The High Court has dismissed several applications by former officials of Chase Bank seeking inspection of properties that were frozen over claims that they were acquired using funds siphoned from the collapsed lender.
Former chairman, Mr Zafrullah Khan, and former general manager corporate assets James Mwaura as well as companies linked to them sought an order for inspection of the properties and review of accounts of rental income derived from the properties.
Justice Alfred Mabeya, however, dismissed the application saying the issue of the management of the properties should be addressed before the insolvency court, as the matter before him revolved around ownership of the properties.
“This court still maintains the above position and finds that it has no jurisdiction to determine the said issue, let alone grant such orders,” said the judge.
Justice Mabeya equally dismissed a plea seeking to compel the branch manager of Housing Finance Company Limited (HFC) to release funds held under one of the properties known as Riverside Mews Ltd.
The court heard that the account holds more than Sh100 million. The judge said granting an order for the release of the money would be tantamount to determining the case prematurely as the Kenya Deposit Insurance Corporation (KDIC) maintained that the assets were part of the ownership dispute.
“In the premises...granting an order for release of the said funds at this stage would be akin to making a determination on the legitimate ownership/directorship of the 13th defendant (Riverside Mews Ltd) without first hearing the evidence of the parties on the issue,” said the judge.
KDIC, which was appointed the liquidator in 2021 had opposed the applications through Mr David Irungu, a director. He told the court that it appointed Town & Country Management Limited to oversee the contested properties, with several properties generating rental income, others under renovation and some facing challenges such as flooding or construction delays.
He said KDIC regularly inspects the properties and had even filed a statement of accounts as required by law as well as hiring security services to protect them from damage or dissipation.
While seeking the orders, Mr Mwaura said since KDIC took over the properties, they have been neglected.
Mr Mwaura said the liquidator had failed to fulfill its statutory obligations, resulting in arrears and penalties on property rates and land rents, which could lead to adverse legal consequences, including potential forfeiture.
KDIC said it has been using rental income from the Riverside Office Block to service the loan from Equity Bank, after Equity Bank converted the loan repayments from dollar to shillings.
The court was also informed that KDIC was engaging with KRA to restructure a Sh71.3 million pre-assessment notice, thus the property was not at risk of forfeiture.
The liquidator alleges Mr Mwaura and Mr Makarios Agumbi authorised payments amounting to Sh7.5 billion from the bank, which was used to fraudulently purchase the properties registered in several companies as special purpose vehicles.
The properties listed were mostly acquired by Rinascimento Global Limited, Nine Fifty Limited, The Lighthouse Property Company, Mathatani Limited and Friends Property Holdings Limited, which were co-owned by the former Chase Bank officials.
