The High Court in Kampala has ordered DFCU Bank to unfreeze accounts belonging to businessman Dr. Dennis Daniel Ssemugenyi and his company, Daniel Dennis Investment Group Ltd, ruling that their prolonged restriction was unlawful and unjust.
Justice Isaac Muwata delivered the ruling on Thursday, setting aside a freezing order that had been in place for more than ten months following allegations of fraud and money laundering. The order, issued by the Buganda Road Chief Magistrate’s Court on September 5, 2024, had blocked account number USD 02660914859731 and others held at DFCU Bank.
The freeze stemmed from a complaint by Thorington Capital Markets Ltd, which accused the applicants of obtaining USD 120,000 in processing fees under false pretences in a failed USD 35 million loan arrangement. However, Dr. Ssemugenyi argued that Thorington reneged on its obligations, later refunded the money, and that all funds in the accounts were from legitimate business activities.
In their submissions, the applicants said the freeze had crippled operations, including a scholarship programme supporting over 1,000 children, and amounted to punishment without trial since no charges had been filed. They also accused DFCU of closing other accounts and confiscating property titles outside the scope of the order.
The State, represented by the Director of Public Prosecutions (DPP), opposed the application, maintaining that the freeze was necessary to preserve evidence during ongoing investigations involving the Financial Intelligence Authority and DFCU Bank staff. Prosecutors cited concerns about fund dissipation and noted Dr. Ssemugenyi’s absence from Uganda since 2020.
However, Justice Muwata ruled that the State had failed to demonstrate sufficient progress in its investigations to justify an indefinite freeze. He noted that the Computer Misuse Act only allows temporary preservation of funds for a “reasonable” period necessary for investigations.
“The prolonged freeze, absent demonstrable progress, violates the temporal limits of the law and undermines the applicants’ constitutional right to property,” the judge stated. “It has transformed a preservation order into a punitive act and constitutes a miscarriage of justice.”
The court therefore directed DFCU Bank to immediately unfreeze all affected accounts, stressing that the applicants’ right to property outweighed speculative risks cited by the State.
This ruling is expected to spark debate over the balance between combating financial crimes and safeguarding individual rights, particularly as banks and regulators increasingly rely on preservation orders in fraud and money laundering cases.
