The Central Bank of Kenya (CBK) and the Kenya Deposits Insurance Corporation (KDIC) have lodged an appeal against orders of High Court Judge George Odunga (pictured above) that stopped them from proceeding with the disposal of assets owned by shareholders of Imperial Bank Ltd (In Receivership).
Despite earlier issuing a press statement indicating that the judicial review ruling had allowed them to proceed with the transfer of the assets, which the shareholders contested, the two have filed an appeal at the Court of Appeal.
Copies of the notice of appeal seen by Money & Markets indicate they were dissatisfied with the November 4 orders issued by Justice Odunga. The notices were filed by Amolo and Gacoka Advocates for CBK and Murgor and Murgor Advocates for KDIC.
While the notices were filed on November 18 and 17 respectively, they have only come to light a day after CBK Governor Patrick Njoroge indicated they were prepared for a long-drawn court battle with the shareholders. He told a press conference that they were in possession of evidence adding up to 85,000 pages.
While CBK and KDIC had on November 8 issued a statement indicating that the court had had lifted orders restraining them from any process that would lead to the exclusion and transfer of assets and liabilities of IBLR, the shareholders countered this, stating that the two were misinterpreting the judicial review ruling to suit their interests.
“The distortion of the Court’s ruling in the Press Releases is a matter of grave concern. It goes against both the Court’s Order that CBK and KDIC act transparently and constructively in relation to the receivership, and the duties of care which the Court expressly found CBK and KDIC to owe,” they said.
KDIC had on June 21, this year, with the endorsement of CBK, appointed NIC Bank Limited (NIC) as the Asset and Liabilities Consultant for IBLR.
The KDIC and NIC agreement, mandated NIC to disburse on behalf of KDIC a maximum of an additional Sh1.5 million each to the remaining IBLR depositors, subject to account and identity verifications.
In addition, the agreement provided that NIC would undertake an assessment of the quality of IBLR’s assets and liabilities, support the recovery of IBLR’s loans, and following negotiations, assume certain assets and liabilities as well as the majority of IBLR staff.
This was to lead to a process granted structured access to about 40 percent of the remaining amount of verified deposits above Sh2.5 million, which would have brought the cumulative payout ratio for all verified deposits to about 59 percent.
In seeking to initially proceed with the process of disposing the assets, CBK and KIDC had accused the shareholders of failing to provide adequate assurances to implement a proposal that will enable the lifting of the receivership, reopening of IBLR, and resumption of normal activities for its customers.
“The final proposal by the shareholders on June 15, 2016, was rejected, in which the shareholders withdrew their offer to inject Ksh.10 billion and replaced it with a proposal to raise Ksh.5 billion by way of a rights issue,” the two had stated.
But the shareholders said they were prepared to engage with CBK and KDIC to obtain further information about the conduct of the receivership of IBLR, the arrangements entered into with Kenya Commercial Bank and Diamond Trust Bank as well as latterly with NIC Bank.
“The enquiry will extend to obtaining information about any other parties who expressed interest in IBLR and for disclosure of much greater detail about the financial status of the Bank at the time of its closure, and since. The Shareholders will also seek information from CBK and KDIC about how the bondholders and depositors are to be dealt with. The Court has ordered CBK and KDIC to provide this information,” they added.
They also said they intend to continue to engage with all affected stakeholders and CBK and KDIC on finding a workable legal framework for an outcome that is in the interests of everyone, as ordered by the High Court.
The anticipated fresh court battle comes at a time senior counsel Ahmednasir Abdullahi has contested the legality of CBK’s decisions on IBLR and demanded that the apex bank and the governor accept liability and provide firm timelines on how they intend to pay the shareholders.
Ahmednasir also wants the Ethics and Anti-Corruption Commission to probe Dr Njuguna while expressing doubt over decisions made by him in the last 18 months in the absence of a full board of directors.