Trader, bank wrangle over frozen Sh20 million
A city trader has sued a bank for freezing his account.
Mohamed Osman Abdi, a businessman in Nairobi, is accusing Gulf African Bank of freezing his account in order to recover some default charges for a loan he took in 2012, yet it had exercised its statutory power of sale and recovered arrears in 2016.
Mr Osman moved to the High Court though the law firm of Ahmednasir & Abdikadir Advocates, and is seeking orders to have his account unfrozen, damages for the loss of time value and also interest on the frozen funds.
The businessman says he deposited $200,000 (Sh20,514,000) to his account at the Gulf Bank but when he went to its Eastleigh Branch on October 1 to transfer some funds to a supplier, he was told his account had been frozen.
He then instructed his lawyers to write to the bank demanding immediate release of the funds.
The Central Bank has been alerted of the incident but is yet to file its response in court.
Earlier last year, the trader says, the bank had frozen his funds amounting to Sh3,594,000 held in a different account without any justifiable cause.
The trader admits that in 2012 he took a loan, which he was unable to service and the bank exercised its statutory power of sale in 2016 by selling his land at a throwaway price to recover the amount owed.
He has sued the bank separately in the Environment and Land Court seeking various reliefs against the lender, key among them being a declaration that the sale of the collateral to a third party be cancelled.
Despite the dispute, the trader says he maintained his account at Gulf Bank for the simple reason that he thought it was a fully Sharia-complaint bank that would deal with him in good faith, in line with Islamic laws.
In court documents, Osman's lawyer states: “It cannot therefore be the case that a facility that was redeemed in 2016 and accounts closed could be the reason why funds held by the plaintiff in a different account were frozen in September 2018.”
Osman accuses the bank of acting in contravention of his right to be informed on any matters pertaining to his account, adding that it should have claimed any outstanding amount from him before taking an adverse action such as freezing of his account.
The businessman is now claiming damages for loss of time value of the sums "unlawfully withheld by the bank".
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Mohamed Osman AbdiGulf African BankHigh CourtFreezing account