Companies

Chase Bank client sues over cheque fraud

COURT

Lady Justice Jacqueline Kamau on Monday issued temporary orders freezing a phantom account number held in Lab & Allied’s name until February 19. PHOTO | FILE

A pharmaceutical manufacturer has sued Chase Bank for alleged negligence in a fraud case where 33 cheques were cashed from its account between September 2 and September 23.

Laboratory & Allied claims in its suit papers says that owing to the bank’s negligence, the phantom account number has been used to clear cheques belonging to the pharmaceutical company, which has cost it over Sh10 million.

The pharmaceutical company now wants the High Court to restrain Chase Bank from processing any transaction relating to the account and to refund it the money it has lost in the scheme.

“As a result of the bank’s negligence, a phantom account number 0102127111001 held in Lab & Allied’s name was opened through which the bank’s employees cleared the cheques totalling to Sh10,876,229 and cashed them,” said the pharmaceutical manufacturer.

Lady Justice Jacqueline Kamau on Monday issued temporary orders freezing the said account until February 19, next year after Chase Bank’s lawyer Taib Ali Taib requested for additional time to file a response for his clients.

Chase Bank will however have to file its response and arguments by January 20, after which Lab & Allied will be granted 14 days to file any supplementary response.

The firm has further said in its court papers that the fraudsters may have colluded with some of the bank’s employees to have the account opened. Lab & Allied has however named one of its former employees as a suspect in the cheque fraud scheme.

“We have reasonable grounds to believe that the plot hatched may have involved an employee by the name Quinto Ochoko who was in charge of banking Lab & Allied’s cheques but who upon commencement of investigations ceased working for Lab & Allied,” said the firm.

Lab & Allied’s managing director Manesh Patel has said in court papers that the firm discovered the problem on September 18, after studying bank statements from its Habib Bank AG Zurich account.

An accountant who had requested the statement found out that funds deposited by its customers between September 2 and September 23 were missing, prompting the firm to alert the Banking Fraud Investigation Unit of the police.

The police informed Mr Patel after preliminary investigations that two individuals posing as the genuine directors of the firm—Gideon Ngonina and Caroline Gakii—who had a host of documents proving their directorship.

Other documents forwarded to Mr Patel by the Banking Fraud Investigation Unit were the certificate of KYC compliance, taxpayer registration certificate and corporate account opening form copies, which he has attached as evidence in the suit.

“Chase Bank did not conduct a search at the companies registry to ascertain the directorship of Lab & Allied. The bank also accepted “Thika Road” as the physical address which cannot even by the farthest stretch of imagination be termed as a physical address,” added Mr Patel.

The fraudsters used a postal address registered to a firm identified as Kobole Insurance Agency.