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KDIC put to task to produce evidence on Imperial Bank receivership

By Faith Karanja | Published Thu, July 19th 2018 at 13:43, Updated July 19th 2018 at 14:13 GMT +3

Kenya Deposit Insurance Corporation (KDIC) has failed to produce evidence in court on why it refused to reimburse a group of Imperial Bank (in receivership) clients their money during the last three pay-outs made to depositors.

The depositors responded though an affidavit by Mr. Marc Das Gupta, on behalf of the 77 petitioners, saying that the blanket averment that all the petitioners are associated with the directors and shareholders of the bank is inaccurate terming the move to deny them their deposits discriminatory and unconstitutional.

“It is noteworthy to that no material has been presented here in or to this court or in any court for that matter to suggest that the monies fraudulently disbursed from the bank ended up with any of the petitioners here in,” reads the Affidavit by Mr. Gupta.

When the bank was put under receivership, CBK and KDIC contracted FTI Consulting to carry out an audit and in-depth investigation to the allegations of fraud but the report has never been presented in court.

“No material evidence has been produced in the said court, or in this court to substantiate the said supposed representations by FTI, on the basis of which the bank Directors and shareholders culpability can be discerned, on any standard” reads the Affidavit by Mr. Gupta.

“It is apparent from their replying affidavit that the Respondent has , in the exercise of its powers under the KDIC act no. 10 of 2010, has on account of matters therein made a decision to withhold the petitioners’ deposits , held in the bank albeit in a discriminatory , unreasonable and in a matter that is oppressive and unconstitutional,”

Through Wandabwa Advocates, Gupta a director of Canyon Investments Limited in response to KDIC application said that KDIC has made a decision to withdraw the petitioners, deposits held in the Bank in an unconstitutional manner.

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He said that they were not accorded a fair hearing before deciding not to affect their payments and which they failed to do.

The director added that the CBK bank has never sought any clarifications from the said account holders.

Court papers recently filed by the directors of various Companies has challenged the receiver manager to show that the depositors’ accounts were linked to the fraud or that the money that was fraudulently disbursed from the bank ended up in their accounts.

The group of depositors made the application on November 20, 2017 against KDIC which responded through an affidavit by the CEO Mahmud Ahmed in May making claims that those accounts were linked to the banks directors and shareholders

The submissions will be heard in court on July 31- this is the same day that the extended receivership period expires.

Central Bank of Kenya (CBK) and KDIC after bungling the receivership, invited the shareholders to participate in a parallel EOI process even after publicly blaming the fraud on the said shareholders.

Shareholders want the court to find CBK governor and Deputy personally liable should they lead recovery efforts into liquidation. Shareholders have fought the bank’s liquidation since it went into receivership in October 2015.

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