The Central Bank of Kenya has sued the directors of the troubled Imperial Bank, seeking to freeze assets worth Sh42 billion held in more than 40 companies.
It also seeks an order to compel the bank directors and shareholders to pay back Sh2.7 billion, allegedly given to them fraudulently as dividends.
The CBK, Imperial Bank and Kenya Deposit Insurance Corporation decided to go after the directors of the bank on grounds they engaged in fraud and breached the fiduciary duty to depositors.
Through lawyers James Gachoka and Philip Murgor, the CBK, Imperial Bank and receiver Kenya Deposit Insurance Corporation have sued Alnashir Popat, Anwar Hajee, Jinit Shah, Hanif Mohammed Amiralisomji, Mukesh Kumar Patel, Vishnu Dhutia, the estate of Abdulmalek Janmohammed, Eric Gitonga, Omurembe Iyadi, Christopher Angelo Diaz and eight others.
The court was told forensic investigations conducted by FTI consulting revealed multiple breaches of fiduciary duty by directors, leading to massive and well-orchestrated fraud which resulted in loss of Sh42 billion assets and depositors’ funds. Under the Banking Act, the directors and shareholders jointly owed its depositors fiduciary duty first and foremost, acting as trustees of assets placed under their control. But due to numerous breaches of this fiduciary duty the directors are accused of jointly allowing the theft.
As such, the directors should be held liable for the loss occasioned to the depositors, the court was told.
The court was told the 10 directors were under regulatory and statutory obligation to apply and comply with guidelines by the CBK. CBK carried out annual routine inspections through its bank supervision department over the years. During the inspection, it identified a number of violations in management and lending among others. The case will be mentioned on Monday.