Wananchi walk past a closed Dubai Bank branch in Nairobi. PHOTO | FILE
By BRIAN WASUNA
In Summary
- Justice Eric Ogola has faulted the regulator for failing to act on Dubai Bank’s problems despite knowing some of the regulations the troubled lender was flouting.
The High Court has turned its guns on the Central Bank of Kenya (CBK) over negligence it says has led to the fall of Dubai Bank.
Justice Eric Ogola has faulted the regulator for failing to
act on Dubai Bank’s problems despite knowing some of the regulations the
troubled lender was flouting.
The judge fired at the CBK while delivering a
ruling that stopped the regulator and the Kenya Deposit Insurance
Corporation from winding up Dubai Bank, arguing that the move was
premature.
The judge held that evidence presented in court
showed that the CBK’s dissolution of Dubai Bank just 10 days after
placing it under receivership appeared to be a ploy by the regulator to
cover its tracks and avoid blame for failing to act on breached
regulations.
The CBK ordered Dubai Bank’s liquidation in August
after an audit report showed that it had flouted regulations that outlaw
parallel banking.
The report also showed that the bank was operating
with a core capital of Sh959 million, below the minimum Sh1 billion set
by the regulator.
“The CBK has slept on the job and its supervisory
powers have been abused. Dubai Bank’s problems are not recent. The CBK
is trying to shield its lack of inspection and is attempting to escape
scrutiny.
“The liquidation of Dubai Bank is suspended by
order for 60 days. The CBK is to consider the proposal by Dubai Bank,”
the judge ruled.
Supplies firm Richardson & David moved to court
last month seeking to stop the lender’s liquidation. The firm is Dubai
Bank’s second largest depositor and had saved Sh142 million when it was
shut in August.
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