Mystery of man behind Dubai Bank

The chairman of Dubai Bank of Kenya, Mr Hassan Zubeidi, is a man webbed in mystery and controversy in a twist that eventually culminated in the closure of a lender in which he was the principal shareholder.

The controversy regarding his dealings at the bank and mystery surrounding his nationality have in recent months deepened just like the woes that saw the bank put under receivership for flouting regulatory rules and sinking deeper into debt. 

He first shot into the limelight in November 2012 with the sacking of his managing director Ms Nereah Said following the fallout that emerged after the MD accused him of mismanaging affairs at the lender. 

Appearing in court in July last year, he told High Court Judge Isaac Lenaola that he could neither remember his date of birth somewhere in Lamu nor when he acquired a national identity card.

His academic record also came under sharp scrutiny with claims of him having studied in Dubai, Yemen and Kenya, which he could not verify. Interestingly, he is reported to have failed to recite Kenya’s national anthem or recite the president Moi-era loyalty pledge as some of the last- ditch efforts to try to authenticate his nationality.

This prompted a lawyer representing the estranged former managing director, Ms Said, to claim that Mr Zubeidi was Yemeni and not a Kenyan citizen as he alleged, casting doubt on how he acquired the Kenyan citizenship. Mr Zubeidi, in fact, claimed he was born in Lamu in 1961 but he could neither recall the date nor the month of his birth. On further cross-examination he revealed he acquired a Kenyan ID in the 1980s in Mombasa but could neither recall the year nor the ID number. 

CURTAINS CAME DOWN

Equally baffling is his revelation, then, that he left for Dubai in the United Arab Emirates where he attended Dubai Primary School for five years though he could not provide supporting documents. He later claimed to have left Dubai for Yemen for his high school education at Seyun Secondary but could neither prove this nor remember the year he attended the school. In Kenya, he said he attended Universal College where he attained a diploma. He also told the court that his parents had died, promising to produce their death certificates. 

But, last Friday, curtains came down on him and his Dubai Bank of Kenya when the Central Bank of Kenya (CBK) put the lender under receivership for one year for falling behind on its debt obligations and failing to remit the regulatory cash reserve ratio (CRR) requirement of 5.25 per cent. In putting the lender under the receivership of the Kenya Deposit Insurance Corporation (KDIC), the CBK also sought to prevent the lender from going under with depositors’ savings and funds owed to creditors.  

Section 43(2) of the Kenya Deposit Insurance Act, 2012 requires CBK to appoint the KDIC as a receiver of a bank if, among other reasons, it is in an unsafe or unsound condition to transact, a bank is likely to fail to meet its financial obligations, a bank has substantially insufficient capital or if there is a violation of any law or regulation. 

“Dubai Bank has been experiencing serious liquidity and capital deficiencies which have raised the CBK’s concerns that it will most likely not be able to meet its financial obligations as and when they fall due,” the CBK said of the lender it issued a banking licence with in April 2000. 

LIQUIDITY RATIOS

The CBK said that as a prudent regulator, it had considered and determined that Dubai Bank’s violations of banking laws and regulations, including failure to maintain adequate capital and liquidity ratios as well as provisions for non-performing loans and weak corporate governance structures, is detrimental to the interests of its depositors, creditors and the public.

The regulator had been closely monitoring Dubai Bank’s daily cash reserve ratio from July 14, 2015 when the bank began breaching its daily cash reserve ratio requirements. The regulator also said its attempt to get the small lender to redress the situation had failed. Instead, there had been “no compliance by the bank and its cash reserve ratios have continued to deteriorate”.  

“The non-compliance with the cash reserve ratios has to date attracted a total penalty of Sh5,395,721.03. Owing to the consistently deteriorating cash reserve ratio position of Dubai Bank and its failure to honour financial obligations, including KSh48.18 million due to Bank of Africa Kenya Limited, the CBK is of the considered opinion that the bank will most likely fail to meet its financial obligations in the normal course of business,” the regulator said in its decision to put the lender under receivership. 

The fallout between Mr Zubeidi and Ms Said revealed the seeming rot that had been going on at the bank putting at risk customer deposits that then amounted to nearly Sh2 billion by November 2012. When the fallout spilled into the limelight, depositors rushed to withdraw their funds so that by the end of 2014, only Sh4 million had been left in the bank as customer deposits.  

Ms Said, who was fired in November 2012, claimed that weak governance structures abetted by the lender’s chairman and principal shareholder, Mr  Zubeidi, had exposed the bank to extensive fraud and theft of funds.

Since then, the bank has been faced with one claim after the other of failing to pay its debtors, a situation it has blamed on the serious cash flow challenges and depositor flight that have left it at the mercy of the CBK. The bank now joins Charterhouse Bank in receivership. Charterhouse Bank was put under receivership on suspicion of abetting money laundering activities.