Court freezes assets of ex-Dry Associates staff

The High Court has frozen assets and bank accounts belonging to a former employee of fund management firm, Dry Associates, who is alleged to have defrauded investors who bought a commercial paper issued by Crown Berger.

Interim orders have been issued against Mr Timothy Karungu Karanja from selling, transferring or dealing in shares they own in any listed company at the Nairobi Securities Exchange and the Central Depository and Settlement Corporation.

The court also ordered Mr Karanja, Sirius Solutions, Meridias Capital, Bluecrest Holdings, Diefel Investment, Gray Properties and Dal Wealth Management to furnish Dry Associates, Horse Association of Kenya and Daudi Nturibi Advocates and the court with records of shares ever owned by the six companies.

Temporary order

Dry Associates, Horse Association of Kenya, David Henry Gray and Daudi Nturibi are named as the plaintiffs in the suit at the Commercial Court division while Mr Karanja, the six companies and Equatorial Commercial Bank are the defendants.

Dry Associates has separately sued Capital Markets Authority (CMA) and the Director of Public Prosecutions (DPP) and obtained temporary orders restraining the regulator from cancelling its trading licence. The case is pending at the Constitutional and Human Rights division.

Justice George Odunga further ordered CIC Insurance Group, Sterling Investment Bank, Meridias Capital, Bluecrest Holdings, Sirius Solutions and Gray Properties to freeze the respective accounts held by Mr Karanja and companies associated with him.

Jubilee Insurance was also ordered to freeze any redemption or cancellation of education policies 188455 and 188454 and to provide Dry Associates’ advocates with a statement showing the total contributions made by Mr Karanja.

Further, the court barred Mr Karanja, co-shareholders and directors from selling or interfering some of his properties in Ruiru, Naivasha, Dagoretti and an apartment in the upmarket Loresho Springs, pending the hearing and determination of the case.

The court also ordered four banking institutions, Imperial Bank, Bank of Africa, Family Bank and Equity Bank and Mhasibu Sacco Society to freeze the accounts in the name of Mr Karanja Sirius Solutions, Meridias Capital, Bluecrest Holdings, Diefel Investment, Gray Properties and Dal Wealth Management and provide statements of accounts since inception.

Crown Berger has also been joined as a party to the petition that Dry Associates has filed against CMA after it purported to withdraw its licence on allegations of fraud.

CMA has accused the fund manager of allowing a former employee to defraud some investors Sh35.3 million.

On Monday, Mr Justice David Majanja extended interim orders restraining the regulator from cancelling Dry Associate’s licence or imposing fines against the company.

CMA is also temporarily barred from communicating with third parties on matters relating to the commercial paper until the dispute is determined.

The regulator had imposed a Sh1.05 million fine on the firm, citing loopholes in its risk management that it says could have exposed investors to losses. The funds said to be lost relate to payments made by listed paint maker Crown Berger to people posing as the bona fide investors in its Sh300 million commercial paper, redeemed early last year.