This investigative website can exclusively report that Dr. Matthias Magoola the proprietor Dei Biopharma Limited, a biotech and pharmaceutical research firm and his lawyers led by Fred Muwema are in talks with Equity bank on how to settle their Shs250bn case out of Court.
In 2024, the controversial businessman rushed to the Commercial Division of the High Court and sued Equity Bank Uganda Limited and its Kenyan counterpart challenging the legality of Shs82.2bn and $43.2 million outstanding loan slapped on him and his commercial companies.
Dr Magoola’s DEI Industries International Limited with DEI Biopharma Limited (formerly DEI Natural Products International) were jointly seeking for an order to account, audit and reconcile their loan and current accounts held with the bank to determine the actual debt due under the credit facilities, variation of terms, loan consolidations and restructures thereto.
“An order directing the defendants to credit the plaintiffs’ loan or current accounts with any amounts found to be unlawfully debited upon the taking of an account, audit and reconciliation,” reads the complaint seeking for another order to off the amounts unlawfully debited from the plaintiffs’ account against any loan outstanding owed to the banks.
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He also wants a court to order directing the bank to refund to the businessman and his companies more than Shs47.6bn which they established was unlawfully debited on their loan account accounts pursuant to their audit.
Through their lawyers, the investor contends that they were compelled to take the loans, variation of terms, consolidations and restructures as offered because they were in urgent need for money to finance their capital-intensive projects, a situation which was compounded by the banks’ real threats of default.
However, the banks deny the allegations explaining that Dr Magoola took out a number of credit facilities from the bank between September 2016 and December 2019 to finance the completion of a factory at Kiryamuli, Wakiso District and wheat importation.
The banks contends that in June 2021, all the credit facilities were consolidated and restructured into one facility at an interest of 17 percent per annum with a 12 month moratorium.
“As a result of the first plaintiff’s default in making any full monthly instalment payment, the first plaintiff’s above mentioned facility was in default from the end of the moratorium and kept accruing interest and default interest,” the banks allege.
According to highly placed sources close to the controversial tycoon, the misunderstanding which resulted into a legal battle was after a decision the businessman took to deposit Shs578.4bn which he secured from president Museveni’s government to save his business empire from collapsing to his bank account in DFCU instead of Equity Bank.
Sources claim that DFCU bank promised to offer Magoola a better commercial deal than that Equity bank if the money was deposited with them.
Equity bank top management was bitter with the development because they were in the centre of the negotiations between Magoola and Museveni’s government.
This website has seen a letter dated May 31, 2024 signed by the Solicitor General on behalf of the Attorney General advising the Minister for Science, Technology and Innovation, Dr Monica Musenero to remit Shs578.4 billion to M/s Dei Biopharma to be used for the purposes which it was appropriated by Parliament.
“The said monies should, in accordance with the Memorandum of Understanding concluded between the government of Uganda and M/s Dei Biopharma Limited concerning the acquisition by the government of Uganda of equity in Dei Biopharma Limited, be included in the valuation assessment of government’s equity acquisition in the company; the shareholder’s agreement as well as the share subscriptions and allotment agreement which drafts have been previously shared with your office,” reads the letter signed by Pius Perry Biribonwoha, the former deputy Solicitor General.
We have also seen another letter dated September 28, 2023 to the Managing Director of Equity Bank by the Finance Minister Matia Kasaija indicating that the government’s intent to express commitment to Equity Bank and subsequently the Central Bank of Kenya and their external auditors, emphasizing the dedication to seeing the project through to its successful completion.
In May 24, 2024, the Secretary to the Treasury in the finance ministry authorized additional expenditure of Shs578.4 billion for the government investment in Dei Biopharma Limited and that part of the said money was to offset their loan obligations to Equity bank.
It is alleged that instead of depositing the funds owed to Equity bank, Dr Magoola and his companies deposited it to another bank.
Equity Bank bosses insist that government intervention to bailout Dr Magoola and his companies followed a series of correspondences regarding his default in paying which led to advertising of his property for sale over the said loan.
According to the court documents, on June 17, 2024, Dr Magoola requested for lenience and a meeting to discuss their loan obligations.
“On June 19,2024, the plaintiffs and defendants held a meeting at which the plaintiffs stated that although they acknowledged the great support they had received from the defendants (banks) while they were still new greenfield organization, they were only willing to repay the principal loan amounts without any payment of interest or default interest owed to the defendants in full and final settlement of their obligations,” reads the court documents.
On June 20, 2023, Dr Magoola wrote reiterating their stated position that the plaintiffs were only willing to pay the principal loan sums outstanding and not the interest or penalties.
On June 21, the complainant offered to pay banks Shs155bn which the bank refused.
Documents further show that on September 14, 2023, the bank through bailiffs advertised DEI properties and those owned by Dr Magoola including his Muyenga based residential home.
According to sources, the businessman fears that the litigation before the Commercial Court is likely to affect the operations of companies and frequent media reporting will place him and his companies in bad light and it is the reason he wants the matter be sorted out of court.
“The negotiations are proceeding well because he has already paid part of the money that the bank is demanding from him, we are positive that we will succeed,” a source who is in the centre of the negotiations said.
