Three Nairobi traders in court over Sh100m fraud allegation

KENYA: A Nairobi court was Thursday told of how three businessmen defrauded a city-based company of over Sh100 million by issuing 58 bouncing cheques over a period of two months.

Nails and Steel Products Ltd Managing Director Neekamal Shah told Milimani Law Courts Senior Principal Magistrate Lucy Mbugua that businessmen Milan Jayendra, Jayendra Khimji and Ranjan Malde of Khilna Ltd took away assorted hardware materials with a promise to pay for them, but instead resorted to delaying tactics.

The court heard that the company with over 300 employees has been grappling with financial constraints due to the debt forcing the management to retrench some of its staff.

"I attempted to contact the first accused so as to settle the matter but there was no positive response. We have not been paid even a single cent since then and this has seen the company forced to restructure its operations and relationships with financial institutions," he told court.

Thika-based Khilna Enterprises Ltd, owned by the accused, obtained the construction materials from the company's stores in Industrial Area along Kampala Road but failed to pay for the products.

Mr Shah was testifying in the case where the company has sued the businessmen of obtaining goods worth Sh99,163,044 by false pretenses between June and August 2010.

The accused, however, denied the charge along with that of conspiracy to defraud and obtaining credit from a bank by false pretenses and are out on a personal bond of Sh25 million.

Shah told the court that the company had entered into an agreement with the businessmen that the payments were to be made through post-dated cheques within 60 to 90 days.

"It was a normal way of doing business for our regular customers and goods could be released upon receiving consent from Mr Milan ," he testified.

He, however, told the court that on August 2010, over 58 post-dated cheques given by the businessman were dishonoured by banks leading to huge losses for the company. The cheques, the court heard, were dishonoured by KCB and Fina banks.

Shah who was taken through 19 copies of the invoices used to deliver the goods in Thika was, however, put to task by defence lawyer Jotham Arua to explain if he was aware that Khilna was under receivership.

"We were never notified that Khilna was under receivership since we started doing business way back in 2004," Shah said.