Julius Tumwesigye, the former finance manager of Prestige Driving School, has been ordered by the court to refund Shs170.52 million to the company that he irregularly received and retained from the firm’s bank account without lawful justification.
Justice Bernard Namanya also awarded the company Shs10 million in general damages, in a ruling that underlines the fact that employees must draw a line between company money and theirs.
How did Tumwesigye fall in trouble?
During the first half of 2021, Prestige Driving School discovered suspicious transactions on one of its Kenya Commercial Bank (KCB) accounts.
Between January 1 and May 11, 2021, the company discovered that Tumwesigye fraudulently transferred more than Shs200.9 million from its KCB account into his own account and the accounts of two other people, Moses Walugembe and Ntambi Hussein, without permission.
The company said the transfers caused it financial loss and asked the court to declare that the money had been fraudulently taken, order its refund and award damages and costs.
Although Tumwesigye admitted working for Prestige Driving School from November 2020 until May 2021, he insisted that his duties were limited to maintaining the accounting system and reconciling bank records.
He told the court that he was neither a signatory to the company’s bank accounts nor a person authorised to make electronic transfers.
According to his defence, the company’s directors, Joyce Kathungu Ngarachu and James Ngarachu Mugo, controlled the bank accounts and every electronic transfer required their approval through one-time passwords issued by the bank.
He also denied knowing Walugembe and Ntambi Hussein, the people Prestige Driving School claimed had been wired some of the money.
Regarding money that entered his own account, Tumwesigye claimed that the company’s directors instructed that the funds be deposited into his account before he passed them on as part of what he described as expenses related to driving school training grounds and an arrangement intended to reduce tax liability.
After hearing the evidence, Justice Namanya directed both sides to file written submissions but only Prestige Driving School complied.
He said the case would therefore be decided on the pleadings, evidence on record and the plaintiff’s written submissions.
Prestige Driving School called two witnesses; the first was Nelly Wanjiru Githae, the company’s chief finance officer, who testified that Tumwesigye had been employed as Finance and Systems Manager and was responsible for handling transactions on the company’s bank accounts.
She told court that one of the company’s KCB accounts was used to pay Uganda Revenue Authority (URA) obligations, learners’ driving fees, test booking fees and permit charges.
Wanjiru said the unusual transactions were discovered around May 2021, prompting the company to commission an audit which revealed that Shs 200.72 million had been transferred from the company’s account to Tumwesigye’s account and the accounts of Walugembe and Ntambi without authority and contrary to company policy.
She therefore asked court to order Tumwesigye to refund the money.
The second witness, Richard Oita, a director of Joseph Richards and Associates, told court that his accounting firm had been hired to investigate unusual transactions on the company’s KCB float account.
He said the investigation found that Shs 200.72 million had been deposited into three personal accounts.
Of these, Oita said Shs170.52 million went to Tumwesigye, Shs21.97 million to Moses Walugembe and Shs8.23 million to Ntambi Hussein.
He said the audit team could not establish the purpose of those payments.
Tumwesigye maintained that he never controlled the company’s bank accounts and could not authorise payments.
Instead, he claimed that the company’s directors instructed that money be deposited into his account before he withdrew it and sent it to director James Mugo through mobile money.
He insisted that he did not fraudulently transfer any money from the company’s account.
In their written submissions, Prestige Driving School’s lawyers, Francis Karoro and Edward Eriaku of AL Advocates. argued that the evidence, including bank statements, the audit report and testimony from the company’s witnesses, proved that Tumwesigye had access to the KCB float account and received money without authorisation.
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After reviewing all the evidence, Justice Namanya found that Tumwesigye’s explanation was not supported by proof, noting that although he claimed he transferred the money to one of the directors using mobile money, he failed to produce convincing evidence to support that claim.
He accepted the auditor’s evidence that Shs170.52 million had entered Tumwesigye’s personal account, but it was difficult to prove whether his alleged co-conspirators received money.
“Accordingly, Tumwesigye is liable to refund the said sum to [Prestige Driving School],” Justice Namanya ruled.
He said that the law required the money to be returned because it had been received in circumstances where, “in law and conscience,” it belonged to the company.
“I am satisfied that [Tumwesigye] received Shs 170,520,000 into his personal bank account in circumstances which, in law and conscience, require him to refund the said sum,” Justice Namanya said.
On damages, he found that Prestige Driving School had suffered inconvenience after being deprived of its money and being forced to hire auditors to investigate the loss.
However, he reduced the company’s claim for Shs100 million in general damages, and he declined to award exemplary damages, saying there was no evidence to justify such an award.
In the final orders, Justice Namanya directed Tumwesigye to pay Prestige Driving School Shs170.52 million and an additional Shs10 million in general damages, with interest of 6% per year.
