Court stops bankruptcy proceedings against Kazungu Kambi

The High Court has stopped bankruptcy proceedings against suspended Labour secretary Kazungu Kambi over a Sh304 million loan owed to Development Bank by a firm associated with him.

Justice Eric Ogola issued the order following an application in which Mr Kambi has denied culpability in the debt owed to Development Bank by Riva Oils Company.

The bank says Mr Kambi and two other directors, Ezekiel Karisa and David Tuitoek, had guaranteed the loan to Riva Oil Company which had operations in Tanzania, Uganda, and Zambia.

In the application, Mr Kambi says the lender never informed him of the High Court judgment ordering him and the other directors to settle the outstanding loan amount.

Mr Justice Ogola has also stopped Development Bank from asking Mr Kambi to settle the debt until his application is determined.

Development Bank successfully sued Riva Oils in 2013 for Sh304 million after the oil firm, Mr Kambi, Mr Karisa and Mr Komen failed to defend the suit.

Mr Kambi filed the suit against Development Bank after it initiated bankruptcy proceedings against him for failing to pay the debt.

“A temporary stay of execution of the judgment delivered on April 2, 2013 and any subsequent proceedings is hereby issued pending the hearing of this application on May 18. By that time all the parties in this suit shall have responded to this suit,” Mr Justice Ogola said.

The firm borrowed Sh250 million in 2007 and the sum had accrued to Sh304 million in 2010, which the bank is demanding with interest of 17 per cent yearly — pushing the debt to Sh390 million.

Mr Kambi’s lawyer Philip Nyachoti said his client was not aware of the judgment ordering Riva Oils and its directors to pay Development Bank the outstanding loan hence it was unfair to institute the bankruptcy proceedings.