Depositors of Imperial Bank that are currently in receivership have initiated a class-action suit against Central Bank of Kenya (CBK) over the decision to place the firm under receivership.
In a notice filed yesterday at the High Court, 11 shareholders are inviting members of the public to be enjoined in the lawsuit by December 21, 2020.
“This notice is to inform you that you may apply to the court to be made a party to the suit within 45 days from publication of this notice,” reads the notice delivered through Muriu Mungai and Co Advocates.
Through the petition, Nafisa Kanji and 10 other members of his family want the court to declare the decision by CBK to place Imperial Bank under receivership in 2015 as “unlawful, unreasonable and in violation of Article 47 of the constitution”.
The petition also seeks to have the decision by the Kenya Deposit Insurance Corporation (KDIC) to suspend the banking business of Imperial Bank declared a violation of their right to fair administrative action under Article 47 of the constitution and the Fair Administrative Action Act, 2015.
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The suit comes a year after the High Court gave the green light to the family to proceed with a class-action suit against the industry regulator.
In a ruling delivered in May last year, Judge Mary Kasango granted orders the family had sought against the CBK and KDIC.
“The petitioners are hereby granted leave to institute or proceed with this petition in a representative capacity on their own behalf and on behalf of depositors of Imperial Bank Limited (under receivership),” said the court ruling.
Imperial Bank was placed under receivership on October 13, 2015 following fraudulent activities that came to light days after the death of the firm’s Managing Director Abdulmalek Janmohamed.
At the time, the bank had 52,398 accounts with Sh48.1 billion customer deposits, according to data from CBK.
The bank also had a sizeable loan book with Sh31.8 billion in loans and advances made as of December 2014, and Sh605 million in mortgages.
A forensic report by American firm FTI Consulting in 2016 found insider fraud at the bank where senior executives falsified reporting systems.
According to court documents, the Kanji family is also seeking to have their full deposits amounting to Sh103 million returned with seven per cent interest.
In May this year, KCB Group assumed Sh3.2 billion in assets and liabilities of Imperial Bank following approval by the CBK.
“From June 2, 2020, Imperial Bank Ltd (in receivership) depositors will be paid a total of Sh3.2 billion over a period of four years,” said the CBK in a statement.
“Subsequently, the depositors will have cumulatively recovered 37.3 per cent of the deposits since 2015 when payouts were commenced.”