Standard Chartered Bank on Kenyatta Avenue in Nairobi. FILE PHOTO | NMG
A construction company wants Standard Chartered Bank Kenya (StanChart)
to pay it Sh845 million in damages after it was listed at a credit
reference bureau as a loan defaulter
and lost business opportunities as a result.
and lost business opportunities as a result.
In a suit filed at the High Court, Monaco
Engineering — through its director Stanley Njogu — has accused the
lender of failing to notify the company that it had been listed.
He
wants the court to declare that StanChart breached contracts signed
between them in respect to the operation of the account, overdraft
facilities and loan terms.
The company, which says it
deals in construction projects and civil works, claims the lender
promised to assist the company to meet requirements of its overseas
investors — Messrs FaAia Group of companies based in the US — which had
asked for its financial history.
The
company had taken up a credit facility (overdraft) in 2013 of Sh9.6
million, whose terms were renewable annually at an interest rate of 19
percent per annum.
The overdraft was for the construction of a boundary wall and
engineering works at Jomo Kenyatta University of Agriculture and
Technology. A dispute between the university and other third parties
over the wall forced the firm to stop works after a court injunction.
Mr
Njogu, through lawyer James Kounah, approached the bank asking for the
overdraft to be converted into a term loan facility. The lender allowed
the request and it was converted into a term loan for two years with an
interest of 15.9 percent.
But the company has accused
StanChart of failing to keep proper records and unilaterally changing
the interest rates of the facilities and applying unknown penalties.
The
bank, however, says the firm had on several occasions exceeded the
overdraft facility, occasioning additional interest charges.
Mr
Kounah said the bank also failed to quickly deal with requests to
restructure the facilities when the firm ran into financial
difficulties. The business, he said, suffered losses after it was
rendered not creditworthy after creditors’ cheques were wrongfully
returned unpaid.
The company says it further lost
funding from FaAia Group and as a result, lost two major business
opportunities worth Sh845 million, which it is now claiming as damages.
He
said he had sought for construction of Klin Apartments whose total
contract was Sh2.1 billion and where the company stood to make profits
of Sh420 million representing 20 percent of the contract.
The
company says it also lost an opportunity as a subcontractor together
with Prashanth projects Ltd in civil works for Kenya Pipeline
Corporation, worth Sh2.125 billion.
Monaco Engineering claims it was to make profit of Sh425 million.
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