Questions on who received EACC rent

The Ethics and Anti-Corruption Commission was paying rent to a company under receivership, a senior investigator has said.

The investigator at the Ethics and Anti-Corruption Authority who probed the Integrity House deal, Mr Kipsang Sambai, said: “EACC has actually been paying rent to Revack Ltd since the time of its precursor, the Kenya Anti-Corruption Authority.”

However, in an email communication with the Nation, the director of the Deposit Protection Fund (DPF), Mr Jonathan Bett, denied the claims by the investigator, insisting that the fund has been collecting rent on the property from the date it became a receiver until the debt was settled in 2013.

“The money collected as rent by the fund was credited to the debt and formed part of the settlement of the debt between Revack and DPF,” he added.

BIWOTT LINK

But Mr Sambai, a staffer at the anti-corruption agency and, therefore, an insider, has maintained in his report compiled in February that records from the authority revealed that the rent was being remitted to Revack Ltd’s account at the Commercial Bank of Africa, Webera Street branch, even as he was writing his report this year.

Revack Ltd, owned by former Kanu powerman Mr Nicholas Biwott and the fugitive former chief executive of Trust Bank, Mr Ajay Shah, was until recently under the control of the fund, which had a charge on Integrity House.

But in what amounts to a cover-up, the fund has flatly refused to reveal the discharge documents, citing customer confidentiality.

The manner in which Integrity House has been sold off without clarity on what has been  collected on behalf of Trust Bank depositors has once again  demonstrated how the interests of depositor’s of Trust Bank have routinely been ignored  over the years by both the Central Bank of Kenya and the DPF.

Trust Bank collapsed in 1998 mainly because of insider loans and unsecured advances to companies owned by directors — namely Ajay Shah, Praful Shah and Nitin Chandaria.

Massive loans advanced to well-connected individuals in the regime of former president Daniel arap Moi was also a major factor.

According to an inspection report by Central Bank in 2001, loans to three insiders amounted to a massive Sh3.1 billion.

Yet, 17 years since the Central Bank intervened, innocent savers have had no access to their full savings.

They are to wait until all assets of the bank have been liquidated to receive the crumbs of what will have remained after all secured creditors will have been repaid.

At one point, the Central Bank influenced the depositors of the bank to enter what was known as a scheme of arrangement.

INSIDER LOANS

This was more or less agreements under which depositors agreed to convert their deposits into equity in exchange for an undertaking of Mr Ajay, Mr Praful and Mr Nitin to clear the insider loans that they owed the bank within four years.

The scheme was a binding agreement that had the sanction of the High Court.

It paved the way for the appointment of some of the major depositors of the bank as directors.

Two years after the signing of the scheme of arrangements, Mr Ahay Praful and Mr Nitin had not signed their commitments.

The directors representing the depositors who had converted their money to shares went to the High Court against Mr Ajay Shah and company.

In August 2001, the spirits of the depositors of Trust Bank were raised when the High Court ordered Mr Ajay Shah to deposit Sh212 million with the High Court or face a six-month jail term.

In a tactical manoeuvre, Mr Ajay claimed that he was bankrupt. As it turned out, the victory of the shareholders was short-lived.

In the middle of the battle in the High Court — and a time when Mr Shah had been cornered — the Central Bank suddenly moved in and closed the bank. The fact that the bank had been running under a High Court sanction scheme or arrangement whose four-year mandate had not lapsed was totally ignored.

The new directors of Trust Bank no longer had ground to challenge Mr Shah.

The Central Bank did not stop there. The lawyers who had been representing the interest of  the depositors were changed and new ones instructed to withdraw the Sh212 million case against Mr Shah.

Integrity House is not the only property the depositors have lost. Mr Shah, Mr Praful and Mr Chandaria also used titles of Nairobi’s City Park to borrow money from the bank.

As of 2013, the outstanding balance on this account was Sh772 million.

It is unlikely that the depositors of Trust Bank will ever get back this money.