A forex trading broker whose bank accounts were frozen over alleged involvement in pyramid scheme-like operations has gone to court seeking orders to have the accounts reopened.
Kiambu-based VIP Portal is seeking the court’s assistance to have its three accounts held at Family Bank’s Limuru branch reopened even as it remains under the watchful eye of the anti-banking fraud police.
VIP Portal’s accounts were frozen after it was accused of operating a pyramid scheme and of defrauding Kiambu residents of millions of shillings — a matter that is still under police investigation.
Two of the frozen accounts are registered in the names of VIP Portal subsidiaries, VIP Sacco and VIP Institute of Trading.
VIP Portal wants the account freezing orders issued by the Chief Magistrate’s Court quashed, arguing that it was not given a fair hearing before the determination was made.
The forex trading broker says its decision to go to court was informed by the bank’s refusal to reopen the accounts despite numerous requests.
VIP Portal says it had in a letter dated May 29 2014 demanded that the bank immediately reopen the accounts and admit liability to compensate it for the arbitrary, unlawful and malicious act of closure of the accounts but the bank rejected the demand.
High Court judge David Onyancha ordered the applicant to serve Family Bank with the court papers and set the hearing for October 8.
VIP Portal also wants Family Bank restrained from freezing its accounts or “in any way interfering with the applicant’s bank accounts”.
An earlier order issued by the Chief Magistrate’s Court shows that Hassan Hirbo, an investigator with the Banking Fraud Investigation Unit, was granted permission to look into VIP Portal’s accounts.
The order gives both Family Bank and Barclays Bank the green light to freeze VIP Portal’s accounts with the two banks and to give the investigator access to the same accounts.
Saint Vincent and the Grenadines
The forex trading website operator is registered as an international business company in Saint Vincent and the Grenadines. It facilitates the purchase of stocks in internationally listed companies online but does not trade locally.
It has operated in Kenya since 2013, when it was officially registered as a company.
VIP Portal is under investigation for allegedly fleecing people of hundreds of millions of shillings under the guise of trading stocks on their behalf in foreign markets.
The Law Society of Kenya (LSK) last month waded into the matter when it wrote a letter to the police and the Central Bank of Kenya (CBK) requesting a thorough investigation of the claims.
A police brief sent to LSK chairman Eric Mutua by the Director of Bank Supervision at the CBK shows that VIP Portal is not licensed to trade as a forex bureau, banking business or micro-finance deposit taking institution yet it was operating as such.
“Between October 2013 and May 2014, VIP Portal account with Family bank had received a total of Sh1.08 billion from the public as deposits,” says the police brief.
Police further said that the suit in the High Court against Family Bank, the police and the prosecution had the effect of stagnating action into the alleged malpractices.
The police further told Mr Mutua that VIP Portal directors Alfred Wangai, Nkatha Kirimi and Colin Mundia had been charged in a Kiambu court with defrauding the public and are out on bail.
The brief says the Family Bank account had Sh174 million by May 2014 following several withdrawals and transfers, some to FXCM Markets — a US-based firm that also provides online forex trading services.
VIP Portal, however, maintains that it has never engaged in any illegal businesses.
In its suit papers, VIP Portal accuses Family Bank of freezing the three accounts without a warning or an explanation.
VIP Portal further claims that its operations have been paralysed as a result of being denied access to the said accounts.
“The applicant’s ability to make payments that are necessary for the operations of its businesses has been detrimentally affected by the closure of their bank accounts and are therefore suffering loss of business which cannot be fully compensated by way of damages,” VIP Portal says.
The forex bureau broker has also enjoined the Inspector General of Police and the Director of Public Prosecutions in the suit.
It says it was not accorded a chance to be heard before its accounts were frozen, and that Family Bank should have given it written reasons for the action.
Mr Wangai, the VIP Portal’s director, says in the papers that his company was served with a court order issued on June 6 this year freezing any transactions on its bank accounts pending the investigations being carried out by the police.