The long journey towards the recovery of money saved in the collapsed Imperial Bank is not about to end for depositors if the number of cases is anything to go by.
Despite the interest shown by KCB Group #ticker:KCB in acquiring the bank, the courts will have to determine the cases before any meaningful progress can be made.
At a recent depositors’ meeting to brief them on the sale of the bank, Central Bank of Kenya Governor Patrick Njoroge acknowledged the depositors had waited for long, but said the regulator is striving to resolve the lender’s woes.
“Even as we spoke last year, I saw anger, frustration and despair. And frankly, I don’t think the year has helped. I've seen more anger, frustration and despair. There are those who have paid the ultimate price. May God rest them in peace,” said Dr Njoroge.
During the forum, Imperial Bank depositors shared stories of pain and despair and how the collapse left in its wake a trail of devastation as their dreams and livelihoods suddenly came tumbling down.
On June 25 last year, CBK released a statement setting a deadline of 48 weeks to conclude receivership of the collapsed lender.
The statement provided hopes, but sadly a year later no tangible conclusion has been made with the receiver fighting multiple suits.
Last year, the financial markets regulator and the Kenya Deposit Insurance Corporation (KDIC) promised to initiate the process of disposing of the bank, with an invitation to potential buyers to file expressions of interest.
Imperial was placed under receivership on October 13, 2015 after CBK learnt of fraud, which milked the lender of Sh34 billion.
The search for an investor kicked off, but with the self-imposed deadline having lapsed, no conclusion has been registered other than the statement indicating that only one investor is in the race to take over the bank.
KDIC on July 31 obtained a 70-day extension of receivership, promising to once again conclude the process. Information on the progress remains scanty.
On June 24, CBK sent out a statement indicating that Imperial will soon have a new anchor shareholder to lift it out of receivership, noting that KCB had emerged as the lead investor. CBK said the other unnamed bidder withdrew from the process.
“The revised proposal was received from KCB Bank Kenya Ltd, while the other bidder has withdrawn from the process. Having assessed the revised proposal, CBK and KDIC will engage KCB in discussions aimed at maximising the value of depositors,” said CBK in the statement.
The regulator promised to “provide further details to stakeholders at the appropriate time”.
Shortlisted investors were granted access to a comprehensive confidential data room that allowed them to develop a formal proposal for Imperial, after completing appropriate confidentiality agreements with CBK.
While placing the bank under receivership in 2015, CBK noted that the board of directors of Imperial brought to its attention inappropriate banking practices that warranted immediate remedial action in order to safeguard the interests of both depositors and creditors.
The details of the rot were to be laid bare when CBK sued Imperial directors, seeking to freeze assets worth Sh42 billion held in more than 40 companies.
The assets were allegedly stolen through a well-orchestrated scheme, organised by the bank’s late founder Abdulmalek Janmohamed.
CBK claimed that Mr Janmohamed used a network of companies and individuals to execute and cover up the mega fraud that shook Kenya’s financial services sector to the core.
Some former managers of the bank and three directors of a private company accused of receiving a large proportion of stolen funds from the lender were in 2016 charged with theft in a Nairobi court.
Imperial’s head of credit Naeem Shah, chief finance officer James Kaburu and the directors of W E Tilley Ltd — a Nairobi-based fishmonger who admitted receiving a third of the cash — denied the five counts of theft preferred against them and were released on police bonds.
The accused were charged with the theft of Sh29 billion from Imperial Bank or more than 80 per cent of the Sh34 billion that Mr Janmohamed is said to have stolen in 10 years.
They denied the charges, but of more importance is that no major news of recovery of the cash has been disclosed three years later.
The receivership precipitated multiple suits involving depositors, directors and receiver managers with majority of these pending in court.
Imperial Bank filed two suits in court seeking to recover every single cent of the Sh34 billion Mr Janmohammed allegedly stole from depositors.
The first case seeks to recover Sh34 billion from 20 firms and individuals believed to have colluded with Mr Janmohammed in the scheme, while the second seeks to liquidate assets the Imperial Bank founder left to his family.
But Mr Janmohammed’s family termed the suit seeking to seize its assets as an attempt to give depositors false hope of recovering the Sh34 billion.
But those facing greatest agony are depositors, especially those with huge amounts, with some filing the suit against CBK seeking orders directing them to release their money.
More than 78 Imperial Bank depositors are also in court seeking orders compelling the receiver managers to release their deposits.
Customers had argued that they were left out when other rest were allowed to access part or all of their deposits and want the receiver compelled to release the cash.
KDIC says in papers filed in court that more than 78 companies and individuals, who are seeking court orders to access their deposits at the bank are associates of the directors.
The corporation asked the court to reject the application noting that they are being investigated over suspicious transactions that may have been part of the wider fraud scheme that brought down the bank.
KDIC says ongoing investigations into the massive fraud 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.
Separately, Mombasa-based businessman Ashok Doshi is in a legal battle to recover his Sh1 billion stuck in the bank.
Mr Doshi argues in his suit that the placement of Imperial under receivership and its closure was premature and was done hurriedly as a cover up of the bank’s unethical activities in collusion with CBK.