Connect with us

Hi, what are you looking for?

top

Kenya

Dubai Bank charged for defaulting on Sh48mn debt

The Central Bank of Kenya opposed an injunction placed on the liquidation process by the Court of Appeal in March saying the courts were acting outside their purview/FILE

The Central Bank of Kenya opposed an injunction placed on the liquidation process by the Court of Appeal in March saying the courts were acting outside their purview/FILE

NAIROBI, Kenya, Jul 14 – Dubai Bank Kenya Limited, its directors and managers have been charged with conspiracy to defraud the Bank of Africa of Sh48 million.

Abdul Hafeth Zubeidi, Ali Basher Sheikh, Prof Wilson Nandwa Hassan, Adam Ali Mwanaidi, Faith Wairimu Munyori, Robert Gatobu Kimonye and Mary Immaculate Nyawira however denied the charge before Magistrate Martha Mutuku and were released on a Sh300,000 cash bail each pending trial on September 21.

The bank defaulting on the Sh48 million debt owed to Bank of Africa was one of the reasons the Central Bank of Kenya gave for placing it under receivership on August 14 of last year and it has been charged with conspiracy to defraud exactly a month to the expiry of that receivership period which was for a year.

“Owing to the consistently deteriorating cash reserve ratio position of Dubai Bank and its failure to honour financial obligations, including Sh48.18 million due to Bank of Africa Kenya Limited, the CBK is of the considered opinion that the bank will most likely fail to meet its financial obligations in the normal course of business,” the Central Bank stated in its explanation for placing the bank under receivership last year.

The bank’s fortunes appear not to have improved 11 months down the line but a lender has fought the bank’s liquidation saying a capital injection and turnaround were possible.

The Central Bank of Kenya opposed an injunction placed on the liquidation process by the Court of Appeal in March saying the courts were acting outside their purview.

The Court of Appeal and the High Court before it were of the opinion that all possible avenues of resuscitation should be exhausted before a final nail was driven into the bank’s coffin.

The court did not however interfere with the payment of Sh100,000 to depositors by the Kenya Deposit Insurance Corporation.

It is not the first time the bank’s directors have been charged with a criminal offence. Last year they were charged with failing to comply with the Proceeds of Crime and Anti-Money Laundering Act. They later contested the bail terms in the High Court for being punitive.

Weak corporate governance was one of the reasons given for placing the bank under receivership.

“CBK as a prudential regulator has considered and determined that Dubai Bank’s violations of banking laws and regulations, including failure to maintain adequate capital and liquidity ratios as well as provisions for non-performing loans and weak corporate governance structures is detrimental to the interests of its depositors, creditors and the public.”

Advertisement. Scroll to continue reading.

About The Author

Comments
Advertisement

More on Capital News