The High Court has ruled that Sh21.8 million be reimbursed to Atticon Limited, a company associated with Agriculture CS Mithika Linturi in a fraudulent case against Aldai MP Mary Keitany.
The case that has been ongoing since March 23, 2018 was dismissed by High Court Judge D.S Majanja which now forces Gulf African Bank who had sued Atticon Limited to reimburse the money.
The bank had filed a suit against the company claiming that it had applied for a Local Order Purchase loan facility through a credit facility application form dated March, 2018.
Douglas Kailianya and three other defendants among them EPZA were listed as guarantors in the case.
The credit facility was to be used to finance the part performance of a construction contract dated December 21, 2016 between the Company and the 5th Defendant (EPZA).
The judge ruled that the Bank acted negligently in opening and operating an account number in the name of the Company.
The ruling therefore indicts Aldai MP Maryanne Keitany who is deemed to have illegally obtained a Local Purchase Order (LPO) financing loan from Gulf African Bank through Atticon Limited without express authority from the directors of the company.
The court found out that after the bank analysed the application form, it offered a Tawarruq Local Purchase Order Finance Facility of Sh20 million on the terms and conditions contained in the Letter of Offer dated April 11, 2018.
The bank had claimed that upon signing the Letter of Offer and complying with the conditions precedent, it disbursed Sh20 million to the company’s account on April 13, 2018 and that the sum was repayable within six months from the date of disbursement.
The bank had further claimed that on December 27, 2018, EPZA paid a sum of Sh28,813,554 being part of the proceeds of the construction contract to the company’s account held at Family Bank Limited and that act of channeling the Sh28,813,554 was and remains a breach of an irrevocable undertaking dated April 3, 2018 issued by EPZA to the bank.
However, the judge ruled that he was not satisfied that the bank conducted proper due diligence on the directorship of the company.
He accused the bank of not conducting a proper search at the Registrar of Companies.
"When there is a dispute as to directorship and shareholding of a company, the best evidence to be relied on is the updated records from the Registrar of Companies. The registry is meant to keep records of all companies and for the purposes of the public to rely on the same as reflecting the true record of any particular company,” the judge ruled.
In support of its claim for negligence, the company cited the Bank for violating the Central Bank of Kenya Prudential Guidelines, 2013 which impose on banks a duty to know their customers.
The court also found out that since the bank was negligent in making unauthorised advances to the company, it cannot recover the amount advanced to it.
"It can only recover the money from the 2nd, 3rd and 4th defendants who purported to execute guarantees in favour of the bank and who ultimately benefited from the money paid to the company. Since they neither entered appearance or filed defence, the case against them is uncontroverted,” the ruling reads.
The court agreed to the company’s request to recover Sh21,846,607.25 from the bank being proceeds from different entities legitimately belonging to the company but appropriated by the 2nd to 4th defendants who were running the account.
These amounts include Sh15,300,000 paid by Jubilee Insurance Company Limited on May 17, 2018, Sh3,616,992 and Sh2,125,145.20 paid by the Ministry of Interior Coordination of the National Government on May 18, 2018 and July 2, 2018 respectively and Sh804,570 paid by the Ministry of Defence on December 31, 2018.