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Equatorial Bank freezes former CEO assets on fraud claim

Equatorial Commercial Bank branch in Nairobi. It has frozen the property of its former CEO. FILE
Equatorial Commercial Bank branch in Nairobi. It has frozen the property of its former CEO. FILE 

Equatorial Commercial Bank has frozen the property of its former chief executive for allegedly advancing a loan to his business associate without board approval.

The bank says that Peter Harris, who quit in November after serving for four years, lent Sh66 million to a foreigner without collateral. He had introduced the borrower to the lender as a potential investor.

The Equatorial Bank chairperson, in court documents, reckons that Mr Harris was meant to receive board approvals for loans above Sh20 million in a court battle that will be watched closely by banking executives.

Industrial Court judge Nduma Nderi directed that the former CEO’s assets like four bank accounts in Equatorial Bank, government bonds worth Sh4.5 million, two cars and residential property in upmarket Rosslyn Estate in Nairobi be frozen.

“A temporary injunction …is hereby issued enjoining Mr Peter Hugh Harris whether by himself, his advocates, agents, co-shareholders, co-directors, company secretaries in companies in which he holds interest, stockbrokers or otherwise form dealing in by way of disposing,” ordered Mr Justice Nderi.

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It’s not clear whether the dispute was behind the replacement of Mr Harris in November. The bank last year said that he had opted not to renew his contract after turning 64 years.

Equatorial Bank chairman Dan Ameyo said in court documents that transactions in Mr Harris’ accounts had increased since the bank asked him to refund the botched loan.

“That the said sums were paid out without the required and or mandatory approvals and without the proper and complete documents in support thereof,” said Mr Ameyo.

“It was evident that the action of not seeking the requisite approval was not only deliberate, but part of an elaborate scheme that aimed at siphoning substantial sums of monies from the claimant to the detriment of its business and depositors.

The bank said the loan was advanced to a foreigner whom Equatorial Bank alleges is a business associate of the former CEO.

“The respondent did not disclose his personal and/or business relations with the said party at the time of dealing with the board of directors and neither did he deem it fit to recuse himself when dealing with the subject transaction,” said Mr Ameyo.

The court asked the commissioner of lands, registrar of motor vehicles, registrar of companies and the Central Depository and Settlement Corporation to ensure the frozen assets are not transferred to third parties.

Sammy Itemere, formerly head of retail and SME banking, replaced Mr Harris. The change in the corner office comes as plans by the bank to sell new shares to strategic investors to cut the ownership of its majority shareholders to below the maximum regulatory limit of 25 per cent.

The bank, which is associated with businessman Naushad Merali, said it returned a profit of Sh20 million in the first quarter after reporting an after-tax loss of Sh481 million in December.

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