Investors move to block Consolidated Bank sale

The looming legal tussle is similar to the legal obstacles that Safaricom faced in the run up to its Sh50 billion Initial Public Offering last year.

A group of MPs had moved to court to block the listing until doubts over the mobile company’s ownership were cleared.

They also argued that the sale was being done in contravention of the Privatisation Act.

But High Court Judge Joseph Nyamu dismissed the application terming it politically inspired.

Last year, a court tussle almost stopped Stanbic Bank Kenya from merging with CFC Bank after 15 former Stanbic employees sued the bank for Sh1.1 billion.

The employees claimed that the bank had failed to pay their pension in full when they retired.

But the merger was later cleared.

In their application, Nationwide Finance shareholders also want Consolidated Bank barred from charging, transferring, leasing or alienating the Consolidated Bank house along Nairobi’s Koinange Street pending the hearing and determination of the petition.

Kiragu Holdings, Mumbu Holdings, KBKanne Investments, Tagaka Holdings, P.J Kiragu Mwangi, Alex Kibaki Muriithi, J.K Mbuu and Mary Waithera Gachui, who are listed as the litigants, say that their goal is to recover ownership of the building.

Mr Kenyatta, through a Kenya Gazette notice dated August 14, 2009, listed Consolidated Bank as one of the entities in Government divestiture programme for the current fiscal year.

But the investors reckon that the matter at stake is public interest and morality as they inter-alia relate to the proper exercise of State power in a capitalist economy, sanctity of private property and the value of the Constitution to investors.

Nationwide became a shareholder in Consolidated Bank after the Government merged the nine institutions in an elaborate scheme that commenced with the establishment of the Special Investment Committee (SIC) in 1996 by the then President Daniel arap Moi.

Other institutions that were forced into the union include Jimba Credit and Finance Corporation, Business Finance Company, Citizen Building Society, Estate Building Society, Estate Finance Company, Home Savings and Mortgages, Union Bank of Kenya, and Kenya Savings and Mortgages.

SIC’s justification was to salvage weak financial institutions that had been adversely affected by the banking crisis of the mid-1980s.

NFC, through its lawyer Kibe Mungai argues it was not among the banks that faced insolvency at the time.