Two companies and a businessman opened bank accounts at Dubai Bank then relinquished their control to the collapsed lender’s chairman Hassan Zubeidi -- a move that cost the bank’s savers Sh400 million.
Court documents show that Kamp General, Kemu Salt Packers and businessman Bashir Mohammed Twaha opened the accounts at Dubai Bank before allowing Mr Zubeidi to make deposits, withdraw and borrow funds using them.
“Upon going through Dubai Bank records I discovered that Kemu Salt Packers owed Sh122 million, an overdraft facility extended to it by Mr Zubeidi. The said account was exclusively mandated to Mr Zubeidi vide an instrument executed by Kemu Salt Packers directors. Kamp General through its directors issued Mr Zubeidi an unconditional mandate to operate its account at Dubai Bank,” the Kenya Deposit Insurance Corporation (KDIC) says in suit papers.
The KDIC believes that Mr Zubeidi used the accounts to launder funds before transferring them to his personal coffers. It now wants to attach property owned by the said firms and businessman as part of a plan to save Dubai Bank depositors from heavy losses.
The KDIC has sued Mr Zubeidi, Kemu Salt Packers, Kamp General, Africa Energy Limited, Suleiman Enterprises and Maestro Properties seeking to recover more than Sh1.6 billion it believes was illegally acquired through Dubai Bank.
The bank was placed under receivership in August 2015 after it was found in breach of several banking industry regulations that had put at risk the Sh1.4 billion that savers had deposited with it.
“At the time Dubai Bank was put under receivership Kamp General owed approximately Sh151 million. Mr Twaha gave a general power of attorney to Mr Zubeidi over his own bank accounts. Mr Twaha unknowingly owed Dubai Bank Sh119 million,” suit papers say.
The KDIC opted to liquidate Dubai Bank after an audit of the lender’s books found that rescue attempts would be futile.
Mr Zubeidi argues in his response to the suit that the KDIC is yet to provide any concrete evidence that he was engaged in any wrongdoing while at the helm of Dubai Bank.
Kemu Salt Packers director Kirpal Singh admits that his firm gave Mr Zubeidi authority to run its bank account, but denies that his firm owes any money to the collapsed lender.
The suit has also given more insight into KDIC’s investigation into Dubai Bank.
The KDIC has revealed that it took statements from former employees who were sacked for questioning Mr Zubeidi’s transactions with some depositors and that it may recommend criminal proceedings against the former Dubai Bank boss.
Mr Zubeidi, however, insists that the KDIC’s pursuit of him is a witch hunt as no recovery proceedings have been filed against other directors of the collapsed lender. The suit, he says, is aimed at settling personal scores against him.
“None of the other directors or any other officers working in the bank have been subjected to the treatment I have been subjected to by KDIC,” he says.