NAIROBI, Kenya, Dec 27 – The High Court has ordered Central Bank of Kenya (CBK) to stop the liquidation of Imperial Bank (IBL) and directed the bank and Kenya Deposit Insurance Corporation (KDCI) to engage Imaran Limited and five other firms who are shareholders of the bank together with the stakeholders to jointly find a workable framework to revive the bank.
Judge Joseph Odunga directed the regulator to ensure that relevant legal provisions are complied with in a recovery plan that is agreeable to all parties for the reopening of the bank.
“The respondents are directed to find a workable legal framework for an outcome that is in the interest of the bank and all its shareholders,” ruled the judge.
CBK was also ordered to provide the applicants with information concerning the arrangements entered into with Diamond Trust Bank, Kenya Commercial Bank (KCB) , NIC Bank and another and the manner in which the depositors are to be dealt with.
CBK is further required to furnish the applicants with information relating to the process of receivership as long as such information is not prejudicial to the ongoing investigations being undertaken.
The shareholders went to court in February accusing CBK and KDIC of entering into agreements with the said banks and commenced a transfer and exclusion process of IBL assets without complying with applicable legal requirements.
Shareholders also faulted CBK and KDIC for failing to consider and engage them on their recovery plan which is aimed at facilitating the reopening of the bank.
So far , CBK has made payouts of Sh20bilion out of the Sh 82 billion that the bank held in deposits, doing away with nearly 90 percent of the bank’s depositor base.
Some of the bank’s large depositors include KTDA, the bank’s shareholders and other companies such as Ashok Doshi.
CBK had opposed the application accusing the firms of having conveniently omitted to disclose in their affidavits the constitution of the board of directors of Imperial Bank Limited.
CBK cleared the bank for liquidation earlier this month following a comprehensive audit of the Bank’s assets which were found to be weak.
Imperial Bank was placed under receivership in October 2015 due to a potential fraud of Sh46 billion placing depositor funds at risk.
Shareholders were accused for irregularly paying themselves Sh2.7 billion as dividends when the bank was not making any profit and a further Sh2 billion) claimed from the directors for recklessly lending to firms.
