Companies

Ex-Imperial Bank directors linked to suspect firms

CHASE

Imperial Bank branch in Mombasa after its collapse. FILE PHOTO | NMG

The Kenya Deposit Insurance Corporation (KDIC) has opposed former Imperial Bank directors’ bid to access the billions of shillings that were frozen following the bank’s sudden collapse three years ago.

KDIC, which is the agency that is mandated to secure depositor funds, says the former directors and owners are merely using the court to frustrate efforts to recover the Sh42.2 billion that the collapsed bank’s receiver is seeking from them.

KDIC says in papers filed in court that more than 78 companies and individuals, who are seeking court orders to access their deposits at Imperial Bank are associates of the directors.

The Imperial Bank customers had argued that they were left out when other depositors were allowed to access part or whole of their cash deposits with the troubled lender and want the receiver compelled to release the cash.

“While the petitioners herein filled forms in support of their respective claims and upon presentation it was clear on the face of the documents that the same directors and shareholders are the claimants through proxy companies and petitioners herein,” KDIC said in its response.

Past reports have indicated that former managing director Abdulmalek Janmohammed, working in conjunction with the bank’s senior management and directors, robbed depositors of Sh42.2 billion.

KDIC claims that 26 companies of the 78 petitioners in the suit are associated with former Imperial Bank chairman Alnashir Popat while another 30 are associated with Hanif Somji, a former director.

KDIC says 17 other companies are associated with Jinit Shah, noting that every company seeking release of cash has a former director or shareholder behind it.

KDIC told the court that the companies linked to shareholders and directors will only be able to access the balance of what remains after stolen cash is recovered.

KDIC, which is also the receiver manager at Imperial Bank, says the former directors are merely trying to circumvent the breach of fiduciary duties, terming it an abuse of court process.

The former directors are also accused of attempting to use the suit to access the cash, even as a separate case filed by KDIC against them over the loss of Sh42.2 billion is pending in court.

Marc Das Gupta, for one of the companies associated with Anashir Popat, however sought to distance the petitioners from alleged scandals at the bank.

Mr Gupta, who swore an affidavit on behalf of all the 78 petitioners, has further accused KDICof failing to formally communicate its decision to reject the application to access the deposits, terming it unfair administrative action.

He further argues that Mr Popat and Mr Somji have interest in only two of the companies each, but discloses that one of the petitioners is a father to Mr Somji and withholding his deposits amounts to a violation of his rights.

The documents further disclose that 10 petitioners are relatives of Mr Jinit Shah, and that he has interest in only six companies that have no outstanding facility with the bank.

The petitioners further argue that none of the companies or individuals are party to the suit in which KDIC is seeking to recover stolen cash from the former shareholders and directors, noting that they are not aware of any freezing orders affecting their accounts.

They claim that the companies are distinct entities from their shareholders and directors, noting that no evidence has been produced to show that they benefited from stolen cash.

The parties will return to court on July 31 for highlighting of submissions.

READ: Corporate debt fades on Chase, Imperial defaults

Tycoon's bid to recover Sh1bn from Imperial Bank hits snag

Flame Tree writes off Sh10.1 million held at Imperial Bank