Mombasa tycoon sues CBK over Sh1bn Imperial Bank deposit
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The Doshis argue that the court has jurisdiction to intervene before or after an institution is placed under receivership and deal with any question arising.
“We are afraid the CBK is running another parallel bank under Kenya Deposit Insurance Corporation and is mixing our money with others at a very big risk to us,” said Mr Doshi.
The regulator said it had met depositors of the collapsed bank to discuss various outstanding issues though it is not clear whether the meetings included customers such as Mr Doshi.
Mombasa-based billionaire Ashok Doshi, who has more than Sh1 billion locked in collapsed Imperial Bank, has sued the Central Bank of Kenya (CBK), seeking to stop the use of rival banks to pay the collapsed bank’s small depositors.
Mr Doshi and his wife, Amit, also want the court to order the defendants to deposit the Sh1 billion they claim to be locked up at Imperial Bank in an escrow account in the names of their advocates.
The Doshis are associated with the Doshi Group, a company with interests in manufacturing and trading, including the sale of building materials and power cables. Founded in 1923 in Mombasa, the Doshi Group has grown organically and through acquisitions to become one of Kenya’s biggest manufacturing firms.
Through their lawyer, Francis Kadima, the Doshi couple is seeking orders restraining the CBK and Imperial Bank from continuing to deal in their (couple’s) money in whatever manner — either by investing, transferring to other banks or to the Kenya Insurance Deposit Corporation.
They are also seeking orders directing the defendants to file Imperial Bank’s statement of account showing liquidity in the deposit account, audit statement published and approved for 2014/2015 and any other liquid and tangible securities held by CBK as of October 13 last year.
The application by the couple is based on grounds that they held both dollar and shilling accounts with Imperial Bank, which went into receivership in October last year.
The Doshis argue that the court has jurisdiction to intervene before or after an institution is placed under receivership and deal with any question arising.
“The defendants are liable to pay both insured amounts and protected deposits once an institution is put under receivership,” the Doshis argue in suit papers.
The couple further argues that deposits held by Imperial at the time it was put under receivership were sufficient to pay all depositors. The plaintiffs reckon that the CBK’s intervention was not because of insolvency but discovery of a fraudulent scheme described as a “parallel bank” that had existed over a period of time.
The plaintiffs further claim that the defendants’ chosen method of paying depositors is illegal, in breach of the law and ought to be stopped until the findings of a forensic report by FTI Consulting LLP London and the CBK’s own investigations are filed in court.
“The plaintiffs have a legitimate claim and the same ought to be heard urgently to avoid any further hardship that may result into total loss of their money,” said Mr Kadima.
Parallel bank
In their supporting affidavit, the Doshis said they learnt through a press release that Imperial Bank had been put in receivership.
Mr Doshi further argues that the CBK and Imperial Bank have not invited depositors to discuss the future of their money as they ought to have done.
“We are afraid the CBK is running another parallel bank under Kenya Deposit Insurance Corporation and is mixing our money with others at a very big risk to us,” said Mr Doshi.
The businessman insists that he is not party to the decision made to pay depositors and it is not clear whether what is being paid is only part of the deposits that were insured by the Imperial Bank.
The CBK has been paying back depositors through KCB and DTB banks up to a maximum of Sh1 million each.
By end of February, some 16,955 depositors representing a third of Imperial Bank’s customers had lodged claims and got paid their savings of Sh6.4 billion.
The CBK said it had set aside Sh8 billion to settle the limited claims, meaning some Sh1.6 billion remained unclaimed. The regulator said it had met depositors of the collapsed bank to discuss various outstanding issues though it is not clear whether the meetings included customers such as Mr Doshi.
The CBK has postponed the announcement of how it wants to resolve Imperial Bank issue, citing the need for further investigations into the bank that was brought down by insider fraud.
The CBK has a free hand to take action on Imperial Bank after the High Court dismissed an application filed by its shareholders that sought to stop the regulator and KDIC from taking decisions that would result in its liquidation.
The court said that the shareholders failed to show an imminent danger that would occur if an order to stop the liquidation process The bank’s shareholders have reportedly disagreed with CBK over the amount of additional capital they would need to inject into the lender before it can be reopened.
