The High Court has ordered Ecobank to pay the family of former Cabinet minister Mbiyu Koinange Sh284 million, which was illegally withdrawn from his estate’s account by some of the lawyers involved in the succession case.
Justice Erick Ogolla found the bank had treated the account casually and negligently by allowing the withdrawals, contrary to a court order issued in 2011 stopping the disbursement of the amount.
“There was an express order from the court that the monies held at the bank should not be released without prior authorization from the court. The onus of ensuring that the bank account is managed accordingly lies with the bank to whom a higher threshold of care is expected,” said Justice Ogolla.
Stating that the bank owed the beneficiaries of the Koinange estate a duty of care, the judge said the financial institution was liable and accountable for the loss of the money.
The judge said this was a case of “willful negligence” and that the bank’s defence that they were not aware of the court order “reeks of negligence of duty to its customer”. He noted that the bank was obligated to make inquiries before making out any payments.
“This court has noted with disturbing concern, the negligent manner in which Ecobank treated the estate's account," said the judge.
The money was part of the Sh1.1 billion proceeds from the sale of Koinange’s land known as "Close Burn Estate Runda" in 2010. Court papers show the signatories to the account were advocates and the mandate of the account was for all the signatories to sign jointly.
Koinange’s widow Eddah Wanjiru, who is one of the administrators of the estate, while urging the court to order for refund of the money said the amount was held in the estate’s account pursuant to a court order dated July 26, 2011.
Through Senior Counsel Paul Muite, the widow said the money was to be shared out equally amongst the beneficiaries of the estate.
However, Mr Muite said Ecobank allowed the entire sum to be withdrawn without a court order and used to cater for advocates’ payments.
Lawyer Muite stated that the account in question was a Trust account opened by the estate administrators through a court order and that Ecobank needed a court’s approval to release the money.
He submitted that the bank's attempt to show that the payments were made to lawyers was a nullity since the bank had no authority to release the monies except by an order of court. He said that the responsibility lay with the bank to pursue those whom it deemed to have paid the money.
In the ruling, Justice Ogolla said since the lost amount of money was colossal, the same could not be moved, transferred, or disposed of without attracting the attention of the responsible managers of the bank.
The estate of a deceased person is a special estate protected by the law and administered by the court through appointed administrators. Where an account is opened in a bank in the name of the estate, the bank must take constructive knowledge of the special category of the customer,” said the judge.
While finding the bank liable, the judge said that apart from the fact that the financial institution knew it was dealing with a deceased person's estate, there was an express order stopping the release of the money.
“Therefore, the casual manner in which the Ecobank treated the said account and disbursed the money could only have been done by way of willful negligence, if not willful fraud. It is the finding of this court, and I so hold, that Ecobank owed a duty of care to the estate, and that it stood in a fiduciary relationship to the estate and must therefore be held fully accountable to the estate and its beneficiaries,” said the judge.
Koinange died on September 3, 1981, without a Will and the matter was filed in court the same year he died. The estate has 12 beneficiaries.
It was not until four decades later that Justice Aggrey Muchelule (now a Court of Appeal judge) made a significant step in sharing the estate- estimated to be worth Sh14 billion.
Koinange served in Mzee Jomo Kenyatta's cabinet and briefly in President Moi's administration.
The estate had initially been distributed in 2015 but Justice William Musyoka left out two widows- Ms Wanjiru and Margaret Njeri Mbiyu- who promptly filed an appeal and successfully petitioned to be included in the distribution.
The family of Koinange is made up of four houses, the house of Loise Njeri Mbiyu (dead), who had five beneficiaries, the house of Ruth Damaris Wambui Mbiyu with five beneficiaries, the house of Margaret Njeri Mbiyu with one beneficiary and the house of Eddah Wanjiru (one beneficiary).
The judge directed some of the properties to be sold and the proceeds banked in a joint account operated by the four administrators of the estate.
