Bitature’s run with lenders hurtles towards an inevitable end

June 25, 2024 in Business, Companies, Finance by Editor

Options appear to be rapidly diminishing for Ugandan businessman and head Simba Group of Companies, Patrick Bitature, as he makes last ditch efforts to avoid paying off millions of dollars, he owes South African lender Vantage Capital.

In the latest upset, Uganda High Court Judge Justice Rosette Comfort Kania, on April 19 overturned a questionable ruling in which Buganda Road Chief Magistrates had issued criminal summons against the directors of Vantage Capital.

The criminal summons, arising from a private prosecution by Wyckliffe Atuhaire, were being seen as the latest tactic by the embattled businessman, to stave off attachment of his properties to recover a USD 34 million debt. The debt accumulated to the staggering sum, after Bitature failed or neglected to pay money, he borrowed nearly a decade ago.

Following a string of losses in court and arbitration proceedings, Atuhaire, a lawyer working with Moogi Brian & Co. Advocates, the firm which represents Simba and Bitature, filed an application for private criminal prosecution against Warren van der Merwe, Mokgome Mogoba and Derek Alexander, partners and employees of Vantage Capital.

Among Atuhaire’s charges was that the trio contravened Ugandan law when they extended credit to Bitature and his companies, when they were not licensed to operate a money lending business in Uganda.

But trashing the Magistrate court’s decision to grant Atuhaire leave to prosecute, Lady Justice Kania described the prior authorisation of criminal proceedings as a “travesty of justice.” She was also critical of the Magistrate and Mr. Atuhairwe and sanctioned Mr. Atuhairwe to personally meet the costs of the proceedings.

In her judgement, Justice Kania found that the Magistrate was bound by, and required to follow, certain findings of higher courts already made regarding the Vantage/Simba dispute. Among others, such findings are that Vantage was not required to register in Uganda before signing the Facility Agreement with Simba and is not required to have a money-lending license as it does not ‘carry on business’ in Uganda. 

Also, Vantage did not obtain securities from Simba by false pretenses. She found that “it was plain for all to see” that Simba had entered the various agreements voluntarily. Simba cannot sustain the argument that they were duressed, unduly influenced or somehow defrauded into entering the Facility Agreement.

Admonishing the lower court, the Learned Judge also reiterated that the courts of Uganda have a duty to protect the country as an investment destination.

“Simba retained one of the brightest legal minds in this country to draw the MTFA [Mezzanine Term Facility Agreement]. It beggars’ belief that any right-thinking person let alone an advocate would turn around and suggest that the MTFA was executed on behalf of Simba as consequence of false pretenses on the part of Vantage. It is plain to see that the MFTA was entered into voluntarily by the parties to it, the parties involved and the firm of lawyers that were retained to draw it appreciated the implications of executing the MFTA. To suggest otherwise and to repeatedly attempt to advance in courts of law the narrative that the MFTA was not entered into voluntarily by the Bitatures is to make an absolute mockery of justice.

“Courts of law in any jurisdiction, by virtue of the decisions they pass in investment disputes such as the one between Vantage and Simba Properties Investment Company Limited, send a signal to investors, particularly foreign investors, about the level of confidence investors should accord that country as an investment destination. The efficiency and effectiveness of a country’s judiciary is indispensable in enhancing the attractiveness of a country as an investment destination. The protracted battle over the payment of a loan which by all indications was taken voluntarily [extended][sic] in 2014 in circumstances that were clearly voluntary, has undoubtedly dented Uganda’s image as an investment destination and impacted negatively on its investment climate ratings. It is a travesty of justice that providers of capital for investment have now been dragged before courts of law and warrants of arrest issued against them in respect of a loan that was extended in December 2014 in respect of which not a single cent has been repaid to date. In an act of brazen abuse of court process, the injustice of refusal to repay the loan has been compounded by dragging the lenders (partners of vantage) to the courts pursuant to private criminal proceedings and as we speak there is an arrest warrant pending against the partners of Vantage. This court will not fold its hands and perpetrate a travesty of justice.” 

Under Ugandan law, this decision is not appealable and probably spells the end of the road for Bitature and Simba.

“There are a number of court cases between Vantage/Simba/Patrick pending before the courts which either require hearing or a ruling, including on the recognition of Vantage’s ICC arbitration award as an order of court. Absent agreeable settlement terms, Vantage will continue its efforts in the courts and then proceed to realise those assets it holds as security as appropriate,” says Derek Alexander, the Associate Partner, Legal at Vantage Capital.

“We at Vantage welcome and echo the sentiments of the Learned Judge in this decision, and the finality it brings to the spurious criminal allegations,” he added.