Equity Bank Faces Lawsuit from Dr. Mathias Magoola Over Shs 250 Billion Loan
Ugandan businessman Dr. Mathias Magoola has disputed a debt exceeding Shs 250 billion owed to Equity Bank Uganda and Kenya, alleging the loans were improperly calculated and advanced.
Dr. Magoola, owner of DEI Biopharma Limited, has filed a court petition in what is seen as an attempt to evade his financial obligations. He is contesting Shs 82.2 billion and $43.2 million in outstanding loans, arguing that these amounts are inflated and unfair.
Dr. Magoola, who runs DEI Industries International Limited and DEI Biopharma Limited (formerly DEI Natural Products International), is calling for a comprehensive account and audit of their loan and current accounts with the bank. He seeks an order for the banks to adjust any unlawful debits from their accounts and refund more than Shs 47.6 billion that he claims was wrongly charged.
The loans in question were reportedly taken to finance various projects, including a medical plant in Matugga, Wakiso District. This plant, which gained prominence when President Museveni inaugurated it after claims it might produce a COVID-19 cure, is now at the center of the dispute.
Before the Commercial Court, Dr. Magoola has challenged the legality of the loans, seeking an audit to verify the actual debt and to address terms, consolidations, and restructurings of the loans.
Dr. Magoola and his companies are requesting that the court direct the bank to credit their accounts for any amounts deemed unlawfully debited and to rectify any discrepancies.
The banks, however, maintain that Dr. Magoola obtained several credit facilities from September 2016 to December 2019 for the completion of a factory in Kiryamuli, Wakiso District, and for wheat importation. They argue that these facilities were consolidated in June 2021 into a single loan with an interest rate of 17 percent per annum and a 12-month moratorium.
By July 25, 2022, at the end of the moratorium, the outstanding amount was Shs 64.7 billion. DEI Industries International Limited was expected to begin monthly payments of Shs 1.449 billion but only made partial payments of Shs 129.6 billion on July 29, 2022, and Shs 58,822.23 on October 10, 2022, over the following 18 months. The banks allege that due to missed payments, the loan continued to accrue interest and default charges.
Dr. Magoola’s case was filed on August 2, shortly after the government provided Shs 578.4 billion to DEI Biopharma Limited to prevent the auction of its assets. A letter from the Solicitor General on May 31, 2024, indicated that these funds were intended to help DEI Biopharma and to be factored into the valuation of the government’s equity stake in the company.
Finance Minister Matia Kasaija, in a letter to Equity Bank’s Managing Director on September 28, 2023, reaffirmed the government’s commitment to support the bank and noted that part of the bailout was meant to offset the company’s loan obligations. However, it is alleged that Dr. Magoola deposited the funds in a different bank rather than settling the debt with Equity Bank.
Despite numerous requests from the banks for repayment, Dr. Magoola and his companies have yet to make payments. The banks’ documents reveal that property owned by Dr. Magoola, including his residential home in Muyenga, was advertised for sale in September 2023 to recover the outstanding debt.
In June 2024, Dr. Magoola requested a meeting to negotiate the loan terms. During this meeting, he acknowledged the banks’ support but proposed to repay only the principal amounts without any interest or penalties. The banks rejected this offer.
Parliament’s approval of the Shs 578 billion bailout for DEI Biopharma Limited in May has been a point of contention, with ongoing debate among legislators.