Stanbic Bank has been asked by a court in Uganda to respond to a claim by Pearl Oils Uganda Ltd that the bank unlawfully debited 515 million Ugandan shillings (USh515 million - around US$250,000) from the company's account.

Pearl Oils claims the bank paid the money to Kenyan-based oil company, Gulf Energy, even though the Ugandan company says it had cancelled the standby L/C and the documents the seller presented to the bank did not conform to the L/C requirements.

Guaranteed payment

Pearl Oils says it opened up a bank account with Stanbic Bank in 2006 to obtain a standby L/C that would guarantee its ability to pay for products supplied by Gulf Energy.

Pearl Oils claims it had cleared all debts to Gulf Energy by 25 February of this year and wrote to the bank on 14 April instructing it to cancel the standby L/C and notify Gulf Energy of the cancellation.

Discrepant documents

According to Pearl Oils, the bank failed to notify Gulf Energy of the L/C cancellation and went ahead to debit Pearl Oils' account with Shs515 million after the Kenyan company presented documentation to the bank.

Pearl Oils says the bank should have rejected these documents anyway, on the basis they showed dates of loading that did not conform with the terms of the various agreements between the parties.

Bank response

The court in Uganda has issued a summons to Stanbic Bank asking for it to respond to the claims against it.

If the bank does not respond, the case may proceed anyway and judgment may be entered in the bank's absence.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.