The High Court has dismissed a Sh1.1 billion claim against Ecobank Kenya by four individuals locked in a fight for control of payments solutions provider Kiwipay, exonerating the lender of negligence.
Three Kenyans – Stephen Maina Njenga, Felix Rantuu Lekishe and Solomon Joseph Maina – and Laos national Monthida Rashi sued Ecobank in 2022 claiming that the lender had allowed illegal withdrawal of over Sh1 billion from Kiwipay’s local subsidiary.
The bank transactions were conducted by Gregory Schmidt, a French national and Kiwipay PTE’s CEO.
The money in the three Ecobank accounts is owned by various merchants around the world, who have hired Kiwipay to offer online payment solutions. Justice Alfred Mabeya has now ruled that Ecobank allowed the transactions on the strength of a valid board resolution, which allowed Mr Shmidt to use Internet banking on all three accounts.
Ecobank’s lawyer Chris Gichangi told Justice Mabeya that the lender acted in line with various documents and authorisations that Kiwipay and its directors signed, which allowed Mr Schmidt to do unlimited transfers on all three accounts.
Mr Njenga and Ms Rashi claimed that Mr Schmidt forged a board resolution to allow him to use internet banking to transfer funds from Kiwipay Kenya’s bank accounts, and asked that Ecobank be ordered to refund the amounts on account of alleged negligence.
But Justice Mabeya found that the two had signed the board resolution.
“The court saw both PW1 and PW5 (Mr Njenga and Ms Rashi) testify. They were both evasive and unreliable when it came to telling the truth. The court has examined the documents produced by DW1 (Mr Schmidt) in respect to internet banking. Internet banking was authorised vide the form appearing at page 60 (of the exhibits),” Justice Mabeya ruled.
The judge further found that Mr Njenga, Mr Lekishe and Mr Maina sold their shares to Ms Rashi for Sh100,000 and resigned as directors, hence had no legal grounds to claim anything from Kiwipay or Ecobank.
Justice Mabeya added that the three Kenyans and Ms Rashi may have defrauded Kiwipay by distributing funds to parties that had offered no service to the payment solutions provider.
“A few examples would suffice. The 1st to 3rd plaintiffs (Mr Njenga, Mr Lekishe and Mr Maina) made resolutions to bind the company to pay huge sums of monies to third parties for no services at all… At page 267 (of the exhibits) is a list of people and entities the said plaintiffs authorised they be paid in excess of $100 million. A sum of $2.6 million was paid to the 1st to 3rd plaintiff’s advocates as legal fees, but within hours, the same was distributed to parties that had nothing to do with legal fees. That is a matter before another court,” the judge said.
“On her part, the 5th plaintiff attempted to transfer from the company a sum of $4.5 million to a company associated with her for no reason at all. When asked why she did so, she told the court that she felt that the 2nd and 3rd defendants (Kiwipay and Mr Schmidt) had abandoned her in Kenya,” Justice Mabeya added.
Another firm, Avistia SRO Ltd, had also sued Kiwipay and Ecobank, seeking payment of $13.47 million (Sh2 billion). Avistia claimed to have developed software for Kiwipay and wanted Sh2 billion held in Ecobank transferred to it.
