Relief for Imperial Bank as court thwarts CBK's liquidation bid

The High Court in Nairobi has stopped the Central Bank of Kenya (CBK) from liquidating Imperial Bank Ltd (IBL) until the relevant legal provisions are complied with.

Justice George Odunga, while delivering the judgement on Friday directed Kenya Deposit Insurance Co-operation (KDIC) to engage stakeholders and depositors to review available options to save the bank.

The shareholders had filed a judicial review application in February this year after CBK allegedly set off the process of transfer, which includes selling the banks’ assets and eventually liquidating it.

“I compel CBK, KDIC and all of their agents to furnish the stakeholders of IBL with information relating to the process of receivership as long as that information is not prejudicial to the investigations being undertaken,” said Odunga.

The stakeholders of IBL, Imaran Ltd, Raynolds and Company Ltd, East African Motors (sales and services Ltd), Momentum Holding Ltd, Abdulmal Investments Ltd and Kenblest Company had sued CBK and KDIC.

NIC Bank, Kenya Commercial Bank, Diamond Trust Bank and Owino Ogweno Josphine were the interested parties in the petition dated February 9, this year. The stakeholders had sought orders prohibiting CBK and its agents from transferring Imperial Bank assets until both parties had met and agreed on the recovery plan for the reopening of the bank.

• .

  Keep Reading

• 
  CBK's fresh bid to raise core capital puts small lenders, investors on edge
• 
  Firm linked to fake fertiliser calls for arrest of Linturi, NCPB boss
• 
  CBK spares borrowers hike in loan costs
• 
  CBK approves LemFi Remittance to Kenya, in partnership with Wapi Pay

IRREGULAR DISBURSEMENTS

“CBK should be prohibited from engaging in the acts that may lead to the liquidation of the bank or doing anything that would prejudice the rights and interests of the banks depositors, creditors and bondholders,” said the stakeholders in court documents.

They also wanted the court to quash CBK’s decision published in a press release dated December 2, last year, through which it commenced a transfer and exclusion process to the benefit of the interested parties in violation of the stakeholders’ rights to fair administrative action.

The stakeholders also wanted CBK to be compelled to provide the relevant information to the applicants, relating to the bank that they may use in the recovery plan.

According to the shareholders, Imperial Bank’s former group managing director Abdulmalek Janmohamed passed away suddenly on September 15, last year, when they allegedly learned that he had been making illegal disbursements from the bank together with other senior officials and external accomplices.

They had claimed in their petition that three CBK and one KDIC employee played a major role in concealing the fraud that saw the bank lose an estimated Sh38 billion.

Former CBK Governor Njuguna Ndung’u is said to have been aware of the said fraud.