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High Court allows Imperial Bank payouts by NIC

Justice Odunga’s November judgment caused a standoff between stakeholders. PHOTO | FILE
Justice Odunga’s November judgment caused a standoff between stakeholders. PHOTO | FILE 

The High Court has allowed Imperial Bank’s receiver managers to give customers of the collapsed lender up to Sh2.5 million of their deposits.

Justice George Odunga Monday clarified through a ruling that he had not stopped the payout that the Kenya Deposit Insurance Corporation (KDIC) initiated through NIC, KCB and DTB banks.

The judge ruled that he has no authority to stop KDIC from issuing part payments to Imperial Bank’s depositors or from liquidating the troubled bank if the processes are done legally.

“The court did not stop and even during the pendency of the application had not stopped the respondents in conjunction with DTB, KCB and NIC banks from disbursing funds to the depositors,” ruled Justice Odunga.

The Imperial Bank Depositors’ Lobby had, through an application last month, requested Justice Odunga to clarify a judgment he delivered in November and state whether it allowed KDIC to continue with the deposits payout.

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Justice Odunga’s November judgment caused a standoff between KDIC, depositors and shareholders who held contrasting interpretations.

Shareholders of the collapsed lender claimed that the Central Bank of Kenya had been barred from continuing with the release of deposits through NIC Bank.

“In my judgement of November 14, 2016, this court was clear in its mind that it cannot stop the respondents from carrying out their statutory mandate.

‘‘However, such mandate had to comply with the law and the Constitution in particular Article 47. I trust that this short ruling clarifies this court’s decision and if there was any confusion the same has been dispelled,” ruled Justice Odunga.

The depositors’ lobby had requested the interpretation after failing to secure a round-table meeting with KDIC which it had called to seek answers on the receiver/manager’s tenure at Imperial Bank.

The lender was placed under receivership in October 2015 after the discovery of Sh44.7 billion looting scheme orchestrated by former Imperial Bank managing director Abdulmalek Janmohammed.

The KDIC has since claimed that Imperial Bank’s shareholders were part of the looting scheme and has filed two recovery suits against them.

It has also filed another suit against the family of Mr Janmohammed, a network of businessmen and companies used to channel depositors’ funds out of the bank.

Imperial Bank depositors, who had earlier been offered access of up to Sh1 million each through KCB Group and DTB Group, will now be able to apply for an extra maximum of Sh1.5 million through NIC Bank which was appointed the assets and liabilities consultant for Imperial Bank.

The agency, which is an arm of the Central Bank of Kenya (CBK), said it has agreed with NIC on a process to speed up access to funds.

Depositors will need to complete KDIC/NIC Bank claim forms, which are available online at the KDIC and NIC websites.

Justice Odunga in November ordered KDIC to meet Imperial Bank’s shareholders, bondholders and depositors and work towards reaching a solution that would be in the interest of all the parties but that is within the law.

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