Imperial Bank depositors have written to the Central Bank of Kenya with a list of demands they want met in a bid to recover billions lost after the bank’s 2015 closure by the Central Bank of Kenya (CBK).
The depositors want CBK held legally responsible for the collapse of mid-tier lender, Imperial Bank Limited.
MMC Africa Law, which is instituting a class action on behalf of Imperial Bank depositors, has given the commercial banks’ regulator a 14-day notice to admit liability and furnish it with crucial documents that show CBK’s lapse in supervising the lender’s operations and depositors’ funds held at the time the bank went under after CBK intervention.
The letter addressed to CBK Governor, Dr. Patrick Njoroge warned of the intentions of the depositors to move to Constitutional court after fourteen days should the regulator fail to adhere to its demands.
“Unless we receive your admission of liability together with the aforesaid documents and information within the next fourteen days from the date of receipt of this letter, our clients intend to commence legal proceedings against CBK with a view of recovering all deposits held and lost in the said bank, consequential damages and interest and to compel you to provide the information as the case may be. The attendant costs shall be borne by CBK,” the letter reads in part.
In the demand letter dated September 19, 2017, the MMC Africa Law has asked the CBK to share the FTI Consulting report on the bank, annual financial reports of the bank between 2011 and 2015, CBK inspection reports in respect of the bank, CBK onsite inspection reports, CBK audit reports for year over the same period and the copy of Imperial Bank of Kenya license for the year 2015.
Also in the list of demands are; Fit and Proper forms filled for the directors and CEO of the bank as of October 2015 and documents used for vetting of officials who were managing the bank, any letters by CBK advising and making recommendation or issued directions in respect of conduct of business and management of the bank.
The demand letter also wants the CBK to provide letters by the regulator disqualifying any individual from holding office, restricting, or suspending payment of dividends, bonuses, increments in salary and other benefits to directors and officers or requiring reconstitution of the bank’s board.
“Our lawyers are as well seeking access to any letters recommending corrective measures, action plan and capital restoration plans for solving the deficiencies in the bank and any letters imposing penalties or fines against the bank or its officers for failure to comply with the Banking Act and the prudential guidelines,” said MMC Africa Law in its demand.
The firm has revealed that neither the lender nor depositors were aware of an impending plan to put the lender under receivership.
“Before the closure, the depositors of the bank, including our clients, were unaware of the reasons for the actions taken by the CBK and the KDIC. Following the closure, the depositors were henceforth unable to access money deposited in the bank or conduct normal banking business,” said MMC Africa Law.
So far, information available to the lawyers shows the lender’s collapse was fueled by failure by CBK to investigate information given by whistle blowers concerning status of the bank, failure of the bank to adhere to liquidity, solvency and capital requirements.
Other reasons given for the collapse of the bank are a lack of good corporate governance as required under the prudential guidelines, inaccurate financial statements, irregular insider lending, reckless lending, unsecured loans and collusion between CBK officers and the banks in misstating the financial statements of the bank.