The Law Society of Kenya (LSK) has applied to join a suit in
which troubled Chase Bank is seeking to recover more than Sh14 billion
its former directors stole from depositors.
The LSK
says it is interested in the recovery of about Sh2 billion that
individual advocates and law firms are said to have kept in the bank on
behalf of their clients as well as its own deposits of Sh38 million at
the time the troubled lender was placed under receivership in April last
year.
It has included in its application supporting
the suit by the Kenya Deposit Insurance Corporation’s (KDIC) — the
bank’s receiver managers — a list of advocates and firms whose funds are
tied down in the bank and their letters asking for the lobby’s
assistance in recovering the funds.
“The
said list does not set out all sums due by the bank to individual
advocates and law firms but it is clear that the amounts due exceed Sh2
billion. As at the time Chase Bank was placed under receivership LSK
itself has a fixed deposit account (Sh22.828 million) and a current
account (Sh15.5 million),” the LSK says.
The LSK says
that part of the Sh38 million it had at Chase Bank was for its
benevolent fund, indicating that the lender’s troubles could spill over
to the LSK’s philanthropic activities.
The KDIC is
seeking to recover Sh14 billion from nine individuals and 11 companies
accused of looting of depositor funds. Chase Bank collapsed last year on
the day it published its restated financial results that showed it had
under-reported insider loans by Sh8 billion.
It
was placed under receivership following discovery of the under-reported
insider loans and irregular transfers of funds to senior bank
officials.
Former Chase Bank chairman Zafrullah Khan,
ex-managing director Duncan Kabui and other former senior bank officials
have been charged with theft of depositor funds.
Justice
Fred Ochieng in April issued a temporary order barring the defendants
from selling assets at the heart of the court battle.
Chase
Bank says Mr Khan, Mr Kabui, former general manager corporate assets
James Mwaura and former general manager finance Makarios Agumbi used
their positions to illegally acquire and benefit from the bank’s assets
it now seeks to recover. Also included in the suit are Chase Assurance
and Ghengis Capital managing director Ali Cheema, Rafiki Microfinance
chief finance officer Daniel Mavindu and managing director Ken Obimbo,
former directors Anthony Gross and Ruth Muthoni, and a network of 11
companies said to have been used to siphon funds from the collapsed
lender.
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