Fidelity Bank and Prime Bank have been entangled in the dispute between troubled Imperial Bank and 20 firms and individuals accused of siphoning Sh34 billion from the troubled lender.
Some of the properties whose transfer the High Court has frozen after Imperial Bank sued the firms and individuals implicated in the mega scandal were used as security to secure loans to the tune of Sh332 million from Fidelity Bank, it has emerged in court.
Imperial Bank on Tuesday moved to court to repossess properties it says were acquired using embezzled funds by lender’s founder Abdulmalek Janmohamed in collusion with 20 firms and individuals.
Fidelity says part of the land affected by the freeze orders were used by W E Tilley and Value Pak Foods to secure loans.
Two other pieces of land in Ruiru also frozen following Imperial Bank’s suit had been charged to Prime Bank, which will on Friday file a formal application to join the suit as an interested party after they made an oral application in court Thursday.
Fidelity Bank wants to be enjoined in the suit to allow it lay claim on the two pieces of land.
“It is just that Fidelity Bank be enjoined in these proceedings. The two properties were charged during the normal course of business between W E Tilley and Fidelity Bank. Pursuant to the said charges, Fidelity has first right over the said properties,” says the lender.
Justice Fred Ochieng on Tuesday froze bank accounts of 31 firms and individuals including Mr Janmohammed’s beneficiaries and placed a caveat on properties they own in Kenya.
Fidelity Bank has accused Imperial Bank’s receiver managers of playing dirty by not including it among the interested parties in the suit despite knowing the land had been used to secure loans from it.
“Even though the court order mentioned Fidelity Bank and properties that were charged to it Imperial Bank, knowing that Fidelity had an interest in the present matter, deliberately failed to enjoin it as an interested party.
“It is noteworthy that WE Tilley has been Fidelity Bank’s client to whom it has been granting financial facilities from time to time,” the lender says.
WE Tilley, has expressed willingness to return Sh10 billion to Imperial Bank.
The Central Bank is seeking to recover cash from the fraudulent loans that the bank issued a select group of clients as one of the conditions issued before the reopening of the bank.
Mr Justice Ochieng will hear Fidelity Bank’s application on November 4, when parties in the suit are expected to have filed their responses to the application.
The regulator on Wednesday met with large depositors to inform them of its proposed roadmap to reopening one day after it held a meeting with Imperial Bank’s shareholders who asked for time to consider the receiver manager’s proposals.
Court documents show that Mr Janmohamed siphoned out billions of shillings from Imperial Bank and manipulated its software systems to hide the theft over a period of 13 years.
All the irregular transactions were kept off the bank’s books and were known to a small clique of senior managers. The court papers further reveal that Imperial Bank’s liability to depositors and buyers of the corporate bond it sold to local investors last month stands at Sh87 billion — nearly Sh20 billion more than the Sh58 billion that was said to have been at risk.