Imperial Bank shareholders have now turned the heat on the Central Bank, accusing the regulator of bungling the restitution of the troubled lender and standing in the way of its possible reopening.
In a demand letter sent on December 28 to the Central Bank and the receiver managers Kenya Deposit Insurance Corporation, the shareholders accuse CBK of humiliating them publicly by making “unreasonable” demands then going ahead to accuse them of standing in the way of the bank’s reopening.
“With KDIC, CBK and our clients’ support, the alternative of liquidation of the bank and likely write-offs for depositors and other creditors could be avoided through a financially sound and legally robust turnaround.
However, so far there has been no formal response from either KDIC or CBK on the said proposal or a proposal from KDIC on the way forward as far as the restructuring or otherwise of the bank,” the letter threatening court action written to Dr Patrick Njoroge and the acting KDCI boss Aggrey Bett reads.
The note by lawyer Andrew Wadabwa accuses CBK of shielding its rogue employees who they say were complicit in diverting funds from the collapsed bank in collusion with its former boss Abdulmalek Janmohamed who died last year.
The shareholders cite frustration in their plan to restructure the bank which they had envisioned would involve recovering stolen funds.
“Our clients were not allowed to conduct any form of due diligence on the bank to ascertain its solvency and liquidity position prior to making the injection of capital.
The failure to inject the unreasonably demanded funds was then used repeatedly to blame our clients for the delay and potential failure to reopen the bank,” they say.
In December 2015, Dr Njoroge said that the shareholders had failed to honour a proposed capital re-injection plan.
“They have not provided adequate assurances to implement a proposal that would enable the prompt reopening of the bank,” said the governor.
The shareholders term the requirement by CBK that they inject Sh20 billion and not the Sh10 billion which they offered voluntarily to capitalize the bank as “unreasonable and unconstitutional”.
“Insisting that our clients approach the persons behind W E Tilley for recovery of monies on the basis that they are members of the same community as our clients and despite KDIC having initiated legal proceedings against W E Tilley and pressurizing our clients to securitise obligations for monies fraudulently misappropriated by W E Tilley, Jade Petroleum and Adra International and others despite our clients informing CBK that the aforesaid parties are no way related to any of our clients,” the shareholders say.
The above are firms cited as being complicit in diverting money from the collapsed lender.
They shareholders also accuse the CBK of turning a blind eye on its own staff by failing to subject them to scrutiny despite “incriminating evidence.”
“CBK has been complicit in the cover up of the activities of its employees vis a vis legal disbursements from the bank.
Our clients are of the view that senior officials and employees of CBK were compromised by the Group Managing Director and his criminal accomplices. CBK officials knew and were actively involved in the fraudulent scheme,” they say.