Dubai Bank bosses questioned over role in NCPB scam

 

Dubai Bank chairman Hassan Zubeidi. Dubai Bank directors were Tuesday put on the spot for issuing $1 million performance bond used by a supplier who has since attached Sh297 million National Cereals and Produce Board (NCPB) property. FILE 

By EDWIN MUTAI

In Summary

• Dubai Bank chairman Hassan Zubedi, managing director Binay Duttah and marketing managing Rajab Mohamed denied claims that the bank was part of a cartel that schemed to defraud NCPB.
• They dismissed assertions that the bank issued invalid performance bonds, which Erad Supplies used to win a contract to supply 40,000 tonnes of maize to NCPB.

Directors of Dubai Bank were on Tuesday put on the spot for issuing a $1 million performance bond used by a supplier who has since attached National Cereals and Produce Board (NCPB) property.

Dubai Bank chairman Hassan Zubedi, managing director Binay Duttah and marketing managing Rajab Mohamed denied claims that the bank was part of a cartel that schemed to defraud the cereals board.

The directors dismissed assertions that the bank issued invalid performance bonds, which Erad Supplies and Contractors Limited used to win a contract to supply 40,000 tonnes of maize to NCPB.

“We have never colluded with Erad or any other person to defraud NCPB. We gave them clear and proper documents. It is not us to dictate terms and conditions of any guarantee, but the contracting party. It was up to NCPB to accept the conditions given by Erad or vice versa,” said Mr Zubedi in response to questions by the Public Investment Committee (PIC) vice chairman Kimani Ichungua.

The Kikuyu MP said Dubai Bank and Erad were part of a conspiracy to defraud the cereals board.

“Would it be correct if I say Dubai Bank and Erad wanted to defraud NCPB through imports? You relied on a draft contract to issue performance bond. The draft contract was not signed and why did you rely on it? You conspired with Erad to defraud the public,” said Mr Ichungua.

He demanded to know from Mr Zubedi the amount the bank has so far received from Erad after attaching cereals board property over the Sh564 million award. “How much as co-conspirators in the scandal have you received from Erad?” he asked.

Mr Zubedi denied having received anything from Erad. “In fact, we have a Sh30 million court order against them. We have not received a single penny,” he said.

(Read: Banks disown firm in Sh564m dispute with cereals board)

Mr Dutah defended the bank, saying it did due diligence, relied on the draft contract and the personal guarantees of the three Erad directors—Jacob Juma, Grace Wakhungu Sarapei and Sirisia MP John Waluke—to issue the performance bond.

“Personal guarantees are far much better than any security. In the event of any default, one can be committed to civil jail and their properties attached. We had no reason to doubt Erad’s ability to supply because the maize business as shown in the contract would have seen them make profits,” Mr Dutah said.

He, however, told the committee that the bank followed provisions of the Central Bank Act and its prudential guidelines in issuing the guarantee.

“We issued performance bond as per the CBK Act, prudential guidelines, the International Chamber of Commerce and International Trade Law,” Mr Zubedi said. He said any party dissatisfied with the local law can go for arbitration in Geneva Switzerland to challenge the decisions.