Former Dubai Bank chairman entangled in Sh1bn row

Hassan Zubeidi, founder of the collapsed Dubai Bank. PHOTO | FILE
Hassan Zubeidi, founder of the collapsed Dubai Bank. PHOTO | FILE 

Hassan Zubeidi, founder of the collapsed Dubai Bank, is locked in a Sh1.1 billion dispute between a Khartoum-based contractor and the government of South Sudan related to a botched electrification project in the troubled nation.

Mr Zubeidi has obtained a court order freezing Sh1.1 billion payable to Khartoum’s Active Partners Group (APG).

He claims that the firm owes him the amount from a loan he extended it in 2010 to undertake the power project.

The former Dubai Bank chairman says APG’s managing director Mohammed Fagir borrowed $6 million (Sh600 million) from him and $5 million (Sh500 million) from another businessman—Jalal Hussein Diab.

Mr Zubeidi holds that he was also assigned the Sh500 million APG borrowed from Mr Diab hence is entitled to Sh1.1 billion in total.

Dubai Bank was placed under receivership by the Central Bank of Kenya (CBK) in August last year for flouting several banking regulations.

Mr Zubeidi is fighting the lender’s closure alongside Dubai Bank’s second-largest depositor—Richardson & David.

The Court of Appeal is set to deliver a ruling on whether to compel the CBK to consider an offer by Virgin Islands firm Sovereign
Financial Holdings to revive the collapsed Dubai Bank by injecting Sh2.2 billion capital.

APG was last year awarded Sh4.4 billion compensation for the botched power project after South Sudan pulled the plug citing a lack of funds owing to civil war and major corruption scandals that depleted its coffers.

But APG held that the government of South Sudan should have taken out a bank guarantee to ensure the project would proceed.

The firm has since attached Sh3.6 billion from various bank accounts and oil that South Sudan intended to export.

Mr Zubeidi has now obtained a court order barring APG and Mr Fagir from maintaining less than Sh1.1 billion in their bank accounts.

Some of the money is saved in two bank accounts APG holds in Abu Dhabi Islamic Bank in the United Arab Emirates while the rest is being held by the Khartoum firm’s advocates—Mungu & Company Advocates.

APG has, however, asked Justice Francis Tuiyott to dismiss Mr Zubeidi’s suit, arguing that the terms of the 2010 loan provided that any dispute arising between the parties would be resolved in Khartoum’s courts.

“I am well aware that Mr Fagir is no longer within the jurisdiction of this court and carries on business and relocated to UAE and Malaysia. Contrary to our previous cordial relationship with Mr Fagir, he suddenly became elusive and avoided talking to me once the arbitral award was made in favour of APG.”

“Pursuant to the agreement between myself and APG, I am entitled to the sum of $11 million (Sh1.1 billion) which payment forms part of the monies recovered by APG from the government of South Sudan that is now being paid to Mungu & Company Advocates,” Mr Zubeidi says in suit papers.

APG, however, insists that Kenya’s courts have no authority to intervene in the dispute, as Mr Fagir and Mr Zubeidi signed an agreement granting Khartoum courts exclusive jurisdiction over any disagreement arising from the loan.

“The said agreement was made in the then Sudan, the subject matter of the agreement was based in the then Sudan and all the parties to the agreement are based in Khartoum and Dubai. This suit and all the applications made by Mr Zubeidi in view of the agreement on jurisdiction of courts are therefore bad in law and should be dismissed with costs,” says Khalid Ahmed, a director of APG.

The suit comes two weeks after Citi Bank and Stanbic Bank agreed to release Sh177 million to APG from bank accounts the government of South Sudan holds with the two lenders.

Under an out-of-court deal, Citi Bank released $1.5 million (Sh150 million) to APG, with Stanbic paying the firm Sh26 million.

Payment of the amounts to APG saw attachment warrants obtained by APG in respect of South Sudan’s accounts with the two lenders lifted.

Mr Fagir fled Khartoum after some APG creditors instituted criminal cases against him, claiming that he was awaiting the compensation from South Sudan to resolve his financial troubles.

The Dubai Bank founder adds that during the arbitration proceedings he also lent Mr Fagir $70,000 (Sh7,000,000) to enable him pay legal fees.