Stanchart clashes with pensioners, RBA in Sh7 billion payout battle

StandChart moved to court seeking to suspend a tribunal's verdict that exposes it to a Sh30 billion settlement for its employees. [File, Standard] Standard Chartered Bank on Tuesday clashed with Retirement Benefits Authority (RBA) and the Attorney General over the retirement benefit rules in an extension of its Sh7 billion row with its former employees. The bank, in its case before the High Court, Gregory Mutai, argued that the rules on the costs to be paid in a case were processed and gazetted by the former Finance Minister Chris Okemo instead of the Chief Justice. For this, Stanchart's lawyer argued that the regulations were unconstitutional. "Nowhere does the Minister of Finance have the power to prescribe the cost of a retirement benefits dispute," argued senior lawyer Chacha Odera. On the other hand, RBA argued that the case was about costs and not a constitutional issue. It stated that the bank and its former employees approached the Retirement Benefits Tribunal and subjected themselves to it, until the case escalated upto the Supreme Court. However, it said that the bank only thought about the rules after losing all through. According to RBA, the case was about an attack on the court's verdict that it should pay the retirees at least Sh7 billion. "This case involves elderly persons who need to be protected. This is a collateral attack on a court's judgment," replied RBA. For the last 17 years, the battle between StanCahrt and its 629 former employees has been ongoing. It could be perhaps one of the longest corporate cases that have been fought through the entire judicial system, from the Retirement Benefits Tribunal to the Supreme Court. Stanchart has moved to the highest court in the land, after the Court of Appeal threw out its case against a Sh7 billion pension claim. The battle initially involved an alleged Sh30 billion payout but has since gone down to Sh7 billion. The former employees had claimed Sh9 billion from the bank as a lump sum payment and Sh1.1 billion, which was allegedly paid to the bank as a surplus. However, the battle has taken another course, with a fresh case before the High Court. The bank has sued the Retirement Benefits Appeals Tribunal, the Retirement Benefits Authority (RBA), and the Attorney General. In the case, Stanchart's lawyer, Odera, questioned the Tribunal's decision to slap the lender with Sh709 million as the cost of the suit. According to him, the cost was computed based on Legal Notice no. 121 of 2000, published by the Minister of Finance. He said that was contrary to the RBA Act, which dictates that the Chief Justice shall exclusively determine the costs. "The impugned scale prescribed costs in a scale ranging between one per cent and two per cent for specified amounts. In contrast, the orders published by the minister impose a rate of 10 per cent on any amount exceeding Sh500,000 and a lower scale of five per cent, depending on whether the chief executive of the second respondent filed a statement. As is evident from the petition filed herewith, the said decree was issued under various statutory breaches and violations of the petitioners' rights under the constitution," argued Odera. He said it would be impossible to recover the money if the same was paid out. Stanchart's Kenya and East Africa Head of Legal Dr Davidson Mwaisaka, in his supporting affidavit, said that following a High Court order, its 629 employees moved to the RBA. He claimed that the authority had ruled that they had been paid their dues. Aggrieved, the employees moved to the tribunal, which found that the bank had taken their former employees' money. It set aside the RBA's decision and awarded them the cost of the case. He revealed that on June 13, this year, the pensioners' lawyer sent a Sh709 million demand as the cost. Dr Mwaisaka said that despite the bank's protest, the tribunal allowed the claim without a hearing. He said that the finance minister does not have the power to determine how much litigants should pay if they lose a case. According to him, the cost was computed on a global sum of Sh7.09 billion. However, whoever said that the amount was not to be paid to the pensioners. Instead, he claimed that they were to get Sh2.4 billion from the amount, while the remainder, Sh4.6 billion, was a refund to be paid to the trustees of the StanChart Kenya pension fund scheme. At the Court of Appeal, the lender claimed it is likely to sink into a bottomless hole if it footed the pension of the 629 employees. Nevertheless, Court of Appeal Judges Patrick Kiage, Lydiah Achode and Weldon Korir dismissed the appeal and slapped the lender with costs. They ruled that there was no evidence that StanChart was unfairly treated by both the RBT and the High Court. "Having subjected the entire record to our own independent and exhaustive analysis and consideration, we are unable to find any basis for the appellants' claim of violation of the provision of the Fair Administrative Action Act. We, instead, find as a fact that the proceedings before the Tribunal, taken as a whole, did meet the threshold for procedural fairness," the bench headed by Justice Kiage said. The bank had moved to the Court of Appeal following a loss before High Court Judge John Chigiti, who also dismissed the case and ordered it to bear the cost of the case. " StandChart, alongside its trustees for the pension fund and staff benefit, were in court seeking to suspend a tribunal's verdict that exposes it to a Sh30 billion settlement for its employees, some of whom retired way back in 1975. The retirement benefits tribunal ordered the lender to disclose to 629 former employees the lump sum benefits and the actuarial methods to be used to recalculate their retirement benefits. StanChart was ordered to factor in the cost of living adjustments, housing allowance and future increases and payments. The tribunal ordered RBA to supervise the exercise and file a report within 60 days. However, it argued that the tribunal overstretched its powers and allegedly included three computation methods that contradict each other. "The ex parte applicants are apprehensive that should this honourable court not grant them leave to commence judicial review proceedings as prayed and that should the said leave not operate as a stay of execution of the decision contained in the judgment of the first respondent dated Aril 28, 2022, not only will they be subjected to unnecessary computation without jurisdiction and without a forum to resolve any dispute that may arise in respect thereof, the first respondent being functus officio, but will be exposed to a settlement of a claim which may be as well in excess of Sh 30 billion," court papers filed by StanChart lawyers, Oraro and Company Advocates read in part. The lender sued alongside David Gico Kamau, Walter Mungai, Azrakim Mudika, and Bartesh Shah. The five are the trustees of the first Standard Chartered Kenya Pension Fund (the first scheme). Others who were in the case are David Gicho Njoroge, Walter Mungai, Jane Chege, Nicholas Otado and Julius Mwangi, who are the trustees of the Standard Chartered Kenya Staff Benefits Scheme 2006, also known as the second scheme. In the case, the lender's retirement benefit scheme administrator, Fred Waswa said the scheme was established in 1975 and was amended over time with the last amendment on July 1, 2006. The first scheme, he said, was established in 1975 and handed to trustees. According to Waswa, the bank, with the sanction of the trustees of the first scheme, established the contribution scheme, which would provide benefits based on the contribution of each member. In 1999, the lender established a new scheme as a separate section of the first scheme. All new employees of the bank were eligible to join this scheme. Waswa said that all members of the first scheme did not transfer their pension to the new defined-contribution section. Instead, they remained in the first scheme with their benefits, which had crystallised at the time they had left the bank. On July 1, 2006, the lender established the second scheme, Standard Chartered Kenya Staff Retirement Benefits Scheme. According to Waswa, upon the establishment of the second scheme, the first scheme became redundant. "The defined contribution section of the first scheme was deemed to have become redundant on the ground that it was incapable of taking any new members. Instead, all new eligible employees of the bank would effectively become members of the second scheme," said Waswa. "The first scheme, therefore, remained active only to honour its obligations to the existing pensioners and deferred pensioners." He stated that the claim in the case before the tribunal is hinged on an argument that all the 629 former employees attained normal retirement age. However, according to him, 111 of the 629 opted to retire in 1994 through it's Voluntary Early Retirement Scheme. At the same time, he said, only 59 of the members who joined the second scheme. "The employees of the bank who terminated their employment either by resignation or otherwise before the retirement age of 55 years and opted to receive a lump sum payment in lieu of their deferred pension or pension also joined the proceedings before the Retirement Benefit Tribunal," said Waswa. He claimed that 319 others had already received a lump sum payment, adding that others filed a case before the Employment and Labour Relations Court. " I believe that the said appellants could not have a claim against the bank or the trustees," he said.

Stanchart clashes with pensioners, RBA in Sh7 billion payout battle

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