Mauritius Commercial Bank is pursuing a company owned by the controversial Somaia and Devani families over a $7.4 million (Sh750 million) debt.
The company, in its defense, says it has defaulted on the loan because of Imperial Bank’s collapse as its deposits are trapped in the lender that is under receivership.
The Port Louis-based lender has filed a suit at the Milimani High Court seeking to recover the Sh750 million from Jade Petroleum, which is owned by members of the Somaia and Devani families, in a complex lending deal involving South Africa’s FirstRand Bank.
Jade Petroleum borrowed $14 million (Sh1.4 billion) from FirstRand Bank, but used various securities including letters of credit and bank guarantees issued by Mauritius Commercial Bank (MCB).
After Jade Petroleum defaulted on the loan, FirstRand Bank called in the letters of credit and guarantees that MCB had issued to allow the lending to proceed.
MCB now wants to recover the Sh750 million, which includes interest on the Sh663 million it has already paid to FirstRand Bank.
MCB says that after paying FirstRand Bank, it inherited the right to pursue personal guarantees that Jade Petroleum’s directors had given as security for the loan.
Jade Petroleum is owned by Pankaj Somaia, Raj Devani and Amar Pandya who have also been enjoined in the suit in their capacities as directors and shareholders of Jade Petroleum.
Pankaj is a cousin and close business associate of convicted fraudster Ketan Somaia, while Raj is related to Triton Petroleum founder Yagnesh Devani who is in the United Kingdom (UK) fighting extradition to Kenya to face charges over a Sh7.6 billion oil scandal.
Mauritius Commercial Bank (MCB) has obtained a summary judgment against Jade Petroleum and its owners to recover Sh750 million.
“MCB duly honoured its obligations under the standby letters of credit and remitted a total sum of $6.5 million (Sh663 million) to FirstRand Bank.
By way of a subrogation and transfer agreement FirstRand Bank irrevocably subrogated to MCB all its rights, interests, securities and privileges in the facility,” the Mauritian bank says.
“Despite demand having been made and notice of intention to sue having been given, the defendants have refused to pay the aforementioned sum,” MCB adds.
But Jade Petroleum now says that it was never furnished with court summons which would have enabled it to defend the suit.
The firm adds that the only debt it owes to FirstRand Bank has been frustrated by Imperial Bank’s receivership. Jade Petroleum held its accounts with Imperial Bank, where it also deposited the Sh1.4 billion borrowed from FirstRand Bank.