Troubled Chase Bank has sued its former chairman and former senior managers seeking to recover billions of shillings they are accused of illegally siphoning from the lender during their more than a decade at the helm.
The bank, in a suit filed through its lawyer Philip Murgor, says former chairman Zafrullah Khan, former managing director Duncan Kabui, former general manager corporate assets James Mwaura and former general manager finance Makarios Agumbi used their positions to illegally acquire and benefit from the bank’s assets it now seeks to recover.
Also included in the suit are Chase Assurance and Ghengis Capital managing director Ali Cheema, Rafiki Microfinance chief finance officer Daniel Mavindu, former directors Anthony Gross and Ruth Muthoni, and a network of 11 companies said to have been used to siphon funds from the collapsed lender.
Chase Bank accuses Mr Khan of living a flashy lifestyle off plum bank accounts and prime real estate property he acquired using illicit proceeds from the collapsed lender.
The bank says in suit papers that Mr Khan, aside from being a calculative investor with a large portfolio in many sectors of the economy, also had a taste for luxury, offering as evidence his ownership of two Sh60 million top-of-the-range cars — a limited edition Corvette and a Ferrari Dino.
The vehicles were registered in his wife Shehla Khan’s name.
Ms Khan also received Sh3.5 million for upkeep, which Chase Bank now says was illegally withdrawn from its Central Bank of Kenya settlement account.
Chase Bank said it was “apprehensive that at the filling of this suit, the defendants/respondents will remove from the jurisdiction of the court, by mortgaging, (and or further mortgaging) charging (and or further charging), assigning, diminishing, transferring, disposing, alienating, operating, pledging and or otherwise interfere and/or deal their property, to defeat the orders of this honourable court.”
The suit has also for the first time indicated how the alleged crime was busted.
Investigations found that Chase Bank co-founder Laurent Demey blew the lid on the lender via an email to Mr Khan and Mr Kabui, and was copied to Richard Carter, a non-executive director on February 22 last year.
Of the Sh14.9 billion Chase Bank is pursuing, Sh1.05 billion was in bonuses irregularly paid to Mr Khan while Sh6.9 billion was paid to the network of companies owned by the defendants.
Information gathered from an audit report by Deloitte & Touche also says another Sh8.7 billion was lent to Mr Khan, Mr Kabui, Mr Mwaura and Mr Agumbi as interest-free loans but disguised in the lender’s books as Islamic banking assets.
Mr Cheema and Mr Mavindu have been linked to the scam by virtue of their shareholdings in Rinascimento Global Limited, Nine Fifty Limited, The Lighthouse Property Company, Mathatani Limited and Friends Property Holdings Limited where their co-shareholders were Mr Khan and Mr Kabui.
Chase Bank, under the care of the Kenya Deposit Insurance Corporation, reckons that the board of directors was not informed of the companies Mr Khan and other top managers established and used to purchase assets now valued at over Sh7.5 billion.
Chase Bank lawyers claim that Mr Khan, Mr Kabui, Mr Mwaura and Mr Agumbi had acquired close to 50 per cent of the bank’s shares through proxies.
Court filings indicate that Mr Khan ensured that a Sh1.05 billion bonus he was to receive over five years based on performance was paid to him in under two months of board approval.
Mr Khan and Mr Mavindu allegedly transferred Sh942 million to a company they jointly owned, Riverside Mews Limited.
The duo then transferred another Sh481 million to another company with a similar name that they co-own, Riverside Mews Investment Limited. Mr Khan is also accused of paying his company Rivieres Finance Limited “consultancy fees amounting to Sh177.2 million, Sh161 million to Ghengis Capital, and Sh48.4 to an account he holds at Iman Bank of Somalia.
The audit says Mr Khan further transferred Sh335 million to Orchid Capital, Sema Mobile Services and Chiggle Mobile services in his and Mr Kabui’s benefit.
The former Chase Bank boss also transferred Sh288 million to AMB Real Estate as an investment and siphoned Sh507 million for his “personal use” before the lender was placed under statutory management.
Mr Khan has been accused of tapping over Sh2.2 billion from Chase Bank.
Justice Grace Nzioka directed the Chase Bank lawyer, Mr Murgor, to appear before her today (Thursday) for directions.