It has been 15 months since Imperial Bank was placed in receivership. And we, the depositors, have woken up every day hoping that the Kenya Deposit Insurance Corporation will announce a solution on how we can access our savings and move on with our lives.
Some depositors have passed away from shock, frustrations and sickness aggravated by the pathetic situation. Others have developed health conditions. Homes have been repossessed, children kicked out of school, businesses closed and jobs lost.
Moreover we see reports that CBK/KDIC have spent up to Sh2 billion of our deposits to pay the ‘highly acclaimed’ forensic experts, FTI Consulting. Never mind it has not put together together a coherent narrative of the exact situation of a bank that was, until its self-disclosure to the regulator, solvent.
Our biggest concern has been revelations from the legal wars between the major stakeholders.
From the documents filed in court, it now strongly appears that Imperial Bank was a piggy bank for Central Bank employees who benefitted by allowing the bank’s top management to carry on years and years of suspicious transactions from suspicious entities, locally and abroad.
The regulator says there is evidence to show that the non-executive directors and the shareholders neglected their fiduciary duties and paid themselves dividends on an insolvent bank.
Legal experts opine that the two parties – the NEDs and shareholders on one side and CBK and KDIC on the other - can very well continue their protracted legal battles without using the depositors as leverage.
In more structured economies, they explain, the regulator would have sold the bank in the way in which Bank of Uganda dealt with IBL (U). Once the depositors and bondholders are out of harm’s way, the regulator would use all its regulatory might and machinery to go after the culprits of the fraud, including its in-house staff.
But did CBK/KDIC ever intend to protect us? Why did they turn down recovery plans?
Information on how KDIC has managed the bank in the 15 months is necessary, especially amidst the controversial 40 per cent payout through NIC Bank. It is controversial because the ruling had to be given twice. It is also not clear how KDIC will pay us without selling off the bank’s assets, something the judge prohibited.
June 2015 financial statements show that IBL (K) had deposits of just over Sh52 billion. With a loan book of Sh40 billion, one would assume that the bank had approximately Sh12 billion at hand. All the the payments so far – first payout of Sh1 million to account holders, second payout of Sh1.5 million, third payout, FTI Consulting pay of between Sh1.5 billion – Sh2 billion, have been made without the bank’s assets being liquidated, except for IBL (Uganda).
Going by the ruling on the Judicial Review case, liquidating the bank is technically and legally impossible, unless KDIC and CBK sit down with the shareholders and agree that it is the best of all the solutions presented.
Inasmuch as the takeover IBL (IR) assets is as lucrative, as it appears to be blessed by the regulator, it is impossible to see how NIC’s legal advisers can allow them to go ahead with a deal that is likely to expose them to legal suits that can be avoided.
To circumvent the imminent legal roadblock, KDIC seems to be waiting for April 13, when the receivership extension lapses and the bank automatically goes into liquidation and they can do with the bank whatever they want.
Looking at the history of bank liquidations, we have seen a trend where the depositors wait in vain for their savings as the receiver managers enrich themselves by making deals with the debtors.
We wait to see how CBK will get us, the large depositors, our 100 per cent payout without courting more legal roadblocks. This is an issue that could have been resolved within weeks of the collapse.
Offering us 40 per cent does not make CBK and KDIC heroes. It just means our suffering will go on for longer. All we want is our money.
The writer is a development consultant and a depositor at IBL