A proposed auction of properties belonging to businessman Dr Mathias Magoola and his associated companies has triggered a fresh legal challenge, with their lawyers arguing that the outstanding loan balances have not been conclusively established by the court.
Muwema & Co. Advocates and Solicitors, representing Dei Industries International Ltd, Dei BioPharma Ltd and Dr Magoola, have challenged a notice of intended sale by public auction or private treaty published in the dailies.
In a legal notice published in the Daily Monitor, the lawyers accuse the banks of attempting to recover disputed loan balances, interest and recovery costs before the completion of an independent audit and reconciliation process ordered by the High Court.
The proposed sale involves eight properties in Kampala and Wakiso districts, including the Dei pharmaceutical manufacturing establishment at Matugga, industrial properties along Sixth Link Road in Luzira, premises at Katwe and Muyenga-Kisugu, and properties in Kitende and Seguku.
Other properties listed include land at Kyamuli-Kungu in Wakiso District. The lawyers identify Equity Bank Uganda and Equity Bank Kenya as the financial institutions behind the recovery process, saying their clients have consistently disputed the amounts claimed by the lenders.
They argue that the loan dispute is still before the courts and that the independent audit process has not produced a report that has been formally received, accepted and adopted by the court.
“The loan dispute between our clients and the Banks is subject to a binding Audit and reconciliation process ordered by the High Court, whose report is yet to be received, accepted and adopted by the court,” the lawyers state.
They further contend that there is currently no legitimate outstanding loan balance or interest conclusively established for recovery through the proposed sale.
The lawyers say the dispute originated from loan demands made in June 2024, when the banks allegedly demanded Shs82 billion and US$43 million from Dei Industries International and Dei BioPharma, respectively.
In August 2024, the companies and Dr Magoola filed High Court Civil Suit No. 929 of 2024, challenging the loan balances and seeking an account, audit and reconciliation of their loan and current accounts. They accused the lenders of irregular loan consolidations, restructuring, excessive interest charges and deductions, which they contend resulted in inflated outstanding balances.
The banks, however, have maintained that the borrowers’ obligations arose from the credit facilities and contractual terms, disputing the allegations of wrongdoing.
The lawyers say that in December 2024, the parties agreed to a consent order providing for an independent audit to establish the actual outstanding loan balances. KPMG was initially appointed to undertake the exercise, but its appointment was subsequently revoked following a challenge by the borrowers.
The High Court then directed the Institute of Certified Public Accountants of Uganda (ICPAU) to nominate another independent audit firm, resulting in the appointment of Clayton & Co. However, the companies and Dr Magoola subsequently challenged the process through which the new auditor was appointed, arguing that it lacked the required independence and transparency.
In July 2026, the Commercial Court dismissed their application challenging ICPAU’s nomination of Clayton & Co., finding that the applicants had not established that the institute’s integrity, objectivity or independence had been compromised.
The audit report subsequently put the borrowers’ alleged indebtedness at approximately US$39.91 million as of June 28, 2025, equivalent to about Shs147.7 billion. Dissatisfied with the ruling, the companies and Dr Magoola pursued an appeal.
On September 9, 2026, the Court of Appeal stayed proceedings in the main High Court case pending the hearing and determination of their intended appeal.
The lawyers now argue that the proposed property sale risks pre-empting the judicial process intended to establish the actual amounts owed to the banks. They say their clients remain willing to have any legitimately established outstanding loans settled through an independent and transparent reconciliation process.
Government investment in Dei BioPharma
The renewed dispute also raises questions about the protection of public funds invested in Dei BioPharma, particularly its pharmaceutical manufacturing facility at Matugga.
The government has invested Shs723.4 billion in the pharmaceutical project through allocations of Shs70 billion in the 2023/2024 financial year, another Shs75 billion in December 2023, and Shs578.4 billion through a supplementary budget in 2024.
The Auditor-General previously raised concerns about the documentation supporting the investment, including the absence of a valuation report, shareholder agreement and share certificates at the time of the audit.
Parliament has also sought clarification on the government’s reported 9.4 per cent shareholding in the company and the returns expected from the investment.
The lawyers say they intend to pursue appropriate legal remedies against the banks and their agents over the disputed recovery process.
They have consequently warned members of the public against participating in the proposed auction, cautioning that anyone who purchases the advertised properties does so at their own risk.
The underlying loan dispute remains unresolved.
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