Diamond Trust asks court to declare Imenti MP bankrupt

Diamond Trust Bank is seeking to declare Imenti Central legislator Gideon Mwiti Irea bankrupt over a Sh6.1 million debt he and the collapsed Akiba Microfinance were ordered to pay the lender in 2008.

The bank says Mr Mwiti had neither settled the debt nor challenged the court’s order and requested the High Court to issue a bankruptcy notice against the MP. Mr Mwiti is yet to respond to the suit.

Diamond Trust Bank had sued Mr Mwiti, Gabriel Mugambi, and John Ncebere as owners of collapsed pyramid scheme Akiba Microfinance in 2005 over an outstanding loan their firm failed to settle.

The court ruled in DTB’s favour, and ordered Mr Mwiti to settle the debt that has kept increasing due to interest.

“We, Diamond Trust Bank, request that a bankruptcy notice be issued by this court against Gideon Mwiti Irea. He is indebted to the bank for an aggregate sum of Sh6.1 million. We produce an office copy of a decree dated February 4, 2008 obtained in a civil suit. The judgment has not been stayed,” DTB says.

Alleged rape

The suit comes as the MP faces criminal charges for alleged rape, assault and intimidation of a woman in his Westlands office. Magistrate Eddah Agade last month released the legislator on a Sh100,000 cash bail.

The victim’s lawyers had asked the court to keep him in custody over claims that he was interfering with investigations into the incident. The legislator could lose his seat should the court rule against him in either case.

Under Kenyan laws, anyone declared bankrupt cannot hold public office.

The lender was awarded Sh1.7 million but the amount has since grown owing to accrued interest of 24.48 per cent placed on the amount. The money will continue accruing interest until Mr Mwiti settles the amount in full.

The Central Bank of Kenya (CBK) closed Kenya Akiba Microfinance in 2005 on suspicion of being a pyramid scheme.

The firm collapsed with over Sh780 million in members’ contributions. Mr Mwiti has been linked to its ownership but he has denied the claim.

Mr Mwiti led the collapsed firm in suing CBK for closing it down irregularly. Akiba won the suit in 2012 and the court ordered CBK to pay it Sh930 million in compensation.

The court ruled that CBK’s 2005 raid of the firm was unlawful. The MP was at the time of Akiba’s collapse its managing director.

He was accused of cheating many Kenyans into depositing their money in Akiba through the false promise of hefty interest on their investment.
DTB last month issued the MP with a seven-day ultimatum to settle the debt. The notice expired on April 23.