Court claimed that Imperial Bank knew about the fraud in the bank

The Central Bank of Kenya and Kenya Deposit Insurance Corporation are accusing shareholders of the collapsed Imperial Bank, now in receivership of using court to evade audit.

CBK and KDIC says orders obtained by the shareholders stopping the transfer of IBL’s asset and liabilities to NIC bank are intended to preempt and influence their decisions at the conclusion of investigations.

On Friday, CBK, KDIC and depositors of the collapsed bank put a spirited fight urging the court to lift the orders and dismiss the case, saying it was only meant to preempt the investigations which are currently revealing massive fraud which they claimed the directors were aware of.

KDIC said the case is an attempt to preempt and possibly influence the decisions of the CBK and KDIC at the conclusion of the forensic audit and to hold them ransom by securing orders whose effect would be to direct them on how to exercise their statutory mandate .

KDIC said the exclusion and transfer process does not mean liquidation which it said can only take place as prescribed under KDIC Act.

Justice George Odunga will rule on Wednesday whether to lift the order stopping the transfer of assets and liabilities to NIC Bank. He had stopped the plans pending the application by the shareholders. The judge, however, said the order does not stop payments to depositors.

On its part, CBK urged the court to dismiss the application, saying it is only after a proper audit, due diligence and management of the IBL assets and liabilities by a solvent and well managed institution, which will ensure the depositors, continue to receive their money.

“Ongoing forensic audit reveals information that documents and emails that indicate that all the allegations contained in whistleblowers’ emails were well known to directors representing the shareholders,” reads an application by KDIC.

It said the bank’s directors were aware of the grand heist at the bank but did nothing to address the situation.

IBL directors had rushed to court arguing that allowing NIC Bank to take over a portion of the closed lender’s loan book and deposits was aimed at putting the bank in liquidation, a move which had earlier been stopped by the court.

The shareholders through lawyers Paul Muite, Kioko Kilukumi and Andrew Wandabwa told the court that transferring assets and liabilities to NIC Bank amounted to winding up the lender and would nullify an ongoing court case where they are seeking to stop any actions that may lead to liquidation of the bank.

“Due diligence was concluded long time and when we hear that NIC is coming to undertake a new process it is questionable,” Wandabwa said.