The Central Bank of Kenya has denied trying to extort Sh20 billion from shareholders of the troubled Imperial Bank as an inducement to allow its reopening.
It has also opposed an application seeking orders to allow Imperial Bank’s reopening.
In the application, Imperial Bank also wants the regulator stopped from dissolving it or investigating alleged fraudulent transfer of funds from the bank, all of which the CBK has opposed.
“It is the shareholders who tried to defraud CBK by attempting to pay some money to allow them reopen the bank. There is no way we would demand Sh20 billion when our investigations had established there was a Sh38 billion fraud in the bank,” said CBK in its court papers Tuesday.
The CBK said shareholders would not suffer prejudice if the orders are not given since it has only placed it under receivership to safeguard depositors’ funds and public interest.
The shareholders’ lawyer, Mr Paul Muite, however, pleaded with Judge George Odunga to allow the bank to reopen.
“We are aware of parties who want to take over Imperial Bank and have prevailed upon the CBK to continue holding it in receivership. There is conspiracy to kill the bank, that is why some of its managers are being called to join other banks,” said Mr Muite.
The six shareholders brought a new twist into the troubled bank’s recovery plans, claiming the CBK had demanded Sh20 billion as a condition to allow its reopening.
The shareholders, Imaram Ltd, Reynolds and Company Ltd, East Africa Motor Industries Ltd, Momentum Holdings Ltd, Abdulmal Investments Ltd and Kenblest Ltd want an order stopping the CBK from transferring, disposing or dissolving of the bank.
Mr Anwar Hajee, a director in one of the shareholding companies, swore an affidavit to support the application and detailed how the CBK demanded they pay the money within 48 hours failure to which the process of dissolving the Imperial Bank would start.
Mr Hajee said trouble started in September last year, when acting MD Naeem Shah and his deputy, Mr James Kaburu, discovered former boss Abdulmalek Janmohamed had initiated and authorised irregular disbursement of money from the bank.
“The board acted by appointing FTI consulting of London, who in their report, confirmed the former MD was running a scheme of fraudulent and illegal disbursements with accomplices, within and outside the bank,” said Mr Hajee.
After the CBK appointed Kenya Commercial Bank and Diamond Trust Bank as receivers, Mr Hajee said they sought to restructure and recover the stolen funds.
“We presented our proposal to enable the reopening of the bank but the CBK refused and presented a single sheet demanding we inject between Sh10 billion and Sh20 billion to cover the unsecured and fraudulent debt by W E Tilley,” swore Mr Hajee.
Justice Odunga will rule on March 31.