Imperial Bank depositors can now access money after ruling

Thousands of Imperial Bank customers have been granted access to their money after a court threw out a petition blocking the payout on Friday.

The High Court in Mombasa allowed the Central Bank of Kenya to continue paying depositors of the collapsed lender through KCB and DTB after lifting temporary freeze given three months ago.

Judge PJ Otieno lifted the orders barring withdrawals to the relief of Imperial Bank depositors, some of who had joined the session in court.

“The interim orders issued on April 19, 2016 and extended to date has been discharged to allow the payment scheme to be implemented by Imperial Bank,” said Otieno.

Billionaire Ashok L Doshi and his wife Amit A Doshi, who were also depositors in Imperial, had successfully petitioned the court to stop the payments in April, albeit temporarily, pending further determination.

The couple said the Sh1 billion they had in Imperial Bank was part of their retirement package, hence the court’s intervention in preserving it. At the end of April, CBK, KCB and DTB were barred from facilitating further withdrawals.

Medical bills

CBK allowed depositors on December 2 last year to withdraw a maximum of Sh1 million, meaning most small depositors were able to get out all their money.

Imperial Bank lawyer Philip Murgor, CBK lawyer Paul Chege and counsel Rajab Mwanamasha representing Mr and Mrs Doshi agreed that the payment scheme should proceed as the suit to compensate the businessman his Sh1 billion was a separate matter.

Mr Murgor said small depositors could not be kept waiting forever because they have medical bills to settle.

Yesterday, some of the small depositors poured into court with anxiety written over their face waiting for the court to direct for the release of their money.

The depositors could not contain their excitement as Murgor and Chege broke the good news to them.

Senior counsel Francis Kadima had in April filed a certificate of urgency before Justice Otieno seeking an order restraining the two financial institutions from investing, transferring to KCB and DTB or Kenya Insurance Deposit Corporation (KIDC) pending the hearing and determination of the application.

Murgor said Imperial bank was a bank under receivership and that it was unlikely that it had enough money to settle the billionaire’s entire claim.

“The depositor wants Sh1billion and wants it deposited in my account and that of Chege as a joint account. We are sympathetic but there is no enough money to pay him full amount and pay all the over 50,000 accounts,” said Murgor.

Mr Kadima said his clients held Sh880 million in USD and other amounts in local currency accounts with Imperial Bank Limited under receivership as at October 13, 2015. He argued that banks are liable to pay both insured amounts and protected deposits forthwith once an institution is put under receivership.

“This is the mischief behind the meaning of protected deposits and further it guarantees depositors that it will pay if an institution is placed under receivership,” said Kadima.

Breach of the law

The advocate said banks have no right in law to decide how to utilise the plaintiffs’ deposits without seeking their permission or being consulted. He said the deposits held by Imperial Bank in receivership at the time it was put under receivership were sufficient to pay all depositors.

Kadima said the bank’s proposal to pay depositors communicated through press release of December 2, 2015 and subsequent on December 11, 2015 is illegal, in breach of the law and ought to be halted until the financial institutions file in court report of the forensic finding FTI Consulting LLP London.

The hearing is set for November 1 and 2, 2016.