Shareholders of Imperial Bank Ltd (in receivership) are up in arms over a decision by the Kenya Deposit Insurance Corporation and the Central Bank of Kenya to commence transfer of its assets contrary to a High Court ruling.
In a statement the shareholders, who had deposits in the bank, took issue with a press release issued by KDIC and CBK saying it distorted the nature of the Judicial Review ruling, suggesting that their application was unsuccessful and that the two are are now free to continue their own course of action in respect of Imperial Bank Ltd ( In Receivership) without restraint.
“As is plain from the Orders, this is not true,” the statement said, adding that the assertions are a misrepresentation of the ruling issued by Justice George Odunga on November 4. The shareholders had gone to court to block KDIC and CBK from transferring their assets, insisting they were not culpable for the loss of Sh42 billion through fraudulent transactions undertaken by former CEO, the late Abdulmalek Janmohamed.
“In further misrepresentation of the Orders, the Press Releases state that KDIC and CBK may continue to pursue their agreement with NIC Bank Limited to assume certain of IBLR’s assets and liabilities. This was not permitted by the Judicial Review ruling. In fact, the Judicial Review ruling maintained and confirmed the Orders made on 29 June 2016 which stated that “….the CBK and KDIC shall not dispose of other assets of IBLIR pending the determination of the proceedings or other orders of this Court.”,” the shareholders statement added.
They welcomed the Judicial Review ruling, having sought it at their own expense to ensure that CBK and KDIC properly respect the legal rights of all stakeholders in any plan for the Bank’s future. The Shareholders’ priority has been, and will continue to be, achieving the best possible outcome for all stakeholders.
But they were quick to express concern over the press release by CBK and KDIC on November 8, which stated that the disposal process was to commence on the strength of the ruling.
“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.
The statement was issued by Imaran Limited, Kenblest Limited, Abdumal Investments Limited, Reynolds Limited, EA Motor Industries (Sales & Service) Limited and Momentum Holdings Limited.
The six noted that given that CBK, as the appointed regulatory authority for the banking industry, and KDIC are public bodies, the distortion of the ruling is detrimental not just to the interests of depositors, bondholders and the shareholders, but also to the interests of the Kenyan public as a whole.
“The Shareholders have therefore made this statement because their priority is to ensure that the interests of all stakeholders are properly protected. The Shareholders regard it as a matter of the utmost importance that the true nature of the stakeholders’ legal rights and the steps the Court has taken to protect them in the Judicial Review ruling are made clear,” the said.
In a bid to find a constructive resolution in accordance with the orders given by the court, the shareholders say they will now proceed 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 Shareholders sincerely hope that their efforts to find a constructive resolution to this matter will be met in the same spirit by CBK and KDIC, in the interests of all parties and in accordance with CBK’s and KDIC’s legal duties and the Orders that the High Court has now made,” the statement said.
According to the shareholders, these are the orders issued by Justice Odunga:
a. An order prohibiting the Respondents, jointly and/ or severally, whether by themselves, their servants, agents, officers, successors and/or assigns from undertaking or engaging in any exclusion and trans- fer process of the Bank or any of the assets in any manner other than as prescribed under the applicable Laws including the Kenya Deposit Insurance Act and the Fair Administrative Actions Act, 2015.
b. An order prohibiting the Respondents, jointly and/ or severally, whether by themselves, their servants, agents, officers, successors and/or assigns from
taking any step which would result cumulatively or otherwise in the liquidation of the Bank unless and until the relevant legal provisions are complied with.
c. An order of mandamus directed at the Respondents and each of them compelling them to furnish the Ex parte Applicants or their servants, agents, representatives and/or their appointees, including financial and legal advisers, with information relating to the process of receivership as long as such information is not prejudicial to the investigations being undertaken.
d. An order of mandamus directed at the Respondents and each of them compelling them to provide to the Ex parte Applicants, together with other stake- holders including the bondholders and depositors with the information concerning the arrangements entered into with all or any of the Interested Parties, and the manner in which the depositors are to be dealt with.
e. An order of mandamus directed at the Respondents and each of them compelling them to formally engage the Ex parte Applicants herein, together with other stakeholders including the bondholders and depositors of the Bank, with a view to jointly, and to the extent permissible by law, finding a workable legal framework for an outcome that is in the interests of the Bank and all its stakeholders.
f. Save for foregoing the rest of the prayers are disallowed.