Imperial, Dubai Bank collapse cases to remain in the headlines

Some of the high profile corporate and corruption cases that kept the Judiciary busy in 2016 are expected to continue making headlines this year.

The Judiciary is expected to conclude a number of trials involving theft of public funds, while corporate fraud cases such as the Dubai Bank and Imperial Bank collapses could take longer to resolve.

The High Court is expected to hear and determine three cases filed by the Kenya Deposit Insurance Corporation (KDIC) against shareholders and two former managers of collapsed Imperial Bank, alongside a network of firms and businessmen who have been linked to the looting of Sh44.7 billion from the lender.

The KDIC filed the cases before the commercial division. The judicial review division of the High Court in November ordered that Imperial Bank’s receiver manager engages shareholders and depositors in talks regarding management of the lender.

Justice George Odunga also ordered the KDIC to consider revival proposals by the shareholders who have placed responsibility of the looting of depositors’ funds on deceased former managing director Abdulmalek Janmohammed who died in October 2015 after suffering a heart attack.

As Justices Olga Sewe, Fred Ochieng and Francis Tuiyott look to determine the recovery suits involving Imperial Bank, the Court of Appeal will be expected to determine the fate of another collapsed lender — Dubai Bank.

Dubai Bank’s second-largest depositor Richardson & David has objected to the KDIC’s move to wind up Dubai Bank and pay off depositors.

The lender was placed under receivership in August 2015 and liquidation recommended two weeks later.

The Central Bank of Kenya (CBK) placed Dubai Bank under receivership after finding that it was insolvent to the tune of Sh1.3 billion, its loan portfolio stood at a staggering Sh4.1 billion and the lender was in default of several banking laws. It only had three directors on its board rather than the required five.

Dubai Bank was also cited for failing to honour customer instructions to complete transactions totalling Sh41 million and owed the Bank of Africa Sh48 million from a forex transaction.

The CBK officials have since been implicated in aiding top administrators of both lenders to conceal the scams.

The trial of 26 individuals implicated in the looting of Sh791 million at the National Youth Service is also expected to be concluded in 2017.

Businesspersons Ben Gethi and Josephine Kabura headline the list of suspects that also includes suspended PS Peter Mangiti, former NYS director Nelson Githinji, ex-NYS deputy director Adan Gedow Harakhe and Devolution ministry administrator Hassan Noor Hassan.

READ: Firms enter New Year dogged by financial scandals

The suspects list also has Samuel Wachenje, Hendrick Ntongesa Pilisi, Naftaly Githinji, Ruth Njeri Hihu, Charles Onsase Nyaachi, Mary Wangui Mbuthia, Ezekiel Karanja Kamau and James Gitau Kanuthu.

Others are Samuel Kilonzi, Fredrick Okello Nasiche, Regina Nyambura Mungai, Philip Joshua Otinga, Jane Wangeci Gichuki, David Dicks Alunga, Titus Libondo and Chemos Kororia Ndiema.

The courts will also this year be expected to determine whether collapsed firm Kinangop Wind Park can auction off equipment that was intended for use before the Sh15.5 billion project went up in smoke.

Attorney-General has sued the firm, arguing that the government still intends to carry on with the project, and wants Kinangop Wind Park stopped from selling the turbines.

Kinangop Wind Park has also sued Kenya at the International Chamber of Commerce seeking compensation for the botched project which it argues failed owing to political reasons. Kenya’s contract with the firm provided for compensation in the event of failure attributed to political heat.

Audit firm Ernst & Young will also know its fate regarding a move by the Capital Markets Authority to punish it for alleged aiding of Uchumi executives in looting amounting to Sh1.9 billion.

The firm has sued the regulator for issuing notices to show cause why its assets should not be attached to recover funds lost as a result of its direct failure to ensure Uchumi’s accurate financial standing did not reflect in audit reports.

The courts have also been asked to demystify the ownership saga of a 20-acre piece of land that has been claimed by Equity Bank CEO James Mwangi, businessman George Kiongera and the United States International University-Africa (USIU-A).

All three parties have held that the original owner was former President Daniel arap Moi. Mr Moi, however, claims he only recognises the sale to Dr Kiongera.

The saga has sucked in the author of the Ndung’u land report — lawyer Paul Ndung’u — who Dr Kiongera has now accused of professional misconduct.

Dr Kiongera says the lawyer failed to disclose that he was a shareholder in DPS International — a firm that claims to have bought the land from Mr Moi before selling it to ICEA which in turn offloaded the property to USIU-A.

Former City Hall chief finance officer Jimmy Mutuku Kiamba will also learn his fate as a petition he filed to stop further investigations by the Ethics and Anti-Corruption Commission (EACC) and the Kenya Revenue Authority.

Mr Kiamba is under investigation by the EACC for allegedly looting Sh400 million between January and November 2014. The former City Hall official was earning a salary of Sh85,000 when he acquired the Sh400 million according to the EACC.

Mr Kiamba was also cited for failing to disclose several assets comprising his estate. He, however, now claims that the EACC is hounding him unlawfully and wants the agency barred from any further investigations.

Chief Justice David Maraga has promised to speed up cases and to digitise court proceedings. The CJ faces an uphill task as there still stands a backlog of 500,000 cases. His predecessor Willy Mutunga managed to ease the backlog which stood at 900,000 in 2011.