The Commercial Division of the High Court has dismissed a lawsuit by Entebbe Municipality Mayor Fabrice Rulinda, against Stanbic Bank Uganda in which he accused the bank of breaching their contract after it reversed a transfer and blocked his account.
On Monday, Justice Stephen Mubiru ruled that the bank acted within the law and dismissed Rulinda’s claim with costs after investigations revealed that the $73,262.50 (over Shs270 million) transfer to his bank account was linked to the March 23 Movement (M23) rebel group operating in eastern Democratic Republic of Congo.
According to court documents, the disputed funds were part of two transfers sent by a company identified as Green Global Corporation, which deposited more than $496,000 into Mr Rulinda’s dollar account within two days in August 2017.
The bank flagged the transactions as suspicious because the account had previously handled relatively small amounts. Shortly after the deposits, Mr Rulinda reportedly withdrew large sums of money, including more than $155,000 in cash, and used part of the funds for travel purchases and school fees.
According to court records, Rulinda admitted during investigations that he facilitated meetings between foreign gold buyers and individuals associated with the M23 rebel movement, an armed group sanctioned by the United Nations for destabilising eastern Congo.
In his statement, Rulinda noted that the buyers intended to channel money through his bank account so that he could withdraw it and pass it on to intermediaries involved in the deal.
The meetings reportedly took place in Kampala hotels before the parties agreed that money would be wired into Rulinda’s personal account and later withdrawn for delivery to the rebels.
Justice Mubiru said the arrangement raised glaring red flags.
Justice Mubiru further noted that Mr Rulinda’s explanations regarding the purpose of the funds were inconsistent.
Justice Mubiru noted that Mr Rulinda’s explanations regarding the purpose of the funds were inconsistent.
The judge emphasised that financial institutions have a legal obligation to halt transactions suspected of involving proceeds of crime.
By routing the funds through his personal bank account, the court said, Rulinda helped provide a veneer of legitimacy to funds tied to an illicit network linked to the rebel group.
The judgment also highlights the wider regional problem of conflict minerals, noting that rebel groups such as M23 have long financed their operations through illicit gold mining and smuggling networks in eastern Congo.
Justice Mubiru observed that such networks often rely on intermediaries and legitimate financial systems in neighbouring countries to disguise proceeds from illegal mineral trade.
Rulinda had sued Stanbic Bank Uganda claiming breach of contract after the bank reversed one of the transfers and blocked his account.
However, the court ruled that the bank acted within the law and in the public interest after identifying the transactions as suspicious and reporting them to the Financial Intelligence Authority.
