Law regulating shylock business repealed in 1984, lawyer says

Legal experts say shylock business has thrived on non-existent laws and exploited loopholes in the statues to make a killing.

Lawyer Wahome Gikonyo says the lawsupposed to regulate the shylock businesswas repealed in 1984, thus money lenders operate on the fringes of the law since.

“They are exploiting a vacuum in law since the Money Lender Act, which was the lawregulating their operation, was repealed and there is no other legislation in its place,” says Gikonyo.

Since most of the money lenders operate on permits to run electronic selling or repair shops, they loan out money illegally and thus when a client defaults they cannot use the Banking Act – which regulates financial institutions – to sue and recover their money.

But Mr Gikonyo says the law can still be on the shylocks’ side if they had their client sign a written agreement to lend them money. “In that instance, the contract will be enforceable in court since the Law of Contracts states that any signed written agreement is valid,” he says.

But despite loan sharks operating in a grey area, Gikonyo says it is possible to charge them for fraud in cases where they have gone ahead and falsified documents in order to cease property.

“There are cases where these shylockshave fraudulently transferred property and even forged land documents. That is fraud that can be prosecuted,” he says.

Another lawyer, Muhoho Gichimu, saysfraud cases have gone up because of lack of a proper mechanism to regulate the practice.

Gichimu says people involved in other suspicious deals have used the trade to clean their money by lending it out and claiming it after a few months.

“I think there should be a regulation to protect people, especially those in rural areas who have been exploited for a very long time. Some people have lost their lifetime savings through these schemes,” he says.

A detective who has investigated some of these cases says it is difficult to pin suspects in court since most of the matters are treated as civil cases.

“We have tried charging suspects with obtaining money through false pretence but these cases have not gone far,” he added.