CBK fights court ruling on Dubai Bank wind up
By the time the bank was going under, it had below the Sh1 billion in terms of cash, says regulator’s lawyer Oduol
The Central Bank yesterday said the High Court erred in stopping the liquidation of Dubai Bank, which was placed under receivership in August last year.
The regulator through lawyer Ochieng Oduol further said there is no law which allows an individual shareholder to own more than 25 per cent in a bank which was allowed by judge Eric Ogola in his judgement.
Oduol made submissions before Court of Appeal judges GBM Kariuki, Erastus Githinji and Sankale ole Kantai.
He said the judge misinterpreted the law on banking by accepting Sovereign Financial Holding to inject Sh2.2 billion in a bid to revive the collapsed bank.
Oduol said by the time the bank was going under, it had below the recommended Sh1 billion in terms of cash and after receiver managers carried out an in depth audit, the institution’s only avenue was liquidation.
“No judge has authority to issue orders stopping winding up of a bank once the process has started. When you are critically sick, you are taken to the Intensive Care Unit and once you die, you are taken to the mortuary, not ward,” the lawyer said.
Liquidation is the process by which a company is wound up and assets and property of the company are redistributed. Ogola in his judgement gave the bank 60 days to seeks ways of reviving the bank in which Sovereign Financial Holdings came in. Oduol said as per the constitution, CBK is an autonomous institution.
After the bank was placed under receivership on August 14 last year, the regulator appointed the Kenya Deposit Insurance Corporation to oversee activities of the bank in which directors were accused of money laundering.
“Under KDIC Act no injunction can be issued against the institution once it has assumed control of a troubled bank,” he said.
Oduol said there were strong grounds to wind up Dubai Bank as leases for the bank’s Nairobi, Nakuru and Mombasa branches had been terminated. He said CBK wants a suit filed by Richardson and David Limited dismissed arguing that they can sue for damages if it feels aggrieved by Dubai Bank’s liquidation.