KCB, pipeline firm in battle for control of Triton’s assets

KCB Group and the Kenya Pipeline Company (KPC) are locked in a legal battle for the control of assets owned by fugitive businessman Yagnesh Devani’s Triton Petroleum.

The KPC wants the bank compelled to disclose the proceeds of Triton’s assets that it auctioned, arguing that this could alter the Sh2.1 billion compensation that KCB is demanding from the State-owned oil transporter.

“It is imperative that the said information be provided before this matter can proceed to full hearing to ensure that the plaintiff is not unjustly enriched by recovering twice over the same debt,” said KPC legal officer Gloria Khafafa.

KCB has objected to the KPC’s application to the High Court seeking to have the bank disclose proceeds from the sale of the collapsed Triton’s assets, saying this should be asked of the receiver managers.

“The orders ought to have been directed at the receivers of Triton Petroleum Company Limited and not the plaintiff as the said information is wholly within the possession, control and knowledge of receivers and not respondent,” said KCB in its statement of objection.

The bank said the asset recovery was ongoing, terming the KPC application as ‘speculative in nature.’

The bank also reckons that PTA Bank and the Kenya Revenue Authority are party to the ongoing receivership and argues that the application cannot proceed in their absence.

The KPC, however, said the disclosure would help in reducing the burden on the State corporation should the court find it culpable.

KCB is seeking the compensation on grounds that the pipeline operator breached terms of the Collateral Financing Agreement (CFA) that demanded the lender’s consent before oil products are released to Triton.

Triton has distanced itself from an agreement in 2009 in which its assets were pledged as security for the loan that was applied for by Mr Devani, a former director of the oil company.

The firm was placed under receivership after Mr Devani fled the country leaving behind a Sh7.6 billion scam after Triton withdrew its stock of fuel from Kenya Pipeline Company and sold it to the market without informing financiers such as KCB and PTA Bank.

He was arrested in 2011 in London and he has been fighting to stop his extradition to face charges related to the scam in Kenya.

Triton is seeking to block KCB and PTA banks from auctioning its assets over a Sh2.1 billion debt on the grounds that the loan was borrowed at a personal level by Mr Devani.

In the Triton case, KCB and PTA banks are allegedly seeking to sell 15 petrol stations and six undeveloped plots owned by the oil firm.

READ: Triton now disowns Devani in Sh2.1bn KCB loans dispute

The company claims that the deeds securing its assets were signed by Mr Devani, Sunil Somaia and Mahendra Pathak without seeking approval from its directors, making the agreement null and void.

The oil firm claims that the two banks sent auctioneers to its premises on November 20 to survey its assets with the aim of selling them.

The bank says the loan agreement with Triton required the KPC to issue acknowledgement letters to the financiers confirming that they were holding stocks that they could only release to the marketer upon receipt of an authorisation from the financier.

The KPC is, however, accused of having failed in its fiduciary responsibilities by not implementing the Collateral Financing Agreement leading to the loss of products.

Glencore Energy UK Limited in 2011 separately sued the KPC seeking Sh3 billion accusing state corporation of unlawfully releasing 31,752 metric tonnes of petroleum products to oil marketers without their consent under the Collateral Financing Agreement (CFA).

The oil firm claims that the two banks sent auctioneers to its premises on November 20 to survey its assets with an aim of disposing them.

The firm was placed under receivership in 2008 after Mr Devani fled the country leaving behind a Sh7.6 billion scam after Triton withdrew its stock of fuel from Kenya Pipeline Company and sold it to the market without informing financiers such as KCB and PTA Bank.

A forensic audit by PricewaterhouseCoopers (PwC) ordered by the government said that senior KPC employees admitted to irregular release of an estimated 96,000 tonnes of fuel products in its custody without consent of lenders.

The PwC report also said operational lapses allowed Triton to draw products that did not belong to it, causing distortions that clogged the petroleum supply chain.