A proposed auction of properties belonging to businessman Dr Mathias Magoola and his associated companies has triggered a fresh legal challenge, with the borrowers disputing the loan balances being pursued by Equity bank.Muwema & Co. Advocates and Solicitors, representing Dei Industries International Ltd, Dei BioPharma Ltd and Magoola, have challenged a notice of intended sale by public auction or private treaty, arguing that the outstanding loan balances of Shs 82 billion and $43 million have not been conclusively established by the courts.In a legal notice published in Daily Monitor and The Observer, the lawyers accuse Equity Bank Uganda and Equity Bank Kenya of seeking to recover disputed loan balances, interest and recovery costs before 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 facility at Matugga, industrial properties along Sixth Link Road in Luzira, premises in Katwe and Muyenga-Kisugu, and properties in Kitende and Seguku. Another property is located at Kyamuli-Kungu in Wakiso district. The lawyers maintain that their clients have consistently disputed the amounts claimed by the lenders and that the loan dispute remains before the courts.They argue that the independent audit process has not yet 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 no legitimate outstanding loan balance or interest has been conclusively established to justify the proposed recovery through the sale of the properties.The dispute dates back to June 2024, when the banks allegedly demanded Shs 82 billion from Dei Industries International and $43 million from Dei BioPharma.In August 2024, the companies and Magoola filed High court civil suit, 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 and restructuring, excessive interest charges and deductions, which they argued had inflated the outstanding balances.The banks, however, have maintained that the borrowers’ obligations arise from the credit facilities and contractual terms, disputing the allegations of wrongdoing.According to the lawyers, the parties agreed to a consent order in December 2024 providing for an independent audit to establish the actual outstanding loan balances.KPMG was initially appointed to conduct 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 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 $39.91 million as of June 28, 2025, equivalent to about Shs 147.7 billion.Dissatisfied with the ruling, the companies and 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 proceeding with the proposed property sale risks pre-empting the judicial process intended to establish the actual amounts owed to the banks.They maintain that their clients remain willing to settle any legitimately established outstanding loans through an independent and transparent reconciliation process.Government investment in Dei BioPharmaThe 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 Shs 723.4 billion in the pharmaceutical project through allocations of Shs 70 billion in the 2023/2024 financial year, another Shs 75 billion in December 2023 and Shs 578.4 billion through a supplementary budget in 2024.The Auditor General previously raised concerns about 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 legal remedies against the banks and their agents over the disputed recovery process.They have also 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 post Magoola challenges auction of Dei properties in Shs 148bn Equity bank loan dispute appeared first on The Observer Media Ltd.