Tropical Bank Uganda Limited and its client, IT Office (U) Limited, find themselves at the center of a financial scandal after failing to repay a loan of over Shs 6.84 billion extended by Prime Finance Company Limited. Despite a court ruling in favor of Prime Finance, the debt has ballooned to over Shs 21 billion due to accumulated interest, leaving the two entities scrambling and the banking sector shamed by their inability to settle the debt.
In March 2020, Prime Finance lent IT Office (U) Limited Shs 5.7 billion at a 5% monthly interest rate for four months, with Tropical Bank Uganda guaranteeing the loan repayment. The funds were meant to clear IT Office’s outstanding liabilities with Tropical Bank and secure additional credit. However, more than four years later, no payments have been made, and Tropical Bank claims that the loan transaction was fraudulent, an allegation dismissed by the bank’s senior staff.
According to insiders, Tropical Bank’s role was pivotal in this transaction, as it assured Prime Finance that it would step in if IT Office failed to meet its obligations. The bank’s executive team, including the Executive Director, Head of Credit, and Legal Manager, signed an irrevocable undertaking, binding the bank to repay the loan. However, after defaulting, Tropical Bank has shifted blame, claiming internal issues and unauthorized dealings.
Tropical Bank’s management has since faced intense infighting, with senior officials vying for top positions and undermining each other. This internal strife has disrupted the bank’s operations and caused a divide in its leadership, affecting sensitive transactions like this one. Key figures such as Managing Director Abdul Aziz Mansul and Head of Compliance Caroline B. Ogwang were reported to have played a role in ousting former executives, leading to a leadership shake-up and further turmoil within the bank.
Despite several legal warnings and a court ruling in August 2021 that ordered the repayment of Shs 6.84 billion with a 5% monthly interest, Tropical Bank has continued to avoid settling the debt. This ongoing scandal reflects deeper issues of mismanagement and power struggles within the bank, further damaging its reputation in the financial sector.
Prime Finance Company Limited remains without recourse, having been advised by the Bank of Uganda to seek remedies under the Contract Act 2010, leaving the case as a glaring example of corporate malpractice in Uganda’s banking industry.