Kampala, Uganda | By Michael Wandati | The police have called on Equity Bank to provide clarification regarding the circumstances surrounding the loss of over Shs 3 billion by Canadian national Clifford Potter in a fraudulent gold transaction.
In a letter addressed to Equity Bank’s Managing Director by SSP Ayub Waisswa of the Criminal Investigations Directorate (CID), which holds one of the two accounts of Stephen Bairukanga, the suspected gold dealer, law enforcement authorities seek information to determine whether this incident constitutes a case of money laundering, which is illegal under the law.
“It’s alleged that one Clifford Max Potter a Canadian citizen and others deposited about USD 1,000,000 to the above bank account between 2016 and 2019, under a fraudulent gold scheme of Stephen Bairukanga and the money was immediately withdrawn from the above account.
It’s said that the bank facilitated the above fraud by failing to comply with the anti-money laundering regulations requiring reporting of the suspicious transactions to FIA (Financial Intelligence Authority),” the letter reads in part.
Through Muwema & Co. Advocates, Potter has formally written to Equity and Stanbic banks, demanding the refund of his money on grounds of their failure to prevent suspicious transactions. The letter argues that had the banks conducted proper due diligence, they would have identified Bairukanga as a fraudulent gold dealer.
It is alleged that between 2016 and 2019, Potter and others transferred substantial sums to Bairukanga’s accounts with promises of receiving gold in return. Despite the transfers, Bairukanga never fulfilled his promise. Approximately $986,115 and $670,123 were deposited and withdrawn from Equity and Stanbic bank accounts respectively.
In an interview, a senior official at Equity Bank, who spoke anonymously due to restrictions on commenting about customer transactions, stated that the bank was not directly involved as the transaction occurred between individuals, not involving the bank itself.
“The bank is not involved; this was a transaction between two parties. We have seen the letter from the lawyer and it’s a matter we have been handling internally, but the matter is between two people let them sort themselves. If they call us to court, we will come and explain our position but t as far as we are aware, the bank is not involved,” the senior official said.
Nevertheless, Potter’s lawyer Fred Muwema argued that the banks cannot absolve themselves of responsibility in this matter. Muwema emphasized that while the transaction was between two parties, the banks had a duty to conduct proper due diligence to verify Bairukanga’s legitimacy as a gold dealer in Uganda, as he had purported himself to be.
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“When you get suspicious money on your account, the bank is supposed to verify where this money is coming from, if you don’t have paperwork that is clear, by law, the bank is supposed to report those suspicious transactions to the Financial Intelligence Authority,” Muwema said.
He added that if the bank had done their work, they would have discovered that Bairukanga was a scam and the money wouldn’t have left the bank.
“Under the law, when the bank fails to do its duty and money gets lost, the bank is liable because it facilitated the transaction. Whereas the bank says that was a relationship between two people, it’s true, but the bank must ensure that those who hold accounts with them don’t use it for suspicious transactions. If they say they are not involved, why have they been blocking people’s accounts? The banks are the gatekeepers against illicit transactions,” Muwema said.
Potter is not the first person to lose billions in fake gold transactions, in the past the police have investigated many cases in which foreigners have lost a lot of money in the hope of getting gold which never materialises.
