes it highly probable that the affected debtor is a systemic borrower within the financial sector,”
Executive Director in-charge of Supervision at Bank of Uganda, Dr Tumubweine Twinemanzi
In response, Vantage’s lawyers wrote to Bank of Uganda, urging them to tighten the rules for borrowers from foreign lenders.
“A lot of this (foreign) lending may be outside the banking sector but relating to securities that are shared with the banks. In those cases you may want to consider running a wider sensitivity analysis on the sector,” they wrote.
“We believe you would agree that borrowers such as Simba, and more recently Ham Enterprises, who trade in the procurement and avoidance of debt obligations, present a major risk to Uganda’s financial sector. The publicity around such defaults seems to suggest the entrenchment of a culture (and ease) of evasion of loan obligations,” they added.
Vintage says the loan to Mr Bitature’s companies has now increased to $32 million after accrued and compounded interest, and penalties.
But Bitature in a personal statement he released last month acknowledged receiving the loan but said difficulties arising from delays in Uganda’s oil and gas sector had undermined his companies’ ability to repay the loan.