Ex-IBL bosses’ re­lief in duel with the CBK

Jus­tice Ge­orge Odunga says the CBK and KDCI are un­der obli­ga­tion to con­sider rea­son­able pro­pos­als by share­hold­ers

The Star (Kenya) - - News Business - SU­SAN MUHINDI @TheS­tarKenya

The High Court has pro­hib­ited the Cen­tral Bank of Kenya and the Kenya De­posit In­sur­ance Cor­po­ra­tion from ini­ti­at­ing the process of liq­ui­dat­ing the col­lapsed Im­pe­rial Bank un­til they ex­haust re­vival op­tions.

Jus­tice Ge­orge Odunga said the CBK and KDCI should con­sider rea­son­able pro­pos­als made by the share­hold­ers. If the pro­pos­als are not vi­able, the reg­u­la­tor should ex­plain to the share­hold­ers the rea­sons for re­ject­ing them, Odunga said.

“Liq­ui­da­tion, in my view are the ‘last rights’ of a com­pany and the high priest of liq­ui­da­tion, oth­er­wise known in the com­pany law as ‘the liq­uida­tor’, ought only to be sum­moned by the doc­tor (the re­ceiver) where all else have failed and the pa­tient’s life (the bank) is hope­lessly ir­re­deemable,” the judge ruled on Fri­day.

The pro­pos­als made by the share- hold­ers should be “rea­son­able and tan­gi­ble”, he said.

The be­lea­guered share­hold­ers had on Oc­to­ber 29 last year pre­sented to the CBK and the KDIC a re­vised re­struc­tur­ing and re­cov­ery plan for the bank, run down by loan-re­lated fraud.

The court heard that the reg­u­la­tor and the re­ceiver man­ager re­fused to con­sider their “re­cov­ery plan and dis­missed it with­out any con­sid­er­a­tion”.

CBK ar­gued that the pro­pos­als by the share­hold­ers were not made in good faith, and were in­tended to hood­wink them that the short­fall was not go­ing to re­sult in in­sol­vency.

The KDIC said it was not obliged un­der the law to ac­cept any re­cov­ery plan from the share­hold­ers, or the board of di­rec­tors.

The KDIC had ar­gued that the said pro­pos­als were de­signed to di­vert at­ten­tion from the non-ex­ec­u­tive di­rec­tors as­so­ci­ated with the share­hold­ers, and draw the CBK into an elab­o­rate cover-up scheme, fo­cused on the late man­ag­ing di­rec­tor Ab­dul­malek Jan­mo­hamed and as­so­ci­ated en­ti­ties. This would have pre­vented di­rec­tors from be­ing in­ves­ti­gated.

Judge Odunga, how­ever, said the CBK’s de­ci­sion not to ac­cede to the pro­pos­als and re­cov­ery plan was not right. He said the two of­fices are un­der con­sti­tu­tional and le­gal obli­ga­tion to in­form the share­hold­ers of their ac­tions.

The court com­pelled the CBK and the KDIC to pro­vide the share­hold­ers, bond­hold­ers and de­pos­i­tors with the in­for­ma­tion con­cern­ing the ar­range­ments en­tered into with any of the in­ter­ested par­ties, and the man­ner in which the de­pos­i­tors are to be dealt with.

The CBK was, how­ever, op­posed to the or­ders sought by the share­hold­ers on grounds that it would leave the bank un­der the con­trol of the share­hold­ers who are un­der in­ves­ti­ga­tions, and con­se­quently with­out a statu­tory cus­to­dian for the pro­tec­tion of the cred­i­tors and de­pos­i­tors.

The KDIC said the suit is a bla­tant at­tempt to stop the foren­sic in­ves­ti­ga­tion into the al­leged theft of Sh38 bil­lion.

/ FILE

Eighty five-yearold Im­pe­rial Bank de­pos­i­tor Sarikas Ion dis­plays a plac­ard out­side the bank’s head­quar­ters in West­lands on May 31

Newspapers in English

Newspapers from Kenya

© PressReader. All rights reserved.