Mauritian bank rows with Somaia, Devani families over Sh740 million

Somaia and Devani families are no strangers to controversy — and the latest brush is a bitter Sh740 million row between Port Louis-based Mauritius Commercial Bank and an oil firm at the centre of collapsed Imperial Bank’s woes.

Jade Petroleum, one of the joint businesses between the Somaia and Devani families, is fighting off attempts by the bank to take enforcement action against it and its owners over an intricate $7.4 million (Sh740 million) loan deal.

Two weeks ago, the controversial oil firm survived the enforcement action, when Milimani High Court judge Maureen Odero set aside a default judgment that the Mauritian bank had obtained in August, 2016 — after Jade Petroleum and its owners failed to appear in court or file any objection to the Sh740 million claim.

RAJ DEVANI

When the case starts in November, it will lift the lid on a controversial oil company — and Mr Raj Devani, a man who family members have accused of transferring family wealth to himself.

The petroleum dealer is owned by Raj Devani, — a nephew of the Yagnesh Devani wanted over the Sh7.6 billion Triton Scandal — and Ketan Somaia’s cousin Pankaj and in-law Amar Pandya.

Raj has been fighting another battle with family members who in 2015 asked the court to have him committed to Mathari Referral Hospital for mental treatment.

But Mr Raj opposed the move to hospitalise him, arguing that it was a ploy by relatives to take control of the vast estate he inherited.

But the mother, Bambi Harikrishna, says her son clandestinely transferred family assets to his companies and used them to secure millions of shillings from banks and then defaulted.

IMPERIAL BANK LOANS

Jade Petroleum caused ripples in the banking sector in 2016 after auditors probing Imperial Bank revealed that the firm received Sh698 million from the bank in unsecured loans which remain unpaid to date.

Evidence retrieved so far indicates that Jade Petroleum was one of the conduits used to siphon Sh44.9 billion from Imperial Bank, through a scheme orchestrated by former managing director Abdulmalek Janmohammed with the aid of senior managers at the collapsed lender.

Two other firms linked to Raj Devani — Adra International and Metro Petroleum — also received Sh4.625 billion in the same scheme.

The money disguised as non-performing loans is yet to be repaid. Jade Petroleum also borrowed $14 million (Sh1.4 billion) from South Africa’s FirstRand Bank. Court papers do not indicate when exactly the loan was taken, but the oil firm holds that it deposited the funds in Imperial Bank, which went under before even a cent could be spent.

Among the security documents used to borrow the money were letters of credit and guarantees from Mauritius Commercial Bank.

The only catch was that if it was forced to pay up the Somaia-Devani debt, Mauritius Commercial Bank would get rights to go after Jade Petroleum and its owners for a refund.

As soon as Jade Petroleum defaulted on its obligation to FirstRand, the South African lender called in letters of credit and guarantees issued by Mauritius Commercial Bank.

The Mauritian bank paid up, but was not ready to take the hit on its chin, and rushed to the Milimani Court seeking permission to attach assets owned by Jade, if the firm was unable to pay up.

Ironically, members of the Somaia and Devani families enjoined in the suit argue that they were unable to honour repayment because the firm’s funds are trapped in Imperial Bank.

They also denied ever receiving court summons — but the Court thinks they engaged in a hide-and-seek game.

Leonard Muendo, a process server working for law firm Hamilton Harrison and Mathews, said he delivered court summons to Cross Road Plaza in Westlands for Jade Petroleum and that the documents were received by the oil dealer’s human resource manager Mumbi Ngure.

Ms Ngure, however, refused to sign the documents, which would have indicated acknowledgment of the suit on behalf of Jade Petroleum, court papers show.

Mr Somaia has now claimed that at the time Ms Ngure was served with the court papers, on June 29, 2016, she was no longer working for Jade Petroleum.

The judge, however, wondered why no letter of resignation was been annexed.

Mr Muendo then proceeded to Mr Pandya’s house in Lavington, where he placed the court documents at the front door. The process server also went to Nyari Estate, where Mr Somaia lives, but he refused to sign the originals as a sign of acknowledgment and acceptance, the court heard.

Mr Somaia told Justice Odero that he only lived in the Nyari house for one year, between January 2007 and February 2008.

He filed a copy of his one-year lease in court, and insisted that the house in question had since been sold. But Justice Odero was not satisfied.

“There is a loud silence from Mr Somaia regarding where he was actually residing on June 29, 2016. If, as he claims, he had moved out of the house in question where did he move to?” the judge noted.

Mr Pandya, too, argued that his mother sold the house in 2008. But the judge threw out the argument, noting that he, also, did not give a residence alibi for the date of service. 

Despite holding that service was properly done, Justice Odero ruled that the defence Jade, Mr Somaia, Mr Devani and Mr Pandya intend to file does raise crucial questions that can only be answered after a full trial and agreed to give them a chance to be heard.

The parties are set to appear before the Milimani High Court deputy registrar on November 18 for the case management conference.