The banking sector regulator has put collapsed Dubai Bank’s assets on auction, marking the end of the road for the lender that was shut down in August last year.
The central bank, through the Kenya Deposit Insurance Corporation (KDIC), instructed auctioneers to sell office equipment and other assets that the lender owned in Nakuru.
Valley Auctioneers yesterday held another auction in Nairobi outside the KDIC godown in Industrial Area following a failed attempt by Dubai Bank founder Hassan Zubeidi to stop the sale.
The KDIC is, however, yet to confirm whether all the office equipment has been sold, and whether a 1.5-acre piece of land that the collapsed lender owned in Upper Hill, Nairobi is among the assets that have been disposed of.
High Court judge Francis Tuiyott yesterday declined to issue an order stopping the Nairobi auction following an application by Mr Zubeidi.
Mr Zubeidi claimed in his application that the KDIC and the Central Bank of Kenya (CBK) were violating an agreement made in court to stop any liquidation until his Court of Appeal suits against Dubai Bank’s dissolution have been determined.
“The intended sale goes against the earlier commitment by parties in the suit to suspend all actions and proceedings while awaiting the determination of civil appeals 66 and 67 filed in the Court of Appeal on July 14, 2016. The intended auction amounts to premature liquidation of Dubai Bank,” Mr Zubeidi claimed.
But the CBK and the KDIC yesterday denied entering into any agreement to suspend the collapsed lender’s liquidation, insisting that the auctions have been carried out in accordance with the Kenya Deposit Insurance Act of 2012.
The Act allows the KDIC to liquidate collapsed lenders found incapable of reopening. The CBK placed Dubai Bank under receivership on August 14 last year after flagging the lender for breach of several CBK regulations. The lender was also at risk of exposing depositors to a Sh3.1 billion loss.
Mr Zubeidi in his application says that the KDIC did not issue a 14-day notice as required by law before auctioning Dubai Bank’s assets.
The KDIC, however, maintains that stopping it from liquidating the bank would amount to unlawfully interfering with its mandate as described in the Constitution. The CBK holds that Mr Zubeidi ceased having any authority or legitimate interest in Dubai Bank when it was placed under receivership last August, hence has no authority to address the court as regards stopping liquidation of the collapsed lender.
Consider offers by local and foreign investors
“There is no commitment or agreement by the KDIC to suspend its statutory mandate under the KDIC Act of 2012. Mr Zubeidi through the application seeks to arrogate himself judicial powers to dictate to the parties and the court his own perceptions and expectations. Mr Zubeidi has no legitimate interest in the subject matter of the application (Dubai Bank),” the KDIC and the CBK say in court filings.
Mr Zubeidi still wants the High Court to compel the KDIC and the CBK to consider offers by local and foreign investors who had shown interest in resurrecting Dubai Bank. Failure to disclose ownership and source of funds has seen the banking industry regulator turn down seven proposals by foreign and local firms that had expressed interest to inject capital and revive the collapsed Dubai Bank in May.
Sovereign Financial Holdings (Virgin Islands), Ark Fincap Private Limited (India) Nedebe Group (South Africa), Longitude Finance (Kenya), Zen East Africa (Kenya), Manaa Bin Hasher Al Maktoum Investments (Dubai) and International Investment Consortium Limited (Malaysia) had offered to inject capital and revive the bank.
The CBK in an evaluation report said none of the offers met legal requirements as most of the firms were shadowy.
“Names and other details of the directors and senior officers of the companies were not submitted. Documentary evidence of sources of capital was not submitted. Full disclosure of any association with officers of Dubai Bank was not made,” the regulator said.
The High Court in June declined to extend an order Mr Zubeidi had obtained alongside Dubai Bank depositor Richardson & David barring the KDIC and the CBK from dissolving the bank.
At the time Dubai Bank was placed in receivership, it was holding Sh1.7 billion in deposits. Auctioneers hired by the KDIC last week asked interested parties to pay a Sh3 million deposit through a banker’s cheque before being allowed to bid. The KDIC is, however, yet to advertise for the sale of the 1.5 acre piece of land the collapsed lender owns in Upper Hill valued at over Sh800 million.
The advertisement also required bidders to pay 25 per cent of purchase prices in cash at the venue and clear any outstanding balances within 30 days of the auction.