Dubai Bank founder makes fresh Sh2bn capital injection claim
Dubai Bank chairman Hassan Zubeidi. PHOTO | FILE
What you need to know:
Hassan Zubeidi says that Zen East Africa Limited (ZAL) is ready to acquire Dubai Bank by investing Sh2 billion in the failed lender.
The collapsed Dubai Bank founder and former chairman Hassan Zubeidi claims that a local investor has offered to pump $20 million (about Sh2 billion) into the troubled lender to revive it following a failed acquisition bid by Virgin Islands-based Sovereign Financial Holdings.
Mr Zubeidi says in a fresh application before the High Court that manufacturer Zen East Africa Limited (ZAL) is ready to acquire Dubai Bank by investing Sh2 billion in the failed lender.
The founder in his application wants the court to extend an order barring the Kenya Deposit Insurance Corporation (KDIC) and the Central Bank of Kenya (CBK) from winding up Dubai Bank to give ZAL an opportunity to inject the fresh capital.
Justice Eric Ogola on November 18 suspended Dubai Bank’s liquidation arguing that the decision to liquidate the lender had been made too hastily. He ordered the regulator to stop the process for 60 days and to listen to an offer presented by Sovereign Financial Holdings.
Mr Zubeidi’s claim comes three weeks after Virgin Islands-based firm dropped its bid to invest $21.5 million (Sh2.2 billion) in Dubai Bank, citing frustration from the CBK, KDIC and bad publicity arising from the collapsed lender’s directors money laundering charges.
“There is danger that the CBK and KDIC may proceed with the liquidation before evaluating the viability of the various bids if the conservatory and injunctive orders issued on November 18 are not extended. I received a bid by Zen East Africa expressing an intention to invest $20 million in the bank towards its revival. The CBK and KDIC are yet to respond to it,” Mr Zubeidi says in court filings.
The CBK and KDIC are yet to respond to the application, but have been granted seven days to file their replies in court. Justice Ogola will hear the matter on February 11.
The judge declined to certify the application as urgent, arguing that the orders he issued barring Dubai Bank’s liquidation remain in force until mid-February.
Mr Zubeidi is an interested party in the suit filed by a Dubai Bank depositor-Richardson & David. The firm says, together with other top depositors, they are also willing to convert their deposits in the lender into equity, a move it insists could raise an additional Sh1 billion.
Mr Zubeidi has accused the CBK and KDIC of employing delaying tactics to ensure the 60 days granted for negotiation with potential investors lapse before any bids have been properly evaluated.
The KDIC called for a meeting with Sovereign on December 28, in which the Dubai Bank receiver ordered Sovereign to furnish a fresh bid for evaluation. The firm instead opted to shelve its plans to acquire a stake in Dubai Bank.
Sovereign also blamed its pullout on bad publicity created by the charging of five Dubai Bank directors with money laundering. Mr Zubeidi, Ali Bashir Sheikh, Binay Dutta, Deeraj Kumar Baghel and Wilson Hassan Nandwa have been accused of money laundering.
Mr Zubeidi, Mr Sheikh and Prof Nandwa are out on bond, while Mr Dutta and Mr Baghel fled the country last year and were charged in absentia.
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