Consolidated Bank wants broker Nyaga’s asset freeze lifted
Investors outside Nyaga Stockbrokers. Photo/FILE
What you need to know:
Consolidated Bank of Kenya has asked the court to vary the orders issued as the loan to the stockbroker is accruing interest with time and that an anticipated out-of-court settlement failed to materialise.
The State-owned banker said it was apprehensive that Nyaga will ultimately be unable to repay the loan.
The broker has already agreed to the release of the charged properties.
A bank wants a freeze on properties associated with the fallen Nyaga Stockbrokers reviewed, saying it is violating its right to sell the company’s assets used as collateral.
Consolidated Bank of Kenya has asked the court to vary the orders issued as the loan to the stockbroker is accruing interest with time and that an anticipated out-of-court settlement failed to materialise.
Lawyer Kiai Maina for Consolidated Bank asked the court to review orders freezing and preserving the firm’s properties in Embu placed as securities for loans, saying that there is danger that the outstanding amount shall surpass the value of the land and occasion the lender substantial loss.
The State-owned banker said it was apprehensive that Nyaga will ultimately be unable to repay the loan. The broker has already agreed to the release of the charged properties.
Consolidated Bank legal officer Wakonyo Igeria told the court that some of the properties listed in the order are charged for several loans advanced to the company.
Mr Igeria said that the bank is not duty bound to follow up on the utilisation of funds disbursed to clients and hence it cannot be blamed for any breach and fraud allegedly committed by the stockbrokers.
“We continue to suffer double jeopardy as neither can the bank recover money from the plaintiff or the managing director (Peter Gakiavih) who was the guarantor nor can the bank exercise statutory power of sale due to the court order issued,” he said.
He said there was no good reason as to why the bank was dragged into the woes facing the stockbroker.
“We ask that the orders issued by the court freezing the assets of Nyaga Stockbrokers should be varied to enable the bank exercise its statutory power of sale.”
Nyaga is one of the brokers placed under statutory management by the regulator Capital Markets Authority (CMA) over loss of billions in the last few years.
Others are Ngenye Kariuki and Discount Securities that are yet to emerge from administration.
“In and around year 2007 and 2008, the CMA discovered that the first defendant in his capacity as the managing director of plaintiff had fraudulently transferred colossal amounts of money from the plaintiff’s bank account into his personal bank account. This constituted a fraud against the company and its customers,” said CMA.
Mr Gakiavih is accused of effecting transactions in, and inducing the purchase and sale of listed securities by means of manipulative deception and other fraudulent devices and contrivances and also converting company monies and clients’ settlement account money to his own use.
The chief executive is blamed for mismanaging the brokerage firm and fraudulently transferring over Sh523 million from the firm’s bank account and Sh76 million from the firm’s petty cash to his personal account.
The case continues.
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