BY SAM ALFAN.
Shareholders of collapsed Imperial Bank Limited wants Central Bank of Kenya (CBK) managers and Kenya Deposit Insurance Corporation (KDIC) boss held liable over imperial bank collapse.
Central Bank of Kenya (CBK) Governor Patrick Njoroge his deputy Sheila Mbijiwe and KDIC boss Mohammud Mohammed have been sued in their personal capacity over alleged mismanaging Imperial Bank Limited (IBL) receivership.
Through Wandabwa Advocates, IBL shareholder together with their respective companies Imaran Limited, Reynolds & Company limited, East African Motor Industries (Sales & Services) limited Momentum Holdings Limited, Abdulmal Investment Limited and Kenblest Limited filed a fresh application at the Labor and Relations Court claiming that the two officials mismanaged IBL receivership.
On 13 of October 2015, the governor appointed Kenya Deposit Insurance Corporation (KDIC) as a receiver of the Imperial Bank Limited for a period of twelve months and Peter Gatere was appointed as the Bank’s receiver-manager. The appointment also included a declaration of a moratorium on the bank.
“We are seeking orders from the court declaring the two liable and should be compelled to lead recovery efforts,” said Lawyer Wandabwa.
The new suit does not in any way affect the ongoing transaction, rather seeks to ensure that the end game is not liquidation.
In the application, they said CBK applied for a 12-month extension to receivership period to work on a recovery deal and the period comes to an end in 14 weeks.
According to the court documents, Kenya Deposit Insurance Corporation (KDIC) confirms that they have continued to collect loans and have so far cumulatively collected over Ksh.10billion.
Patel and the others in the court documents said they are aggrieved by the conduct of the Central Bank during the period of the Bank’s receivership and omitting their statutory powers.
They claim that Njoroge, Sheila and Mohammud ought to have known that Peter Gatere, the receiver was not only an employee of CBK, a staff member of CBK’s supervision unit and a close confidant of the named culprits in the FTI Report and shown as having exchanged emails with the senior management of the Bank.
They added that they could have known that he was involved in the fraudulent activity of W.E. Tilley as far back as 2012, but culpable and otherwise complicit in the irregular disbursements from the Bank.
In the court documents, the two are said to have aided and abetted the appointment of Peter Gatere as receiver-manager or otherwise failed to prevent his appointment in the circumstances with such appointment having been made with a view to covering up the truth behind the fraud at the Bank.
“In allowing DTB access to the Bank and/or the Bank’s records and data, Njoroge, Mbijiwe and Mohamud Mohammed have aided to cover up DTB’s role if any in handling the funds carried out on the Bank” the shareholders argued.
They contested that the governor, his deputy and the Chief Executive Officer of KDIC have not only failed to investigate, and or trace the money trail of the funds defrauded from the Bank through Fidelity and DTB, but have actively protected and or propped them up with a view to burying the truth.
They further argued that the CBK and its officials have also failed to trace or otherwise take steps to trace, the funds known to have been disbursed from the Bank to various companies whose accounts were held at Fidelity and DTB.
The shareholders in the complaint said that Mr Njoroge has also allowed another financial institution, NIC Bank Limited (“NIC”) to benefit from the receivership process and the unrestricted access to data with the result that NIC has been able to open branches in the same vicinity as several of the Bank’s branches which could only have happened if NIC had access to the Bank’s customer base and data.
“Failure to protect the Bank’s value will result in further losses to depositors,” they said.
They said that In failing to trace the sums irregularly and illegally disbursed from the Bank, the three have refused to confirm that they were indeed not the beneficiaries of the amounts irregularly disbursed from the Bank, yet they still persist, acting at the behest of the Fourth and Fifth Defendants in maintaining unsubstantiated allegations against the Plaintiffs as relates to their alleged fraud as evidenced in various documents filed in Court.
They said that malicious conduct of Njoroge and his deputy is further compounded by the fact that there have been unjustified overheads maintained at the Bank since the commencement of its receivership, which has a net effect of eroding the Bank’s commercial.
They are further seeking to declare the governor, his deputy and KDIC boss have acted in misfeasance of public office.
They also want a declaration that the shareholders were unlawfully discriminated against in relations to the EOI process and they acted in excess of their powers as relates to the receivership of the bank.
The matter to be mentioned for further directions.