Shareholders of a collapsed bank sue Central Bank over payout

Shareholders argue that unless the payout is stopped, the lender will be liquidated at the end of its receivership period on April 14.

 

The shareholders have told the press that the Central Bank and KDIC have since the collapse of the lender, ignored a court order issued last year compelling them to share details of Imperial Bank’s.

They have faulted the two for concealing information on the lender’s status and possible revival plans.

Collapsed lender’s shareholders have also questioned the ongoing payment of cash to some depositors through Kenya’s NIC Bank in exchange for assets.

They have argued that the move amounts to premature liquidation which a High Court in Nairobi, through Justice George Odunga, had barred.

Odunga, in his November 2016 ruling, ordered the Central Bank and the Kenya Deposit Insurance Corporation (KDIC) to engage shareholders and depositors with a view to reviving the lender that has remained under statutory management since October 2015.

The bank was placed seized by the regulator after the discovery of a Sh44.9 billion embezzlement scheme allegedly spearheaded by deceased managing director Abdulmalek Janmohammed.

The Kenya Deposit Insurance Corporation (KDIC) has already filed two suits against the shareholders seeking to recover the sum, arguing that as owners they participated in the siphoning of depositors’ savings.

Kenya Deposit Insurance Corporation (KDIC) has also filed another suit against the family of Janmohammed, a network of businessmen and companies used to channel depositors’ funds out of the bank. The shareholders now want CBK governor Patrick Njoroge, the regulator’s board of directors and their Kenya Deposit Insurance Corporation (KDIC) counterparts jailed.

“It is noteworthy that the contemplated transfer process to NIC Bank is what the court had barred. This honorable court should issue a 30- day notice to CBK board of directors and KDIC board of directors to personally attend court to show why contempt of court proceedings should not be commenced against them,” the shareholders say.

The accused are yet to respond to the suit.

“Despite the applicants herein requesting the respondents herein to avail to them the necessary and relevant information regarding the receivership and arrangements entered into with third parties, the respondents have refused to supply the applicants herein with the said information or even respond to the said correspondence,” says one of Imperial Bank’s shareholders.

Justice Odunga’s November judgment caused a standoff between the KDIC, depositors and shareholders who held contrasting interpretations.

Shareholders claimed that the CBK had been barred from continuing with the release of deposits through NIC Bank while the receiver manager holds that the judge gave the deal a go-ahead.

In the lawsuit, the shareholders say, unless stopped the lender will be liquidated at the end of its receivership period on April 14.

They also want an order compelling the CBK and the KDIC to furnish them with details on the collapsed lender’s receivership.

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