The High Court has barred former Imperial Bank directors from disposing off their assets before a suit filed by Central Bank (CBK) to recover lost monies is concluded.
In his ruling, Judge Francis Tuiyot gave the directors a stern warning not to interfere with the assets. The Judge ruled that the directors may interfere with the assets on quest “at their own risk.”
The CBK is seeking to recover Sh45 billion lost at the institution through fraud. Judge Tuiyot made the ruling after the CBK and 132 depositors raised alarm that there was intent by of disposing off shares held by the directors and at the same time undervaluing the assets
“If your clients go against the assurance made in court, they will have themselves to blame,” the judge warned.
“As we speak, the apprehension that the defendants may act inappropriately is real,” said lawyer Philip Murgor who is representing CBK. “The assets to be frozen are a total of 42 companies in which the directors are shareholders... it has come to our knowledge that some assets are being disposed of.” He said it would be impossible for CBK to recover the lost Sh45 billion in the event of an ownership change in the targeted assets. He asked the court to rule that there should be no transfers, sale or change of ownership up until the court makes its final verdict.
The directors have, however, opposed demands made by the CBK citing that some of assets were not in any way linked to the bank and thus could not be the basis of freezing their assets.
The case will be heard on October 17, 18 and 19.
The regulator, together with receiver manager (Kenya Deposit Insurance Corporation (KDIC)), had filed a suit seeking to recover Sh45 billion from shareholders and directors of Imperial Bank.
In their petition, they argue that forensic investigations on financial irregularities at the bank revealed gross negligence and breach of fiduciary duty (a legal obligation of one party to act in the best interest of another) leading to complex and long running fraud. They are therefore seeking orders to seize all known property and assets of the bank’s directors and shareholders as well as that of over 40 companies linked to them.