Lawyers representing businessman Dr Matthias Magoola and his companies have challenged Equity Bank’s decision to advertise the sale of their properties, arguing that the move disregards ongoing court proceedings over the disputed loan balances.
In a notice published in several newspapers on Monday, November 9, Muwema & Co. Advocates accused the bank of acting in bad faith by moving to sell the properties before an independent audit of the disputed loans has been resolved by court.
The lawyers argue that the bank has no established outstanding loan balance that can lawfully be recovered through the proposed sale, adding that the auction risks undermining a Court of Appeal process that is yet to determine the validity of an audit report on the debt.
The notice of intended sale, issued on November 5 by auctioneers Jald (U) Ltd on the instructions of Equity Bank Group, lists several properties belonging to Dei BioPharma Ltd, Dei Industries International Ltd and Magoola.
The properties include industrial and commercial land in Matugga, Wakiso district, under Kyadondo Block 82, as well as plots in Kyamuli-Kungu, Luzira, Katwe, Muyenga-Kisugu, Kitende and Seguku.
Equity Bank is seeking to recover outstanding loan balances, interest and other charges through the proposed sale.
However, the borrowers’ lawyers contend that the bank is attempting to pre-empt an independent audit intended to establish the actual amount, if any, owed by their clients.
They warn that the unresolved debt dispute makes the proposed sale legally questionable and that prospective buyers could risk acquiring properties whose ownership may later be contested.
The dispute stems from credit facilities advanced between 2016 and 2021, mainly to finance Dei BioPharma’s pharmaceutical manufacturing project in Matugga, Wakiso district. The project has also attracted substantial government investment.
In August 2024, Dei BioPharma and Dei Industries International filed High Court Civil Suit No. 929 of 2024, challenging Equity Bank’s demand for approximately Shs82 billion and US$43 million.
The companies accused the bank of predatory lending practices, including inflating principal and interest balances, irregularly consolidating loans during restructuring and engaging in what they described as a fraudulent accounting scheme.
As part of efforts to resolve the dispute, the parties entered into a consent order on December 10, 2024, appointing KPMG to conduct a comprehensive audit of the loans.
However, the borrowers later challenged KPMG’s appointment, alleging that the banks had failed to disclose an existing business relationship that presented a conflict of interest.
Following the challenge, the Institute of Certified Public Accountants of Uganda (ICPAU) was directed to nominate an independent audit firm. Clayton & Co. was subsequently appointed.
The companies also challenged this process, alleging that the banks had secretly engaged with ICPAU, thereby compromising the independence of the audit. They subsequently filed High Court Miscellaneous Application No. 1121 of 2025.
The lawyers further claim that in December 2024, the banks persuaded their clients to pay Shs120 billion, approximately US$30 million, on the understanding that the payment would facilitate refinancing. However, they say the promised refinancing was never delivered.
Despite the pending challenge, Clayton & Co. issued an audit report in June 2025, placing the companies’ indebtedness at approximately US$35.9 million as of June 28, 2025.
On July 29, 2026, the High Court dismissed the companies’ challenge to the audit process, prompting them to appeal.
On September 9, 2026, the Court of Appeal stayed proceedings in the main High Court suit pending determination of the appeal challenging the audit process. The court also restrained the banks from relying on the disputed audit report in the interim.
The lawyers argue that the November 5 sale notice disregards these court orders and amounts to an attempt to enforce a debt whose final position remains contested.
They maintain that until the audit dispute is determined and the actual indebtedness established, the bank cannot proceed as though the amount being claimed is undisputed.
Muwema & Co. Advocates have warned members of the public against participating in the proposed auction, saying any purchase would be at their own risk.
They also threaten to pursue legal sanctions against Equity Bank and its agents over the intended sale.
The dispute now shifts to the Court of Appeal, which is yet to determine the substantive challenge to the audit process that has kept the parties locked in a legal battle for more than a year.
