BY WAHOME THUKU

Banks are known to claim high value for their customers. But when that relationship collapses, the result can be decades of legal suits.

In 1988, United States Agency for International Development (USaid) developed a programme for granting loans to rural entrepreneurs to undertake commercial projects. The money was to be channeled though KCB.

Benjoh Amalgamated Ltd applied for funds through KCB and was granted an overdraft of Sh1.8 million in April 1989. In the same year, it was granted a further loan and an additional overdraft in 1990.

The loans were guaranteed by Muiru Coffee Estate and secured by three parcels of land owned by the two companies in Kiambu and Nyandarua.

Benjoh Amalgamated defaulted on payment. KCB wrote to them demanding payments.

What followed was a series of lawsuits and countersuits by the two parties from 1992. The cases moved from the High Court to the Court of Appeal and back.

Then the matter took a criminal dimension in mid 2010 when Benjoh Amalgamated lodged a complaint with the CID claiming forgery and fraud in the account at KCB. By this time, KCB has trounced the companies in a number of civil applications in court.

OBTAIN EVIDENCE

The CID headquarters wrote to KCB demanding explanation on several issues about the account.

There was an exchange of letters between the CID director, the Attorney General and KCB Chief Executive Officer, Martin Oduor, on the matter.

Oduor defended the bank saying Benjoh Amalgamated had resulted to criminal complaints after losing the civil cases.

According to KCB, the High Court and the Court of Appeal had dealt with all the issues being investigated.

Oduor claimed Benjoh Amalgamated was using the CID to obtain information for evidence in the civil cases still pending in court.

He described this as grossly illegal, mischievous, unfair, unprocedural and totally untenable.

In October, last year, CID summoned KCB company secretary Mr David Kiprop Malakwen and the director of credit Mr Wilfred Kipkorir Sang over the criminal complaints.

Immediately, the bank filed an urgent petition at the High Court to block the summons and further investigations into the matter.

Through lawyer Philip Nyachoti, KCB accused the State of violating and infringing its constitutional right to fair trial under Article 50 of the Constitution.

Justice David Majanja heard the case.

Lawyer Nyachoti said the two KCB officials had never written any documents in respect of the disputes and the alleged police inquiry was intended to frustrate, embarrass, intimidate and acquire information unfairly and illegally.

POLICE POWERS

He claimed police intended to unlawfully lock up the two officers when they reported at CID headquarters.

The CID and AG opposed the petition. In an affidavit sworn by Chief Inspector James Chemitei, the State claimed that previous response by KCB in the matter was unsatisfactory and unclear hence the need to summon the officials.

The State argued that though civil proceedings were still pending in court, police had a constitutional duty to investigate any criminal dealings in the account at KCB.

The summons was part of the investigations of the alleged fraud and forgery and only the KCB officials could provide answers.

Muiru Coffee Estate’s representative Samuel Kung’u Muigai said they believed the civil disputes could only be resolved by a conclusive investigation into the records of the account. It was in that regard that Benjoh Amalgamated had filed the criminal complaint, he added.

Under section 193A of the Criminal Procedure Code, the fact that a criminal matter is also the issue in pending civil proceedings does not stop, prohibit or delay the criminal proceedings.

Justice Majanja, however, pointed out that the same law allows the High Court to stop actual or contemplated criminal proceedings if they are oppressive, vexatious and abuse of court process or in violation of fundamental rights and freedoms. This power must, however, be used sparingly.

He agreed that under Article 157 of the Constitution, the Director of Public Prosecutions and Inspector General of the National Police Service had powers to prosecute and investigate criminal offences independently without interference.

"But these offices are subject to the Constitution and the High Court is entitled to intervene where the facts disclose a violation of the rights and fundamental freedoms guaranteed under the Constitution," the judge said.

The judge said from the history of the dispute, it was clear the two companies were keen to keep the cases alive in any forum that would listen to them.

"It’s in this light that the complaint in respect of the account at KCB must be seen," he said adding: "The complaints are really collateral attack on the decisions of the High Court and Court of Appeal in matters which they have held are settled."

Majanja said he could not shut his eyes to what was obvious abuse of the legal process.

"This abuse must be stopped in its tracks and I am satisfied I have jurisdiction to do so," he ruled.

The judge held that the continued investigations would violate the bank’s right to fair trial in the civil matter. The two companies had an obligation not to impair the constitutional rights of the bank.

Majanja said the investigations would see the two KCB officials called to answer issues that had already been settled by the courts.

"I need not wait for that date and time to come, I only need to be satisfied that such a threat is real."

He said the intention of Muiru Coffee Estate and Benjoh Amalgamated was clearly to use criminal process to open decisions already made by court.

Still pending

The judge pointed out that in interfering with criminal investigations or trial, the court had to balance between public and private interest.

"In this case the parties have been at loggerheads since 1992. It’s really a matter between the two parties and it is in public interest that the integrity of the judicial process is preserved. The opening of criminal inquiry which would result in impugning lawful court decisions no doubt diminishes the standing of the court," Majanja concluded.

With that, he declared the police investigations a threat to KCB’s right to fair trial under Article 50 of the Constitution.

He restrained the CID, its officers and agents from summoning, arresting or in any way investigating KCB or its employees in relation to the dispute.

The civil disputes between the bank and the two companies are still pending in court. And so the drama continues.

The writer is a court reporter with Standard Group

Email. wthuku@standardmedia.co.ke