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Cotton Union Dragged to Court over Shs3 Billion

15 October 2013

UGANDA - Kampala-based cotton dealer Cottfield East Africa U Ltd is seeking court’s help to recover Shs2.9 billion from the Uganda Ginners and Cotton Exporters Association (UGCEA).

The cotton dealer said that from 2010 to 2011, it contributed Shs4.6 billion to UGCEA under the mistaken belief that UGCEA would hold the money in trust for ginners like Cottfield.

"The defendant has, however, been applying the Cotton Development Fund (CDF) on matters that are not to the benefit [of the ginners]," said Cottfield through a suit filed at the High Court in Mbale on 19 September. "Because of those matters, it [Cottfield] has demanded for a reimbursement of the monies it has paid. The defendant has only paid back Shs1,754,797,800 leaving a balance of Shs2,920,649,200."

However, in its defence filed on 4 October, UGCEA denied the claims. "The plaintiff is aware the defendant administers it [CDF] on behalf of its owners [the ginners], and is privy to decisions of the ginners to spend part of it on purposes complained of and that there is no refund payable to any ginner," UGCEA said.

This is not the first time that UGCEA is being taken to court over refunds of monies contributed to the CDF. In May, Parambo Cotton Farmers Ltd filed a civil suit claiming Shs679 million for the 2 million kilogrammes of cotton Parambo had handled.

This prompted UGCEA to ask the CDO to reign in on the ginners who were questioning how the Fund was being managed. "…UGCEA hereby requests…CDO, as the policy organ of the cotton sector, to exclude any operator from the cotton sector who is deemed by the UGCEA and CDO to undermine or destabilise the sector," 21 UGCEA members resolved during an extraordinary meeting in Kampala early this year.

TheCropSite News Desk

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