A petition filed with the Bank of Uganda has raised serious concerns about alleged systemic misconduct at Bank of Africa Uganda, including claims of unlawful loan enforcement mechanisms, mismanagement of staff Provident fund contributions, and violations of constitutional and employment rights.
The petition accuses the bank of engaging in practices that may contravene Uganda’s Constitution specifically Articles 24, 26, 40, and 50 as well as provisions of the Mortgage Act, 2009 and the Uganda Retirement Benefits Regulatory Authority (URBRA) Act.
Key Allegations Include:
- Enforcement of Clause 8(a)
The bank is accused of using this clause in staff loan agreements to trigger automatic loan recovery, overdraft conversion, and collateral seizure immediately upon resignation or termination. The clause is described as coercive and punitive, allegedly designed to deter staff from leaving the institution.
- Creation of Unauthorized Overdrafts
One of the claims involves the forced amalgamation of mortgage and unsecured loans into a commercial overdraft facility—without the employee’s consent or a lawful restructuring agreement. The resultant overdraft was then reportedly used to justify the sale of the employee’s mortgaged property.
- Misappropriation of Provident Fund
The bank allegedly compelled the use of staff Provident fund contributions to offset disputed loan obligations, bypassing URBRA regulations and excluding authorized fund administrators from the process.
- Constructive Economic Bondage
It is further alleged that the combination of preferential staff loan terms (which are revoked upon resignation), Clause 8(a) enforcement, and forced overdraft restructuring amounts to a system of “economic captivity” that discourages voluntary exits, even in cases of mistreatment.
- Unregistered Mortgage Variations
The petitioner claims that material changes to mortgage terms were enforced without the legally required documentation, signatures, or registration contrary to the Mortgage Act, 2009.
These allegations form the basis of a High Court (Commercial Division) suit filed by Michael Mwesigwa, a former staff member of the bank, who is also pursuing regulatory intervention.
Regulatory Action Requested
The petition calls on the Bank of Uganda to:
- Investigate the bank’s loan and overdraft enforcement practices;
- Audit the application of Clause 8(a) across staff contracts;
- Enforce compliance with relevant employment, constitutional, and retirement benefit laws;
- Ensure that Provident funds are released to exiting employees without being used to secure disputed loans unless consent is explicitly provided.
Mwesigwa has warned that failure by regulators to respond within a reasonable timeframe will prompt him to escalate the matter through a constitutional petition under Article 137.
