Kenya Orient Insurance assets attached over Sh258m bank debt

An auctioneer has attached furniture and office equipment belonging to Kenya Orient Insurance over a debt of more than Sh257 million.

Garam Auctioneers proclaimed the assets on Thursday last week for seizure to satisfy a debt of $1,997,907 (about Sh257.7 million at the current exchange rates) owed to Ecobank.

The debt arises from a performance bond of $500,000 issued by the insurer to coffee exporter Meghji Kanji & Company Ltd in 1996, but which the insurer did not honour.

Then, the bank was known as Akiba Bank and Meghji was its customer and needed a packaging credit facility, which Kenya Orient agreed to facilitate. 

The assets proclaimed by the auctioneer include office desks, chairs, water dispensers, computers and laptops and reception tables.

Through lawyer Donald Kipkorir, the bank said the insurer issued the performance bond to Meghji Kanji for coffee export and working capital.

The insurance firm had disputed the debt arguing that no coffee was exported within the period of the bond and it was therefore not enforceable.

The insurer further argued that the performance bond was invalid because it had no company seal and that it was fraudulently signed by a director. 

The High Court dismissed the case in 2018 and an appeal by the underwriter suffered the same fate in August last year. 

The High court had directed Kenya Orient to pay Ecobank $461,468 plus interest of 12.5 percent from July 2, 1998, until full payment. 

In the judgment, Justices Daniel Musinga, Patrick Kiage and Mumbi Ngugi, said the bank was not required to prove coffee export for liability under the performance bond, to attach.

“In other words, proof of coffee export was not a condition precedent for liability to attach and the only thing the respondent (Ecobank) was supposed to prove was Meghji’s default in servicing the facility,” said the judges. 

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