Depositors pile pressure on ex-Imperial Bank directors

Pressure on Tuesday continued to pile on directors of the fallen Imperial Bank after depositors sought to be enjoined in a new suit in which the directors face a freeze on their assets in a bid to recover a Sh45 billion loss that sent the lender into receivership. 

Through lawyer Josephine Kogweno, the depositors say the orders sought in the suit “will affect them directly as account holders and depositors at Imperial Bank Limited”.

“The depositors and their families are already suffering due to the illegalities at the said bank,” an affidavit presented yesterday at the High Court reads.

The case has been re-allocated to a new judge, as the former proceeds on leave, and will be mentioned this morning for directions. 

Imperial Bank Limited (IBL), Kenya Deposit Insurance Corporation and Central Bank of Kenya  lodged a fresh onslaught on former directors and shareholders accusing them of taking part in “a well orchestrated fraud which led to massive loses that have impacted negatively on the financial sector in the country”.

They say the forensic examination conducted by FTI Consulting on the financial irregularities at Imperial Bank revealed glaring financial malpractices on the part of the defendants resulting in the loss of the lender’s  assets and depositors’ funds.

The petitioners want the directors compelled to refund  Sh45 billion and to be audited, tracked, and  all the shares and assets they own in connection with the bank after September 15, 2015 frozen.

An order is also sought for  advertisement and  “individuals with information as to the whereabouts of the defendants, properties to provide the said information for purposes of tracing and recovery.”

Mr Phillip Murgor for the applicants says Mr Alnashir Popat, Mr Anwar Hajee, Mr Jinit Shah, Mr Hanif Mohamed, Mr Mukesh Kumar, Mr Vishnu Dhutia and others allowed the bank’s assets including depositor’s funds to be misappropriated through their failure to prevent the fraud on the bank. 

The IBL and KDIC, which are represented by Mr Murgor, say the colossal fraud at lender was permitted by the defendants.

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Mr Murgor argues that the situation has also subjected the bank customers to undue stress and hardship occasioned by  the loss of their deposits.

“The shareholders are liable for all loss and damage caused by their negligence, gross negligence, fraud, breach of fiduciary duty,” he said.

The lawyer said investigations at Imperial Bank similarly revealed that the directors and shareholders “wholly or partially acquired assets using money that was acquired fraudulently or unlawfully from the bank through various schemes”.

In early October 2015, Mr Alnashir Popat, Mr Anwar Hajee, Mr Jinit Shah, Mr Hanif Mohamed, Mr Mukesh Kumar, Mr Vishnu Dhutia, and others  provided information sufficient to prove the theft and consequential loss of Sh38 billion and informed FTI that their failure to detect the fraud was caused by the group managing director maintaining parallel banking systems, court documents read.

“As a result of the complex, long-running and well-orchestrated fraud, Sh 3.5 billion of loans and overdrafts are believed to have been suppressed prior to 2006, while Sh34.6 billion of loans and overdrafts were suppressed between the year 2006 and 2015,” Mr Murgor adds.

The bank avers that in addition, there were Sh2.2 billion of unsuppressed loans and overdrafts relating to the major beneficiaries of the fraud which are also at risk, together with a further Sh2.5 billion of loans and overdrafts also connected to the other beneficiaries of the grand fraud.

Mr Murgor says Popat, Hajee, Shah, Mohamed, Kumar, Dhutia, Estate of AbdulMalek JanMohamed, Eric Gitonga, Omurembe Iyadi and Christopher Angelo Diaz allowed the bank’s assets, including depositor’s funds to be misappropriated through their failure to prevent the fraud on the bank. 

The fraud, the petitioners say, “could have been prevented by adherence to prudent banking practices.”

The bank and KDIC want the court to order the transfer to the lender all of the shares held by some of the directors in various firms they have identified in the court documents.