Court bars ex-Imperial Bank directors from selling assets
Imperial Bank depositors demonstrating outside the bank's headquarters in Westlands, Nairobi, on May 31, 2016. FILE PHOTO | SALATON NJAU |
What you need to know:
- Judge Francis Tuiyot ruled that the assets in question shall remain in the hands of the directors for the time being but they may "interfere with them at their own peril".
- "If your clients [go against] the assurance made in court, they will have themselves to blame," the judge said.
- Two lawyers claimed that they were aware that shares transfers were being effected as the proceedings were in progress.
The High Court has stopped former Imperial Bank directors from selling their assets pending the conclusion of a suit in which the Central Bank (CBK) seeks to recover Sh45 billion lost at the institution through fraud.
Judge Francis Tuiyot ruled that the assets in question shall remain in the hands of the directors for the time being but they may "interfere with them at their own peril".
This is after apprehensions were raised in court that there were hurried transfers of shares being effected after the filing of the CBK suit.
The CBK is seeking a freeze order on all assets and shares owned by the former directors who are accused of fraud.
Judge Tuiyot made the order after the CBK and 132 depositors said said some shares owned by the directors in companies cited in the suit were being transferred.
"If your clients [go against] the assurance made in court, they will have themselves to blame," the judge said.
Two lawyers claimed that they were aware that shares transfers were being effected as the proceedings were in progress.
"As we speak, the apprehension that the defendants may act inappropriately is real," lawyer Philip Murgor said.
Lawyers representing the directors were forced to make an undertaking that there would be "no interference" with the properties till the case is heard and determined.
Mr Murgor sought the order against the transfer of shares, also asking the court to compel the directors "not to diminish or undervalue the properties in question."
The lawyer asked the directors to assure the court that no such transactions would take place during the court case.
42 COMPANIES
"The assets to be frozen are a total of 42 companies in which the directors are shareholders, it has come to our knowledge that some assets are being disposed of," Mr Murgor said.
He said the disposition of these assets may thwart the very attempts aimed at enabling the recovery of the money which depositors lost.
He asked the court to rule that there shall be no transfers, sale or change of ownership of the properties cited in the suit.
On Wednesday, the directors opposed an application seeking to enjoin 132 depositors in the suit but lawyers submitted that “the money to be recovered belonged to the depositors."
"The basic principle of fairness and obedience to the rule of natural justice dictates that they be party to these proceedings," Mr Murgor said.
He asked the court that the directors must make an undertaking that their assets will not be disbursed beyond the reach of the court.
"We seek an order that can protect the assets so that they can remain in their hands, but disable them from disposing the assets, and that their value is not diminished," Mr Murgor said.
Imperial Bank of Kenya, Kenya Deposit Insurance Corporation and Central Bank of Kenya lodged the new case claiming that the directors slept on the job and allowed fraud to take place, sending the bank into liquidity.
The directors have, however, challenged the case stating that such an allegation "cannot form a basis for the freezing of their assets, some of which they did not directly acquire through Imperial Bank."
The case will be heard on October 17, 18 and 19.
