[2025] UGHCACD 1

# **REPUBLIC OF UGANDA** IN THE HIGH COURT OF UGANDA HOLDEN AT KAMPALA **ANTI-CORRUPTION DIVISION** CRIMINAL CASE 1 OF 2023 **UGANDA ................................. PROSECUTOR**

### **VRS**

### AJUK RONALD JIMMY ........... ACCUSED

### 10

### **BEFORE GIDUDU, J**

### **JUDGMENT.**

### Introduction.

Ajuk Ronald, hereinafter called the accused is indicted with the offence of Causing Financial Loss C/S 20(1) of the ACA, Cap 116. He is accused of fraudulently utilizing **USD 219,931** the property of **ABSA** Bank Uganda Ltd that was erroneously credited to his **US Dollar account No. 6006916145** on 9^th June 2022, knowing that such act would cause financial loss to the bank. He denied the charges hence the trial.

#### **Brief background.** $20$

It started with a request for a loan by the accused from a colleague called Kamwine Ann of **UGX.** 6,000,000=. The accused held a US dollar account in Absa bank Uganda Ltd, herein after called the bank. Kamwine did the needful using internet banking. She transferred **UGX.** 6,000,000= from her UGX account to the accused's US dollar account. The credit on the accused's account was to be about **USD 1550** depending on the exchange rate of the day. **Who**

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By error in the bank system, the credit to the accused's account was **USD 6,000,000=.** The bank system did not convert the Uganda Currency into US dollars as expected. It maintained the figure as if Kamwine had transacted in US dollars whereas not. The accused started spending the money immediately through points of sale. ATM withdrawals and internet transfers to other customers.

After three days, the bank realized the error and stopped operations on his account. The bank also reversed some transfers made to some customers with accounts within the same bank. After some recoveries from the destination accounts within the bank, the outstanding amount spent by the accused stood at USD 219,931.

The bank summoned the accused to explain himself about spending money wrongly credited to his account. When he turned up he was asked to refund it and upon failing, he was arrested and charged.

The accused admits, he received a credit of **USD 6,000,000=** on his account. He admits, he requested Kamwine for a loan of **UGX**. **6,000,000** = which would have been far less than what was credited on his US dollar account.

He however, justified the utilization of the funds upon an honest but mistaken belief that the money was sent to him by his business $20$ partners/funders in Germany. He testified at length about a business project of smart parking in Kampala which he wanted to do but needed equipment to implement it. He engaged financiers in China, Hong Kong and Germany to supply equipment for smart parking at public malls in Kampala.

It was his belief that the funders had opted to send money to his account instead of equipment. He denied having knowledge that he was causing loss to the bank by disbursing the funds from his account to several payees.

It was his evidence that two days after he had started disbursing 30 the money, he called one of his business contacts in Germany called Richard to confirm if the money on his account was from the financiers abroad and what were the terms of re-payment. Richard

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promised to return the confirmation later. Later, Richard confirmed they had not sent any money to his account.

# Burden and standard of proof.

The burden of proof is upon the prosecution to prove each of the essential ingredients in the indictment. The accused has no duty to prove his innocence. The burden of proof must be beyond reasonable doubt. I can do no better than cite a passage below regarding this principle.

"The degree of beyond reasonable doubt is well settled. It need not reach certainty, but it must carry a high degree of $10$ probability. Proof beyond reasonable doubt does not mean proof beyond the shadow of doubt. The law would fail to protect the community if it admitted fanciful possibilities to deflect the course of Justice. If evidence is so strong against a man as to leave only a remote possibility in his favour which can be dismissed with a sentence- of course it is possible but not in the least probable- the case is proved beyond reasonable doubt but nothing short of that will suffice".

Per Lord Denning in Miller V Minister of Pensions (1947) 2 All E. R 372 at p. 373. $20$

# Ingredients of the offence.

- Doing or failing to do an any act $(i)$ - Knowing or having reason that the act or omission will $(ii)$ cause financial loss to government, bank, credit institution, insurance company or public body.

Mar

Actual loss $(iii)$

# **Representation:-**

The prosecution was represented by Ms. Gloria Inzikuru with Ms. Madanda Alice on watching brief whilst the defence was represented 30 by M/S Emmanuel Emoru and Ivan Wesonga

# Resolution.

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It is not in dispute that the accused utilized funds credited on his account. It is not in dispute that those funds were not earned by him. It is not in dispute that the only deposit the accused was entitled to was about USD 1550 converted from UGX. 6,000,000=

What is in dispute is whether the accused had knowledge or **reason to believe** that the act of utilizing the money would cause financial loss to the bank. Secondly, whether there was actual loss suffered by the bank.

**Knowledge or reason to believe** is a mental state of the accused. Where it is denied, the court looks at the circumstances $10$ surrounding the act or omission in order to determine if the accused acted or failed to act with awareness that loss would follow conduct. This case, like most cybercrimes. such require interrogation of circumstantial evidence to resolve the dispute.

What is circumstantial evidence? It is evidence of the facts surrounding the commission of the alleged offence.

Courts have developed rules to be followed if a court is to decide a case based on circumstantial evidence. The following excerpts from the celebrated case of Simon Musoke v R (1958) E. A 715 are instructive.

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"In a case depending exclusively upon circumstantial evidence, court must find before deciding upon conviction that inculpatory facts were incompatible with the innocence of the accused and incapable of explanation upon any other reasonable hypothesis than that of a guilt.

Another principle laid down is TEPER V R (2) (1952) AC 480 at 489 is that..

It is also necessary before drawing the inference of the accused's guilt from circumstantial evidence to be sure that there are no other co-existing circumstances which would weaken or destroy the inference".

The facts of this case are fairly simple. The accused was broke. In his own words he wanted some money for a weekend. He asked for a friendly loan from a colleague. The loan was of UGX. 6,000,000=. It was to be sent to his USD account. It would automatically convert to about USD 1550. Instead he received six million US dollars and without any question, he started spending it. Within three days he had spent over **429,307 USD**. The bank called him to explain this conduct and asked him to refund the money since he had not earned it legitimately. Failing to agree on the refund process, he was arrested and charged.

The prosecution asked court to find him guilty of acting criminally for the following reasons:-

- $(i)$ The accused was broke and asked Kamwine for a loan of UGX. 6,000,000. This was far less than $429,307$ USD that he spent. - Kamwine sent a message to the accused to confirm she had $(ii)$ sent UGX. 6,000,000= only meaning he was supposed to be surprised if USD 6,000,000= hit his account instead. - Failure to verify the source of such colossal sums of money (iii) hitting an account that had a balance of less than ten US dollars before spending it. - The immediate utilization of funds from the account far in $(iv)$ excess of the loan he received without verifying the source of excess money. - The alleged financing agreement from **Cytel or Skidata** did $(v)$ not include sending USD $6,000,000$ = to the accused. It was for equipment. - The alleged financing agreement $(vi)$ was concluded in December 2022 yet money was utilized in June 2022 meaning there was no reason to believe it was funding from abroad because there was no agreement in June 2022. - The emails tendered by the accused relate to a business (vii) deal with a company Ron Outsourcing Ltd and not Ajuk **Ronald Jimmy.** If money was to be sent it would have gone

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to the account of the company and not his personal account.

- (viii) The speed of disbursements was high. Despite bank limits, he had utilized up to **USD 429,307** in 3 days - The accused has failed to re-imburse **USD 219,931** to the $(ix)$ bank which is the outstanding balance after the bank reversed transactions sending money to third parties with accounts in the same bank. - That there was actual loss of **USD 219,931** which has not $(x)$ been recovered from the accused. This is loss to the bank.

The defence countered the above arguments as summarized below:-

- That various emails showing a business engagement with $(i)$ foreign financiers gave the accused assurance that this money could be from abroad pursuant to the business deals he was pursuing. - The existence of a business financing agreement of $(ii)$ December 2022 means that prior to this any money credited on the accused's account was from these protracted business financing negotiations. - The accused had no knowledge or reason to believe that by (iii) utilizing the money he was causing financial loss to the bank. - The accused had no hand in creating the money on his $(iv)$ account. He had no knowledge the bank system was faulty. - That Kamwine did not send him a screen shot to show she $(v)$ had sent only UGX. 6,000,000= which could have made him aware that extra funds on his account could be an error. - That due to ongoing business interactions with his business $(vi)$ partners abroad, he acted reasonably to believe that the funds on his account were from those business lines. - That when he was called to the bank, he acted honestly by (vii) going there to find out what the problem could be. He did not flee. - (viii) That there was no evidence of actual loss because the same was not reflected in the accounts of the bank. That the loss

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was not reported to the Bank of Uganda. That the money is not totally lost because it is recoverable by suit against the accused.

The defence made a lot of other submissions relating to events that have happened since the incident of June 2022. These submissions are with respect irrelevant to the issue of whether the accused acted with prior knowledge or reasonable belief that he was causing financial loss or not. They are, with respect diversionary.

Evidence of PW4, Kwamusi Henry Derrick, from the **IT** department of Absa Bank is that in April 2022, the retail team complained that 10 customers using internet banking were receiving less money across currencies in the process of converting from one currency to another.

As a result of this complaint, the bank took corrective measures. Oracle teams from India worked on the bank system which was deployed after a few days of testing. The six million error from Uganda Currency to US dollars occurred in this testing period and there was no human hand in it.

Apparently the system was deployed before installing system detectors to red flag transactions such as the one between Kamwine $20$ and the accused. That is how the money got credited and was able to be accessed by the accused. Under normal circumstances, his account should have been frozen upon receiving six million US dollars.

Let me examine various species of circumstantial evidence relied on by the prosecution but denied by the defence.

The prosecution contends that the accused was broke and asked Kamwine for a loan of UGX. 6,000,000=. That prior to this request the bank statement of the accused showed he had less than 10 USD.

The implication here is that the accused was to expect a few dollars after conversion of UGX. 6,000,000= and not 6,000,000 USD. The accused does not deny being broke. He conceded he asked for a

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time

loan for a weekend. His bank account to which money was deposited had a balance of **USD 2.33** ONLY.

When Kamwine advanced him a loan that turned to be USD 6,000,000= on 10^th June 2022, the accused became active. He made several transactions on the same day comprising ATM withdrawals and funds transfers on day one as follows:-

- 1. ATM cash USD 113. - 2. Funds transfer of USD 1,342. - 3. ATM cash USD 56. - 4. Funds transfer USD 25,000. - 5. Funds transfer USD 25,000. - 6. ATM cash USD 570. - 7. Funds transfer USD 27.800. - 8. Funds transfer USD 27,500. - 9. Funds transfer USD 27,500.

Total expenditure on 10^th June 2022 is **USD 134,311**. I was asked to find that this was normal for a man doing business with partners from abroad.

The second day on 11^th June 2022 he made the following transactions:- $20$

1. Transfer of USD 27,000.

- 2. Transfer of USD 8,665 - 3. Transfer of USD 28,000.

# Total is **USD 63,665**.

On the 13^th June 2022 he made even more transactions as below:-

- 1. POS of USD 28 - 2. ATM withdrawal USD 570 - 3. ATM withdrawal USD 285 - 4. Funds transfer USD 11,500 - 5. Funds transfer USD 26,000

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- 6. Funds transfer USD 26,000 - 7. POS USD 88.36 - 8. POS USD 102.04 - 9. POS USD 28.50 - $10.$ ATM withdrawal USD 855 - $11.$ Funds Transfer USD 28.000 - 12. Funds Transfer USD 28,000 - $13.$ Funds Transfer USD 28,000 - $14$ POS USD 838.24 - 15. POS USD 10.99 $10$

## Total USD **150,306.13**

With respect, I am unable to accept the argument that a person who asks for a loan of an equivalent of a mere **1550 USD** but finds **6,000,000= USD** would immediately embark on spending it without verifying with the bank where the money had come from.

Evidence of PW6, Kamwine Anne is that she immediately informed when she transferred equivalent the accused the $\overline{of}$ UGX.6,000,000= to his dollar account. When the accused withdrew USD 113 and left a balance of USD 5,999,888.73 on his account. He should have immediately asked Kamwine if she sent extra cash or waited on the bank to open on Monday 13^th June 2022 to ask what had happened on his account. This is what would be expected of the normal or natural conduct of a person.

Section 113 of the Evidence Act, Cap 8, is instructive on how courts presume certain human conduct or behavior.

## "113. Court may presume existence of certain facts.

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The court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the

particular case."

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For a person who is broke and whose dollar account (exhibit P6) has never had a credit of more than USD BOOO between l"t Januar5r 2O2O until 10th June 2022 when it was hit by a massive credit of six million US dollars should have been surprised or even shocked by such a development. He should have called Kamwine, the bank and others he deals with to verify where such an unsolicited credit had come from instead of going on a spending spree.

It was the accused's evidence that this happened over the weekend so he never accessed the bank to inquire about extra funds on his 10 account. That is far from the truth. 10th June 2022 was a Friday. It was a working day. The accused spent money without walking it the bank to ask why he has more money than expected. 1lth June 2022 was a Saturday. Banks work hatf day. He chose not to ask but went on to spent money not legitimately earned. On Sunday 12th June 2022, he rested and resumed his spending on Monday l3tt June 2022 again without ascertaining the source and purpose of the money on his account. If he was honest he should have asked questions spending what never belonged to him. He would have avoided the consequences of his reckless conduct.

²⁰ He stated that he made a call by landline but got no response from the bank since nobody picked the call. That is fine, why did he spend more money on Monday 13tt June 2022 when banks were open? He could have managed his excitement until he was sure about the source of the money. He should have called Richard who was in Germany that very moment to ask if Cytel or Skidata had sent money instead of equipment before they even signed ^a contract!

Besides, how did funders from abroad who were dealing \ rith a company called Ron Outsourcing Ltd send money to a personal account of the director when in the various emails tendered in form of exhibit D 1 and the email analysis report in exhibit D2 do not talk about sending money instead of equipment and the accused's

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personal account is not disclosed. These are questions that betray the accused's conduct. His conduct is evidence of knowledge and/ or reason to believe that the deliberate utilization of funds on his account without caring to establish not just the source but also the purpose of the funds was causing financial loss to the bank. Banks keep depositors' money. If a bank customer illegally utilizes money deposited on his/her account by error, it means the bank must compensate depositors affected by the illegal withdraw or payment.

The defence argued that the accused did not create the money on his account so he had no knowledge that by spending it he was $10$ causing financial loss. The question is where did he get the right to use it since he did not know its source and purpose? I was referred to the huge volume of emails showing he was engaged in business deal with companies abroad as evidence that it was not strange for him to use money on his account because it could have come from any of those companies abroad.

Again, with respect, engagements between **Ron Outsourcing Ltd** and **Cytel (Shanghai) Ltd or Skidata** was about CREDIT FACILITY FOR PARKING EQUIPMENT. There was no expectation that the accused would be given money instead. Any money would, therefore, surprise anyone including the accused.

Further, the equipment was not to be supplied to the accused's company without advance payment! Indeed the eventual agreement of December 2022 between Ron Outsourcing Ltd and Cytel **(Shanghai) Ltd** required **Ron Outsourcing Ltd** in paragraph 5.6(b) to make a deposit of 30% of the equipment value before Cytel **(Shanghai) Ltd** could release equipment to the accused's company.

It follows that the negotiations by the accused and the equipment suppliers had nothing to do with money and any expectation by the accused that he could get a windfall from them would be a false imagination. On the contrary, the accused was to pay 30% of the equipment value before he could expect a credit facility delivery of

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70% of the equipment. **Exhibit D1** tendered by the accused betrays his defence that he was entitled to spend money. On the contrary, it bolsters the view that the accused should have been surprised that money instead of equipment is sent to an account belonging to a non-party to the negotiations.

The cumulative import of the various species of circumstantial evidence submitted by the prosecution when weighed against the defence denials leaves no doubt that the accused took advantage of the bank system error to spend money wrongly credited to his account. That was a false credit not backed up by actual money. The bank had to replace it.

Did the bank suffer actual loss or not? The prosecution submitted it did because to-date the money spent by the accused to accounts outside the bank is unrecovered. The accused has failed to pay back money to the bank. On the other hand, the defence submitted that there was no loss because the money is recoverable by civil suit. Indeed the parties are in the Commercial Court over this money.

I was referred to the case of **Godfrey Walubi and another Vrs Uganda Criminal appeal 152 of 2012** that the actual loss itself $20$ would be on the bank's books of accounts and had to be proved. The defence had also submitted that the bank did not produce these books in court or a report of loss to the Bank of Uganda to confirm loss.

The prosecution referred to the accused's bank statement in exhibit P6 which shows a false deposit of USD $6,000,000$ = and utilization of the funds by the accused customer to the tune of USD 429,307 but since the bank was able to trace and recover some money from accounts to which the accused had sent money within the bank, the actual loss is **USD 219,931**. This evidence, it was submitted, was not challenged.

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It is trite that loss must be actual and ascertainable. It must not be assumed. Evidence of loss is found in evidence of Ivan Onyango, PW1, a fraud analyst with the bank who ascertained the transactions on the accused's account and traced payees to whom the accused had sent money. Exhibit P1 is a summary of transactions out of the false 6,000,000= USD credit. It is a kind of trial balance in accounting which shows what was received, what was spent, what was recovered and what is outstanding. It gives the outstanding figure as **USD 219,931**. The amount is therefore, ascertainable. It is not imaginary. Besides, the accused does not deny utilizing it. The only defence is that he was not aware that he was not entitled to it and that in utilizing it the way he did, he was not aware or had no reason to believe that he was causing financial $loss.$

These set of facts are distinguishable from the case of **Walubi and onr** (supra) in that Walubi's case relates to overdraft facilities that were running and required reconciliation of accounts before determining the actual loss. In this case, the accused had no credit facility with the bank. He got a false deposit which he utilized and both his bank statement in **exhibit P6** and the trial balance in **exhibit P1** speak to the exact usage and outstanding balance required to be recovered from the accused.

The prosecution referred me to a South African Court of Appeal case between Nissan South Africa versus Martinz, Nadia N. O. Firstrand Bank Ltd case no. 27 of 2004 decided on 1^st October 2004. The issue in that case was "what are the consequences of *mistakenly transferring money to an incorrect bank account?*

The court held inter alia that any appropriation of funds mistakenly credited to the bank account with knowledge that you are not entitled to it constitutes theft. This scenario is similar to the one in this case. I am persuaded by the holding of the South African court. A court of Justice cannot allow a person to spend money mistakenly

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credited to their account without reasonable cause. On the contrary, if no reasonable explanation is given, the Court would punish such conduct.

It is criminal to spend money found into your account with knowledge that you are not entitled to it. The legitimate expectation is for the account holder finding unexplained money on their account to report it to the bank to ascertain its source and purpose instead of treating it like the Biblical *manna* from heaven in the Book of Exodus 16:31 when God dropped food from heaven for Moses to feed the Israelites who were starving in the desert.

The accused formed an intention to steal and cause loss immediately he became aware of excess funds on his account. His spending style betrays his innocence. He was deliberate in failing to seek explanations from the bank. The bank was open on all the days that he spent the money. He has no excuse.

This was a form of theft and even when the thief intends to refund it later, the crime is committed the moment money is moved from the account. See section 237(2)(e) PCA, Cap 128. The theft occurred on 10^th, 11^th and 13^th June 2022. That is when the bank lost this money to-date. The existence of civil proceedings in the Commercial Court does not sanitize what the accused did. The fact that he has stuck to his guns not to refund that money even when he is now sure it was not his means he was determined to cause loss.

In conclusion, the inculpatory facts surrounding the accused's conduct during and after the event are incompatible with his innocence and are incapable of explanation upon any other reasonable hypothesis than that of guilt.

The gentleman assessor advised me to find the accused guilty. I accept that advice. There is abundant circumstantial and documentary evidence to justify a conviction. There is no credible defence to the charges. The prosecution has proved the charge

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against the accused beyond reasonable doubt. I find him guilty on the charge of causing financial loss contrar5r to section 2O( lof the Anti-Corruption Act, Chapter 116. I convict him

Lawrence Judge 14th Januory, 20125

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