Reprieve for CfC Stanbic in Sh1.2bn award to ex-banker

Corporate News

Dyer and Blair chairman Jimnah Mbaru. He has had to take the helm after the exit of key staff, which has seen the firm’s turnover drop drastically. PHOTO | DIANA NGILA 

By BRIAN WASUNA, bwasuna@ke.nationmedia.com

In Summary

• Dyer & Blair claimed in its defence that Mr Kiarie’s accounts were frozen between 2003 and 2006 when banking fraud investigators were trying to build a case against him in the alleged theft of Sh129 million from three companies.
• CfC adds in its appeal that it had no contract with Mr Kiarie hence it would be unfair to compel it to jointly pay the among. The Court of Appeal judges held CfC’s liability in the matter alongside the validity of claims that Mr Kiarie’s accounts were frozen.

CfC Stanbic Bank has obtained a court order barring former KCB director John Kung’u Kiarie from demanding Sh1.2 billion he was awarded in a shares row against the lender and Dyer & Blair Investment Bank.

The Court of Appeal issued the order after CfC Stanbic claimed that the amount is colossal and that the lender would be unable to recover it in the event its appeal against the award is successful.

Mr Kiarie sued Dyer & Blair in 2009 for allegedly colluding with CfC Stanbic to short-change him in a Sh91.5 million investment he made expecting returns of Sh328 million.

Mr Kiarie deposited the Sh91.5 million with Dyer & Blair in 2003, and the lender invested the whole amount in CfC Stanbic.

Dyer & Blair claimed in its defence that Mr Kiarie’s accounts were frozen between 2003 and 2006 when banking fraud investigators were trying to build a case against him in the alleged theft of Sh129 million from three companies.

READ: Jimna Mbaru allowed to appeal Sh465m award against his firm

CfC and Dyer & Blair now say in the appeal that there is evidence from the Chief Magistrate’s Court to prove that the former KCB director’s accounts had been frozen for four years and that Mr Kiarie’s investment could not be used to trade at the Nairobi bourse.

Mr Kiarie had claimed that he is a “man of means” and would be capable of repaying the amount in the event CfC’s appeal succeeds, but judges Mohammed Warsame, G.B.M. Kariuki and Sankale ole Kantai maintained that it is best to preserve the Sh1.2 billion until the appeal is determined.

“Mr George Oraro told us at the hearing that the decretal sum stood at Sh1.2 billion, a rather substantial sum which could cause instability to CfC which is a corporation listed on the Nairobi Securities Exchange and capable of paying the decretal sum if the appeal fails.”

“We are satisfied, on the material placed before us, that CfC has satisfied both limbs of the principles which we apply in a consideration of an application such as this one. That is why we hereby grant an order of stay pending hearing and determination of Civil Appeal No. 62 of 2016,” the Court of Appeal held.

CfC adds in its appeal that it had no contract with Mr Kiarie hence it would be unfair to compel it to jointly pay the among. The Court of Appeal judges held CfC’s liability in the matter alongside the validity of claims that Mr Kiarie’s accounts were frozen.

Freeze on accounts

The High Court had ruled that Dyer & Blair had continued to invest the funds invested by Mr Kiarie despite the alleged freeze on his accounts.

“More importantly is what caused the dispute between the parties, which was the investigations commenced by third parties and the time the order was issued, lifted and validity of the same. We think these are weighty issues which can only be determined through an appeal,” the judges ruled.

Dyer & Blair also holds that High Court judge Eric Ogola was wrong to rely on evidence provided by the investment bank’s former general manager and current National Bank chairman, Mohammed Hassan, who was not listed as a witness when the suit was filed in 2009