Treasury was put to task on Thursday to explain circumstances that led to the closure of Charterhouse bank seven years ago.
Finance Minister Njeru Githae was unable to satisfy MPs demands for the reopening of the bank “in order to allow depositors access their money.”
Githae’s contention that the bank, which is now under statutory management, was closed down due to bad media publicity could not be entertained by the House.
“Charterhouse was not closed because of tax evasion, it was closed because of bad publicity to avoid a run in on its deposits,” said Githae amid protests from MPs.
“Banking is a business that trades on confidence. If it loses confidence it will go down no mater how large or solvent it is. Bad publicity has brought down most banks because depositors engage in panic withdrawals. For this reason, CBK had to step in to preserve deposits and integrity of the institutions,” he added.
Public Investment Committee chairman Mithika Linturi disputed claims of media propaganda noting that if “a few competing individuals gang up and spread propaganda several Kenyan banks will close down.”
MPs accused the minister and Central Bank Governor Prof Njuguna Ndung’u of frustrating the reopening of the bank “on orders from foreign governments.”
“Foreign forces are behind the closure of the bank for selfish reasons. This bank is solvent and the only reason for closure is that powerful forces are out to intimidate indigenous banks ...,” said Kiema Kilonzo.
Mr Haroun Mwau, Bonny Khalwale, Charles Kilonzo, Jakoyo Midiwo and Shakeel Shabir put up a spirited case for the bank and accused the government of impunity in dealing with the matters of the bank.
“The minister is not sincere on this matter, the closure of the bank was done on instructions from former US ambassador Michael Renneberger,” said Dr Khalwale who chairs the Public Accounts Committee asked.
Mr Mwau, who triggered the debate through a question, wondered why treasury had failed to reopen the bank even after the House approved a report calling for its reopening.
“There is a court order in addition to the House resolution directing the minister to reopen the bank. Why did the minister chose to disregard this House and the Courts?” he said.
Mr Shabir accused the minister of feigning ignorance on the existence of the reports of the House yet he is a member of parliament.
“The receivership was for a specified period but was extended by 12 months without court orders. Why can’t he open this bank for the sake of suffering depositors? Shabir said.
The minister said he had not seen any court order nor read the report of the House directing the reopening of the bank.
“This matter was brought to my attention a week ago. I am not aware of any court order that has instructed CBK to open the bank.
The government believes in the rule of law and we cannot ignore any court judgments,” he said.
He said he will return to the House in two weeks time to give a definite decision on the banks fate. Speaker Farah Maalim directed the minister to move with speed in the interest of the depositors. [email protected].
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