Following revelations that Diamond Trust Bank (DTB) Uganda is doing illegal withdrawals from their client’s accounts, customers have been withdrawing their money from the bank.
This has created fears that the bank might collapse.
It all started when Ham Enterprises noticed that DTB without consent, was withdrawing money from its accounts.
They decided to take DTB to court.
Ham Enterprises in court papers proves that DTB fraudulently withdrew UGX 29,035,682,682 billion (Sh857 million) account and USD 22,938,528.29 Million (Sh2.4 billion) from their shillings and dollar accounts as per the account statements for a 10-year banking relationship that they had operated those accounts.
There are other clients of DTB who also found out that on various days, DTB withdrew money from their accounts without their consent. Gen Charles Angina also filed a case (suit no. 76/2018) in court after the bank took advantage of his busy schedule and committed a series of frauds on his accounts which included transferring his properties to third parties on allegations that he had defaulted and he lost UGX 1,800,000,000 (Sh53 million)
Another customer named Yiga Musa (suit no.254/2017) filed a suit against the bank in 2016 after the bank took advantage of him not understanding and reading the English language. The bank made him sign many documents, including mortgages deeds with an intention of creating an illegal mortgage and making him a debtor and defrauded him of UGX 3, 500,000, 000 (Sh103 million)
As the cases in court progresses, the bank is facing a new threat, jittery clients are withdrawing their monies in drove from the bank, creating the possibility of the bank’s imminent collapse.
“Imagine a kikubo man, in this COVID time, to lose hundreds of millions. So, there is that panic. We doing all to reassure the customers but looks like the damage has been done. It is not just the Ham issue; disgruntled customers have been making noise and its becoming loud. Of course, we have almost collapsed but we can’t afford to lose customers and these huge deposits at the rate it is happening,” a DTB employee told Uganda Daily.
The industry regulator in that country, the Bank of Uganda (BoU), the equivalent of Central Bank of Kenya (CBK) has not said a word as it still treats this matter as a rumor but as the sector’s regulator it has to come in at some point to reassure the public and protect the bank and the entire financial sector.
In Kenya too, with the many such cases of illegal withdrawals , the CBK remained mum.
The BOU deputy Governor, however, had this to say, “The Bank of Uganda only intervenes in a financial institution when it has reasonable belief and evidence that continued operations of that institution pose serious risk of loss to depositors’ funds”. In the past, also, the Bank of Uganda Governor Emmanuel Mutebile hinted that two banks in Uganda were on close watch. “DTB is said to have been top on the list. With the ongoing scandals, BOU is said to be reviewing is its position to take over the bank or shut it down.”