Firm that stopped Dubai Bank wind-up named in Imperial row

Richardson & David, the little-known Kenyan firm that stopped the Central Bank of Kenya (CBK) from liquidating Dubai Bank, has resurfaced as one of the key players in the drama of Imperial Bank since it was shut down last October.

Imperial Bank through its receiver manager, the Kenya Deposit Insurance Corporation (KDIC), says in court documents that the supplies firm had by August 2013 become one of its 50 largest borrowers.

The bank’s records also indicate that Richardson & David had defaulted on a Sh69 million loan for close to one year by the time of the bank’s closure.

The firm had by August 2013 failed to service the loan for 341 days contrary to the requirement that borrowers should not fail to do so for more than three months.

Imperial Bank filed the documents as part of the evidence that its former deputy managing director James Kaburu knew about the fraudulent dealings orchestrated by former managing director Abulmalek Janmohamed.

The Central Bank of Kenya (CBK) accuses Mr Kaburu of helping to cover up shady dealings involving W. E. Tilley — the fishing firm at the centre of Imperial Bank’s Sh34 billion scam.

“Produced are copies of emails and lists of the bank’s top 50 borrowers dating from February 2013, which were retrieved from the bank’s system by FTI Consulting - a firm that has been engaged by the bank to carry out investigations,” the KDIC says in court documents.

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The court filings, however, do not indicate whether Imperial Bank attached the supplies firm’s assets to recover the loan.

Richardson & David was one of the top savers at the troubled Dubai Bank, having deposited Sh142 million or 10 per cent of the bank’s deposits when the CBK placed the lender under statutory management in August last year.

Richardson & David’s total savings and other loan facilities in Imperial Bank, if any, are yet to be revealed as FTI Consulting is still investigating the scam, which is one of the biggest in Kenya’s history.

The firm in December secured a court order stopping the KDIC and the CBK from liquidating Dubai Bank, arguing that it is ready to convert its savings into equity in an attempt to rescue the bank.

Richardson & David is one of Kenya Power’s top suppliers of treated transmission poles, and claims to have delivered poles worth $20 million (Sh2 billion) to the electricity company.

The company, which is owned by Valiveetil Pius Lawrence (99.90 per cent shares) and Ephraim Luyo Mbiru (0.10 per cent shares), was incorporated in 2009. Information on Richardson & David’s website indicates that the firm has an annual turnover of Sh110 million.

While the company states on its website that it is part of a group of companies with a presence in the United Kingdom, United Arab Emirates, Kenya and Uganda, it does not reveal the name of its parent firm.

Crucial cog

The KDIC filed the Imperial Bank records as part of its response to Mr Kaburu’s claims that he only learnt that W. E. Tilley was part of the embezzlement scheme after Mr Janmohammed died in September last year.

The KDIC insists that Mr Kaburu was a crucial cog in Mr Janmohamed’s plan to create a conveyor belt that moved money from customers’ accounts to his pockets.

Mr Kaburu has denied having any knowledge of W. E. Tilley, one of the firms Mr Janmohamed used to channel depositors’ funds to his pockets. But the CBK has attached the list of the largest borrowers that Mr Kaburu produced omitting W. E. Tilley.

Mr Janmohamed extended large, unsecured loans to W. E. Tilley then concealed the facilities using Mr Kaburu and other Imperial Bank officials, the KDIC says.

“It is noteworthy that the Tilley liabilities were excluded in a number of the bank’s lists of its top 50 borrowers yet there is no evidence that Mr Kaburu questioned their exclusion or sought to establish whether the Tilley liabilities had been cleared,” the KDIC says.

Mr Kaburu has also been accused of lying to the CBK in 2012 when asked about W. E. Tilley’s accounts at Imperial Bank. The KDIC says he told the banking sector regulator that the firm at the centre of Imperial Bank’s collapse only had one account with $32,235 (Sh3.25 million).

FTI Consulting has also established that Mr Kaburu on several occasions authorised payments to W. E. Tilley to the tune of over Sh450 million between 2007 and 2012.

The KDIC has also denied claims by Mr Janmohamed’s family that the Imperial Bank founder had earned over Sh1 billion in salaries and bonuses from the troubled lender and that he invested the earnings to build a massive business empire.

Ann Muoki, an assistant receiver working for the KDIC, says investigations by FTI Consulting have revealed that Mr Janmohamed earned Sh301 million from Imperial Bank between 2006 and 2015 when he died.

“Even assuming we were able to retrieve the deceased’s salary and bonus records from 1992 when he started working for the bank, the total amount is unlikely to hit the Sh1 billion mark,” Ms Muoki says.

Imperial Bank has filed two suits in seeking to recover every cent of the Sh34 billion Mr Janmohamed allegedly stole from depositors in 13 years.

The first suit seeks to recover Sh34 billion from 20 firms and individuals believed to have colluded with Mr Janmohamed in the scheme, while the second seeks to attach assets he is believed to have left to his family, in both cash and property.

The CBK shut down Imperial Bank down in October last year after it was discovered that Mr Janmohamed’s scheme could expose depositors to massive losses.