Moi’s land rival in Kabarak tops list of Dubai Bank losers

Malcolm John Bell, the Nakuru farmer who made history by winning a protracted land battle against former President Daniel arap Moi, tops the list of those who stand to lose the most from Dubai Bank’s collapse.

Mr Bell, who is Mr Moi’s neighbour in Kabarak, was Dubai Bank’s top depositor with Sh156.6 million in his account when the Central Bank of Kenya (CBK) shut down the lender in August.

At Sh156.6 million, the Nakuru-based farmer’s deposits equalled 11.9 per cent of the total Sh1.35 billion Dubai Bank held in customer deposits, leaving him with the highest exposure in the liquidation.

Supplies firm Richardson and David, which had Sh142 million or 10.4 per cent of the total deposits, was the second-largest saver who also faces immense loss in the Dubai Bank debacle.

The firm has lodged a suit at the Milimani High Court in Nairobi seeking to stop Dubai Bank’s liquidation, arguing that the process was initiated prematurely.

The CBK’s report on Dubai Bank shows that the estate of former Butere Member of Parliament Martin Shikuku and the Catholic Diocese of Garissa are also in the list of the top 20 depositors who stand to lose the most from the lender’s collapse.

Mr Shikuku, who died in 2012 after a battle with cancer, had a balance of Sh14.9 million in his account and the funds were then transferred to his estate.

“The top 20 depositors as at August 14, 2015 collectively held Sh659 million, representing 48.6 per cent of the institution’s total deposits,” the CBK report says.

READ: CBK fights bid to stop Dubai Bank liquidation

The report names Mr Bell (Sh154.9 million), the Catholic Diocese of Garissa (Sh37.38 million) and Mr Shikuku (Sh14.9 million) as the top savers.

The CBK shut down Dubai Bank in August, citing serious cases of parallel banking, a mountain of unsecured loans that were not being serviced, interference with client accounts and lack of a full organisational chart as provided for by the law.

The financial sector regulator followed the recommendation of the Kenya Deposit Insurance Corporation (KDIC) in calling for Dubai Bank’s liquidation, barely three weeks after the bank went into receivership.

Under the Banking Act, firms and individuals that have deposits in a lender that is being wound up are compensated in tranches of Sh100,000 upon recovery of any funds from asset sales or serviced loans.

This means that the biggest savers suffer the most loss in the event that the liquidator fails to recover enough cash to compensate the depositors.

Dubai Bank’s insolvency, as declared by the CBK, has put its largest depositors in a tight spot with the lender’s total liabilities standing at more than Sh2 billion or twice the amount savers had in their accounts.

Richardson and David wants Dubai Bank placed under receivership, and has expressed readiness to convert its Sh142 million deposits into shareholding in a last-ditch effort to save the lender from collapse.

“Richardson and David is prepared to support the process of turning around Dubai Bank’s fortunes by having its deposits converted into equity as the CBK allowed depositors of Delphis Bank to do,” the firm says in suit papers. But the industry regulator holds that it is too late for the supplies firm to stop Dubai Bank’s winding up as the law does not allow any authority, even the court, to interfere with the KDIC once it has taken over a lender’s operations.

The CBK has terminated leases for Dubai Bank’s Nairobi, Nakuru and Mombasa offices, and argues that the process of liquidation cannot be stopped halfway. It holds that Richardson and David will have an opportunity to sue for damages if the firm is dissatisfied with the regulator’s actions.

READ: How Dubai Bank chief took billions from customers

The only other saver that had crossed the Sh100 million mark at Dubai Bank was Chinese construction firm Shanxi Geological Engineering. The firm had stacked up Sh107.4 million in two accounts.

Shanxi has carried out several construction projects in Kenya valued at over Sh1.4 billion. The firm has also worked on a number of water supply projects with the Tanathi Water Services Board for towns like Murang’a, Kiambu and Lamu.

It has also drilled and maintained boreholes for Tanathi Water Services Board. The list of firms facing losses in Dubai Bank’s collapse includes Crown Petroleum Kenya (Sh13 million), Elgon House Limited (Sh13 million), Xplico Insurance (Sh4.7 million), and Nakuru’s Farmland Aviation Limited (Sh1.6 million). The Nakuru War Memorial Hospital also stands to lose Sh17 million in the lender’s collapse.

The CBK wants Dubai Bank’s founder and former chairman Hassan Zubeidi held liable for the losses, and has filed a suit seeking to attach his assets after finding that he used his influence in the lender to misappropriate depositors’ funds.

The regulator has also revealed that Mr Zubeidi may face criminal charges over his bank’s fall, and that he has already been interrogated by police.

A report the regulator published on the bank shows that Mr Zubeidi used depositors’ funds to guarantee his private companies some Sh1.6 billion.

The five companies – Africa Energy, Suleiman Enterprises Company, Kamp General Engineering Company, Kemu Salt Parkers Production Company and Maestro Properties – have been enjoined in CBK’s suit seeking Mr Zubeidi’s assets.

Mr Bell sued Mr Moi in 2003, a year after he left State House, accusing the former president of taking ownership of his family’s land without fulfilling a promise he made to his father, Ginger, in exchange for the plot.

Mr Moi was to help the Bell family get connected to the electricity grid, build a cattle dip and sink a bore hole on their 1,200-acre farm adjacent to Moi High School Kabarak.

When Ginger died in 1997, the junior Bell assumed the responsibility of reclaiming the family heritage.

Mr Moi took the fight for the 100-acre farm to the Supreme Court where it was dismissed.