CBK asked to return Akiba’s property

The Central Bank has been ordered to release and return items of a micro-finance institution it confiscated on suspicion that it was operating as a bank.

Justice Alfred Mabeya on Friday ruled that CBK had no authority to raid the premises of Kenya Akiba Micro Financing Limited, since it was legally registered to carry out financial operations and hire purchase.

“There is no reason why CBK should continue clinging to the company’s property when it was duly registered and incorporated as a company by relevant government ministries and issued with a certificate of incorporation,” ruled Judge Mabeya.

CBK was ordered to return computers, tax records, company seals, original title deeds, certificates of lease, vehicle log books, customer files, banking and financial records.

In November 2005, CBK raided the company’s premises in Nairobi, Kitengela, Ongata Rongai and Voi on suspicion that it was offering banking services without being licensed to operate under the Banking Act.

The company moved to court in 2006 claiming that CBK’s action was illegal because it was incorporated under the Companies and Co-operatives Act and denied operating as a bank.

It sought a return of its properties and an order compelling CBK to make an undertaking to compensate it Sh2 billion as value of the property.

Justice Mabeya found in his ruling that CBK cannot claim it has not been able to analyse the records and data of the company to find out the nature of its business, yet it has been in possession of the firm’s records for six years.

“CBK has failed to produce anything to show that the business activities of the company amounted to banking or business of deposit taking,” said the judge.

He ruled that CBK’s contention that the company was carrying out business in contravention of the Banking Act was a red herring being raised to try and cushion itself from liability for the blatant and illegal raid of the company premises.

He added that even after analysing the company records, CBK had not proved that the micro-financier was doing anything other than hire purchase business.

Justice Mabeya ruled that detention of the company property is not only unconstitutional but unacceptable in a society that prides itself to be under the rule of law.

“In any event, it was the government that registered the company with such name. Why should then the agents of the same government seek to punish the company for its own mistake,” said the judge.