Imperial Bank shareholders want to join case against accomplices

Corporate News

Imperial Bank customers at a Mombasa branch on October 13, 2015 after learning that it had been placement under receivership. PHOTO | FILE 

By BRIAN WASUNA, bwasuna@ke.nationmedia.com

In Summary

• The shareholders argue that they had planned to pursue assets owned by the firms and individuals to recover the money and that it would be easier if they were enjoined into the case.
• Imperial Bank through the Kenya Deposit Insurance Corporation, the receiver manager, moved to court last month seeking to attach assets owned by the firms and individuals to recover money believed to have been stolen by the bank’s founder through an elaborate scheme.
• The shareholders are Imaran, Reynolds & Company, East Africa Motors, Momentum Holdings , Adbumal Investments, Rex Motors and Kenblest.

Shareholders of collapsed Imperial Bank are seeking to be enjoined in a court case filed by the lender’s receiver managers in pursuit of 20 companies and individuals believed to have embezzled Sh34 billion belonging to depositors.

Seven companies, with a combined 86.5 per cent shareholding in the bank, Thursday asked High Court judge Fred Ochieng to enjoin them in the suit as co-complainants.

The shareholders argue that they had planned to pursue assets owned by the firms and individuals to recover the money and that it would be easier if they were enjoined into the case.

Imperial Bank through the Kenya Deposit Insurance Corporation, the receiver manager, moved to court last month seeking to attach assets owned by the firms and individuals to recover money believed to have been stolen by the bank’s founder through an elaborate scheme.

The suit has revealed that the late Abdulmalek Janmohammed, the former CEO and founder of the bank, used a network of 20 companies and individuals to execute and cover up mega fraud that shook the Kenyan financial services sector to the core.

READ: How Imperial Bank chief stole savers' billions

“The applicants have causes of action against the defendants which are distinct and separate from Imperial Bank’s cause of action, albeit grounded on the same subject matter. The joinder of the applicants in this suit will avoid multiplicity of suits,” the shareholders say.

Implicated in scam

The shareholders are Imaran, Reynolds & Company, East Africa Motors, Momentum Holdings , Adbumal Investments, Rex Motors and Kenblest.

The eighth Imperial Bank shareholder is Janco Investments, which is owned by Mr Janmohammed. Ghalib Hajee, a director at Abdumal Investments which owns 14 per cent of Imperial Bank, says shareholders will be entitled to whatever amount is recovered through the suit.

He says shareholders will have to inject capital to revive the bank before the suit is concluded, hence funds recovered through the suit will be owed to them as a refund.

Court documents show that W. E. Tilley, one of the companies implicated in the scam, used to receive bulk payments in a US dollar account on instruction from Mr Janmohammed. W.E. Tilley would then transfer the funds to another account in the bank where the dollars would be converted into Kenya shillings.

The money would then be transferred to the accounts of other companies linked to Mr Janmohammed and W.E. Tilley and its directors in instalments of between Sh10 million and Sh100 million every week.

Justice Ochieng will hear the application on December 22 when parties in the suit will either oppose or agree to the shareholders’ request.