The High Court has rejected an application by the Law Society of Kenya (LSK) to be enjoined in a suit where the Central Bank receiver is seeking to recover Sh14 billion from nine individuals and 11 companies accused of looting Chase Bank.
Justice Fredrick Ochieng rejected the request noting that LSK’s interests will be protected by the receiver, the Kenya Deposit Insurance Corporation’s (KDIC), which has a legal mandate and capacity to recover the money for the benefit of all depositors.
The LSK has sought to be allowed to join the case arguing that its members have nearly Sh800 million locked in the financially troubled Chase Bank.
“Finally, the suit is not the vehicle through which any particular depositors can recover the funds it had deposited in the bank,” ruled Justice Ochieng.
Chase Bank collapsed in 2016 on the day it published its restated financial results that showed it had under-reported insider loans by Sh8 billion.
Former Chase Bank chairman Zafrullah Khan, former managing director Duncan Kabui and other former senior officials have been charged with theft of depositors’ funds.
In the ongoing case before the courts, the Central Bank of Kenya has been pursuing Mr Khan and eight other former senior managers and directors at Chase Bank and its related companies to recover Sh14.9 billion the regulator says was lost through irregular insider loans and property acquisitions.
But the bank’s founder has insisted that the CBK has no evidence of any wrongdoing on his part.
LSK had revealed in its application that Nairobi-based Walker Kontos tops the list of 42 law firms that had huge deposits in the collapsed lender, with Sh223 million to its name. The amount, Walker Kontos says, is in a client account it holds at Chase Bank.
The LSK itself had Sh39.3 million saved at the bank. Chase Bank subsidiaries, Ghengis Capital and Boulevard Properties Limited have opposed the LSK’s bid to join the suit on grounds that civil procedure rules do not provide for interested parties to do so.
Mauritian lender SBM Holdings has made a binding offer to take over Chase Bank which has already indicated it has accepted the bid.
The receiver two weeks ago announced that 3,100 affected depositors will access 75 percent of the Sh76 billion deposits locked in the troubled lender in staggered phases over a period of three years.