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CBK probes 78 Imperial Bank accounts for fraud

Imperial Bank DEPOSITORS DURING A PROTEST IN NAIROBI LAST YEAR. FILE PHOTO | NMG
IMPERIAL BANK DEPOSITORS DURING A PROTEST IN NAIROBI LAST YEAR. FILE PHOTO | NMG 

More than 78 Imperial Bank depositors have been denied access to their money after their accounts were linked to suspect transactions that led to the bank’s collapse.

The Kenya Deposit Insurance Corporation (KDIC) says in court documents that ongoing investigations into the massive fraud at the bank have widened to include some of the large depositors believed to have colluded with the bank’s directors but have been pressing for payment of their cash.

The KDIC — the bank’s receiver managers — says the individuals and companies are being investigated over suspicious transactions that may have been part of the wider fraud scheme that brought down the bank.

The revelations are contained in a brief filing that the KDIC has made in opposition to a suit by Imperial Bank customers’ seeking orders compelling the receiver managers to release their deposits.

“The petitioners are subject to investigations with regard to their financial transactions with the IBL (IR) and if not found culpable their deposits will be paid out subject to the applicable percentage,” the KDIC says in a document filed in court.

Must wait

The KDIC, which is the State agency appointed to manage the collapsed bank’s affairs, told the High Court that the individuals and companies must await the outcome of the investigations before a determination is made as to whether they can access their funds or not.

The Imperial Bank customers had argued that they were left out when other depositors accessed part or whole of their cash deposited with the troubled lender.

On May 3, when the case came up for mention before Justice Grace Nzioka, the petitioners asked the court to order the KDIC to preserve their deposits, noting that press statements had indicated that the Central Bank of Kenya (CBK) was about to reach an agreement with a potential buyer.

The KDIC has not offered any substantive response to their request, they said.

The agency rejected the assertion, noting that there was no danger to the petitioners’ deposits and described the suit as ‘premature, misconceived and abuse of court process.’

Justice Nzioka directed the KDIC to file response in seven days and set mention for May 17 to confirm compliance.

Finer details of the nature of the alleged fraud associated with the section of depositors are expected to be laid bare once KDIC files a substantive response.

The KDIC has, in a separate suit, revealed that Imperial’s principal shareholder and chairman, Alnashir Popat, and his co-directors were direct beneficiaries of the scandal that was unearthed upon the sudden death of former managing director Abdulmalek Janmohamed.

The directors are accused of allowing use of fictitious accounts to facilitate transactions on their behalf and thereafter benefiting from the said accounts.
Mr Janmohamed alongside the bank’s directors are accused of robbing depositors of Sh42.2 billion or more than half the total deposits.

Expose collusion

The latest suit is expected to reveal the extent of collusion between some of the depositors and the directors.

The KDIC claims that the depositors’ suit is intended to armtwist it into effecting payments despite their alleged fraudulent or irregular transactions with the lender that are currently under investigation.

The petitioners want the court to order amounts equivalent to their total deposit held at Imperial Bank placed in an escrow account pending determination of the suit.

Imperial Bank was placed under receivership on October 15, 2016. The KDIC, which was appointed as the receiver, went ahead and declared a moratorium on the bank.

The agency subsequently announced that payments would be made to verified depositors up to a maximum of Sh1 million.

The petitioners claim that despite asking for payment of their deposits, the KDIC has never paid them or offered reasons for the non-payment.

“We have only learnt from informal sources that our claims were declined due to our ‘proximity’ to the bank’s shareholders,” they said.

Marc Das Gupta, a director of one of the companies listed as petitioners, said he has been kept in the dark about the fate of his deposits even as the central bank actively hunted for a buyer for the bank.

Mr Gupta, who says he has been authorised by other petitioners to swear the affidavit, argued that they have not been given an opportunity to be heard, making the decision to leave them out discriminatory.

Other petioners are Vikesh Jinit Shah, Nili Niraj Shah, Niraj Anju Shah, Mayur Shah, Anju Shah, Bhavni Shah, Mohanlal Shah and Arti Doshi.

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