Companies

CBK boss summoned to court in Imperial contempt suit

imperial

Imperial Bank depositors during a past demonstration. PHOTO | FILE

The High Court has summoned Central Bank of Kenya (CBK) governor Patrick Njoroge, Kenya Deposit Insurance Corporation (KDIC) CEO Mahmoud Mohamed and other officials to explain why contempt of court proceedings should not be commenced against them.

The summons follow an application by collapsed Imperial Bank shareholders who claim they have been denied access to information on the lender’s status under receivership, which Justice George Odunga had ordered they be furnished with.

Justice Odunga yesterday issued the summons and directed that the matter be mentioned on March 24 for further directions. Imperial shareholders claim they have written to the CBK and KDIC several times demanding information on the bank’s accounts and for meetings to discuss possible revival plans, but to no avail.

They further claim that Justice Odunga, in November stopped the CBK and KDIC from continuing with the payment of depositors through NIC Bank.

Justice Odunga in November ordered CBK and KDIC to engage shareholders and depositors with a view to reviving the lender that has remained under statutory management since October 2015.

“In refusing to respond to the applicants or engaging them, whilst at the same time continuing with the arrangements with NIC, the bank will effectively go into liquidation come the end of the statutory management on April 14.

Effectively these steps are being undertaken by the respondents in breach of the relevant legal provisions in contempt of the judgment.” “As a consequence of the respondents’ wilful disobedience of the judgment and the court orders, and the blatant contempt with which the respondents have treated the same, the authority and dignity of this honourable court have been gravely undermined,” Imperial shareholders claim.

The CBK and KDIC officials are yet to respond to the application seeking to jail them. The bank was placed under receivership after the discovery of a Sh44.9 billion embezzlement scheme allegedly spearheaded by deceased managing director Abdulmalek Janmohammed.

EMBEZZLEMENT SCHEME

The NIC Bank payment plan has seen KDIC release up to Sh2.5 million to some of Imperial’s large depositors. In return, NIC is to acquire some of Imperial’s assets.

Depositors were initially allowed to withdraw up to Sh1 million when the lender first opened under the management of KCB and DTB, while a further Sh1.5 million was disbursed in the second phase through NIC.

The CBK board is chaired by Mohammed Nyaoga. It also has Ravi Ruparel, Nelius Kariuki, Samson Cherutich, Charity Selina Kisotu, Rachael Dzombo and Kamau Thugge.

The KDIC board CEO is Mahmoud Mohamed and also has Julius Kipng’etich, CBK governor Dr Njoroge, Mr Thugge, Attorney-General Githu Muigai, Nasim Devji, Jeremy Ngunze, and Samuel Kimani.

Imperial Bank’s shareholders insist that they are all liable for the alleged refusal to abide by Justice Odunga’s ruling.

The CBK and KDIC in November argued that Justice Odunga’s ruling actually allowed them to continue with the payments through NIC. They claimed that the arrangement is within the law.