Investor seeks Sh465m from broker, bank
Posted Wednesday, July 4 2012 at 19:58
An investor seeking Sh465 million from Dyer & Blair Investment Bank and CFC Stanbic for loss of returns on funds invested in the two institutions, was denied a fair and reasonable compensation, a witness told a Nairobi court on Wednesday.
Mr Patrick Kagiri, the managing partner of Mbiyu Kagiri and Partners, an asset management firm appointed by John Kung’u Kiarie to evaluate his returns on Sh91.5 million he invested in Dyer & Blair in 2003, said the businessman was entitled to Sh328 million “as a fair and reasonable return for his money.”
Mr Kagiri told Commercial Court judge Joseph Mutava that he evaluated the investment by studying the performance in the money and equity markets and concluded that it grew.
“Using the criteria as a benchmark, I was able to conclude that Mr Kiarie’s investment gain should have been worth Sh328 million without including the Sh91.5 million capital invested originally and which he had already been paid,” said Mr Kagiri.
He further informed the court that based on his professional experience and the work done on the assignment, he concluded that had Dyer & Blair conducted due diligence in accordance with the agreement, “they should have been able to perform better.”
Although the investment bank admits receiving funds from Mr Kiarie, it denies entering into any written contract with him. Similarly, CFC Stanbic has also denied being privy to any contractual relationship with the investor.
CFC Stanbic was made a party to the suit after Mr Kiarie was informed by Dyer & Blair that his funds were invested with them. Mr Kiarie lodged the precedent-setting court case over alleged miscalculation of interest to money he deposited with Dyer & Blair in 2003.
Dyer & Blair has defended itself saying it executed the investor’s instructions to the best of its ability and with the exercise of all due prudence, diligence, skill and competence.
The investment bank argues that it fully accounted for the principal and interest due to the businessman and denies owing him Sh465.5million. According to the investor, the funds were to be put in a broad portfolio including shares or fixed deposits, treasury bonds or bills.
In April 2005, Mr Kiarie said he withdrew Sh24 million from Dyer & Blair but claims he was not informed the amount of interest his investment had earned.
Mr Kiarie has further admitted withdrawing the balance of Sh67.5 million in October 2007 but claims the withdrawals were not accompanied by a full statement of accounts and interest paid to enable him close the account.
He says the bank released to him the principal sum “with a purported interest of Sh2.3 million but refused to give a full statement of accounts or the basis for the nominal interest paid.”
On July 29, 2009, the court dismissed applications by the two banks requiring Mr Kiarie to provide security worth Sh12.9 million to be allowed to proceed with his case.
Allowing the case to be heard to conclusion, Mr Justice Luka Kimaru ruled that Mr Kiarie had demonstrated to the court that he was a man of means and would be able to meet the costs of the suit in the event he loses the case.
“Mr Kiarie has listed some of his property as evidence that he is not a man of straw and should therefore be allowed to prosecute his suit without the shackles of being required to provide security,” observed Mr Justice Kimaru.