Justice Joyce Kavuma of the civil division of the High Court has halted civil proceedings brought against the Financial Intelligence Authority (FIA) by Zulpha Birungi after the body froze her account following allegations of fraud.
The dispute began after a complaint by Cellulant Uganda Limited, which reported what it described as an illegal and fraudulent transfer of its funds into Birungi’s account held at Centenary Bank.
In response, the FIA instructed the bank to freeze the account to “prevent flight of funds,” according to an affidavit sworn by its executive director, Sam Wandera. The move came after investigations were launched into the suspicious transactions.
The matter later took a criminal turn. Birungi, together with others, was charged before the Chief Magistrates’ Court at Buganda Road with three counts of theft, receiving stolen property, and conspiracy to commit a felony.
The FIA told the court that the money in question amounted to Shs250 million, which Birungi allegedly received from Cellulant Uganda. However, by the time authorities intervened, most of the money had already been withdrawn.
By the time FIA moved to freeze Birungi’s account, it had Shs42.8 million.
Birungi, using lawyers from Elgon Advocates, challenged the freezing of her account by filing a civil case in the High Court. In that suit, she sought orders to have her account unconditionally unblocked so she could access the money for personal and business use.
She argued that the FIA acted illegally by freezing her account without a court order. She described the authority’s actions as “illegal, ultra vires and unreasonable.”
Birungi also maintained that the existence of a criminal case did not bar her from pursuing a civil claim. “There is no law that bars instituting both criminal and civil matters at the same time over the same subject matter,” she argued.
She told the court that the civil case was not just about recovering the money but about testing whether the FIA had the legal authority to act as it did.
They further argued that the FIA is not mandated to hold exhibits on behalf of the Director of Public Prosecutions and therefore had no right to continue holding her funds.
On the other hand, lawyers from the FIA’s legal department insisted that allowing the civil case to proceed would interfere with the ongoing criminal trial.
They argued that both cases revolved around the same money allegedly obtained fraudulently and that there was a risk the funds could be lost if the account was unfrozen before the criminal case was concluded.
FIA also warned of the danger of conflicting court decisions if the two cases were handled simultaneously.
FIA ordered Stanbic Bank to freeze a company’s account. Court said that was illegal
However, Justice Kavuma rejected FIA’s argument, stating clearly that the possibility of conflicting judgments is not enough to stop civil proceedings.
Instead, she focused on whether continuing with the civil case would affect the fairness of the criminal trial, and indeed, she concluded it would.
“There is a real risk that the proceedings in this court would prejudice the fairness of the trial in the criminal matter,” she said.
She noted that allowing the civil case to proceed could influence the criminal proceedings or even lead to the fabrication of evidence.
Justice Kavuma added that criminal cases generally take priority over civil matters, especially where public interest is involved.
In the end, she sided with the FIA and ordered that the civil case be put on hold.
“This court finds that [Birungi] has made out a case for the staying of proceedings and the same are hereby stayed pending the determination of the criminal matter,” she ruled.
The decision means Birungi will have to wait until the criminal case at Buganda Road Court is concluded before pursuing her civil claims. Her Shs42.8 million, which is still frozen, remains tied to the outcome of the criminal trial.
