Court dashes hope for former Dubai Bank employees

The bank was insolvent to the tune of Sh1.3 billion. [iStockphoto]

The Labour court in Nairobi has dismissed a case filed by former Dubai Bank employees, seeking more than Sh44 million from the defunct lender.

Justice Maureen Onyango, in her verdict, found that it was impossible for the liquidator to pay the salaries owed to the employees as the monies recouped from the bank after sinking went to secured creditors.

As of the date of liquidation on August 24, 2015, Dubai Bank had Sh36 million as cash balance. However, it owed insured creditors at least Sh123 million.

The bank was insolvent to the tune of Sh1.3 billion.

Justice Onyango found that even if Kenya Deposit Insurance Corporation (KDIC) and Adam Boru who was Dubai Bank's liquidation agent were willing to pay the salaries, it would have been impossible to satisfy the insured liquidators who came first in line of claim.

She observed that employees came in second.

Justice Onyango, however, said although there were no funds to pay the employees, it does not mean that their fate is sealed as they can be paid when KDIC recoups more money from debts owed to the bank.

"From the foregoing, it is evident that the 1st and 2nd respondents (KDIC and Boru) were not in a position to pay the debts of the claimants which ranked second to the insured deposits. I, therefore, find that the bank was insolvent and therefore there were no funds to be applied to payment of the monies owed to the claimants as at the time they approached the court," ruled Justice Onyango.

Liquidator

The case was filed by Francis Mulu, Rahim Abdumalik and Hassan Kinuthia on behalf of 41 former Dubai Bank employees.

They accused the liquidator of failing to pay their dues when the bank was placed under receivership and subsequent liquidation.

They further accused the liquidator of failing to honour its end of the bargain after it issued them with a termination letter. According to the employees, KDIC promised to pay their salary arrears and terminal benefits.

They asked the court to find that they were unlawfully sacked adding that their rights to fair labour practices were infringed.

KDIC and Boru admitted that the bank owed its former employees salaries.

However, Boru told the court that there was no evidence to show that they had withheld the debt.

He argued that following the bank going under, he held a meeting with all employees and explained to them what was at stake and the procedures through which they could be paid.

Buru said the termination of the employment was not voluntary.