Kenya Insights

Tag: Chase bank

  • City Lawyer Sued Over Sh1M Debt

    City Lawyer Sued Over Sh1M Debt

    SBM Bank has sued Nairobi based lawyer seeking close to Sh1 million.

    The lender wants the court to enter the judgement of Sh900,000 against lawyer James Gitau Singh with interest at commercial rates until payment in full.

    The Bank argued that in a gazette notice number 6833 of 6th July 2018, the bank took business from receivership of Chase bank Kenya and certain assets and liabilities right and obligations including rights and obligations request to lawyer Singh accounts were validly transferred to the bank.

    By the agreement in writing into Chase Bank on 31st November in 2005, the lender agreed to provide banking services to the lawyer both I shilling and Euro accounts which were all material times held and operated by lawyer Singh or his authorized agents.

    According to the lender, it was a term of the said Agreement Chase Bank (Kenya) Limited would honour all cheques drawn by the lawyer and carry out any such instructions he may give in connection with the subject account.

    This was notwithstanding that such action would cause the subject account to be overdrawn or cause an overdraft to be increased.

    “In compliance with the terms of the agreement the Chase Bank (Kenya) Limited honoured all Cheques drawn by the lawyer and presented for payment and on various occasions made payments when the subject accounts were underfunded leaving the account in an overdrawn position, ” says SBM Bank.

    The Bank add that upon demand being made to Singh with regard to the overdrawn amounts, about May, 2011 he opted to sell his 757, 656 shares in Kenya Commercial Bank to offset part of the outstanding arrears.

    The afore-stated sale realized Sh. 19,397,492.01 which amount was credited into his Kenya Shillings account to offset part of the outstanding arrears.

    Subsequently, on 26th May, 2011, the proceeds of the sale of Signh’s KCB shares were converted into Euros and a sum of 158,605.00 Euros credited into the Signh’s Euro account to offset part of the outstanding arrears thereby leaving the sum of Euros 304, 020.56 outstanding and Sh. 2, 823.98 as at 30th June, 2011.

    The lawyer failed or neglected to settle the afore-stated outstanding amount of Euros 304, 020.56 and Sh. 2,823.98 which ums continued to accrue interest at the contract rates.

    The Bank  and Chase Bank (Kenya) Limited engaged in negotiations with a view to amicably resolving the issue of the outstanding arrears. At the negotiations, Signh requested and Chase Bank (Kenya) Limited agreed to waive all the interests accrued on the outstanding arrears and he pay an all-inclusive figure of Euros 299,576.00 and Sh. 192,312.00 in full and final settlement.

    “As a pre-condition of the afore-stated agreement, Chase Bank (Kenya) Limited was to prepare and forward a letter of offer setting out the terms of the agreement to the Defendant and the Defendant was to confirm his acceptance to the terms therein by executing the said letter of offer, ” says the lender.

    Pursuant to the foregoing the Chase Bank (Kenya) Limited prepared and forwarded to the Defendant a letter of offer dated 4th August, 2015. The Defendant ever since has failed to forward a response despite several reminders.

    Bank adds that despite numerous demands and reminders, the lawyer has failed, refused or neglected to execute the letter of offer or settle the outstanding arrears of Euros 299,576.00 and Sh. 192,312.00 as agreed by the parties during the aforestated negotiations.

    The Bank avers that contractual and fiduciary relationship between the lender and Signh exists by virtue of the operation of the Kenya Shillings Account and a Euro Account  which accounts are still active, operational and running to date.

    Bank further avers that Signh’s subject accounts continues to be in debt and currently he owes the Bank the sum of Euros 530,692.81 and Sh. 367, 688 as at 17th September 2020.

    Singh has opposed the bank application.

  • SBM Bank Faced With Liquidation Threat

    SBM Bank Faced With Liquidation Threat

    Afrasia Bank has threatened SBM Bank (Kenya) with a notice of instituting liquidation proceedings against should the bank fail to refund over Sh900 million that it had deposited in collapsed Chase Bank six years ago.

    Last month, Justice Wilfrida Okwany ruled that SBM is culpable for all liabilities of Chase Bank which it acquired in 2018 including the monies deposited by Afrasia Bank.

    The judge said the Transfer of Business Act was applicable in the deal and since SBM did not publish the mandatory notice under the law, it is liable for all Chase Bank dues.

    In the notice published on local dailies, Afrasia said the money $7.5 million (Sh904 million) plus interest of $16645 (Sh2 million) should be paid in Mauritius or its lawyers Githii & Co Advocates.

    “Further take notice that failure to pay the afore-stated amount shall result in Afrasia Bank limited filing for a liquidation order against the company,” the notice dated September 19 stated.

    Suspect treasury bond transaction

    In February the Mauritian lender had a run in with the Capital Markets Authority (CMA) over suspected fraudulent trade in treasury bonds.

    It then launched inquiry to spotlight irregular trade where multimillion-shilling bond transactions saw SBM Bank lose an undetermined amount of cash.

    At the heart of the matter was a treasury dealer and head of balance sheet management at SBM Bank, Mr Stephen Lagat, in August last year approved a transaction in which SBM Bank was duped into selling a bond at a price other than the prevailing market rate.

    The effect of the malpractice, also referred to as “front-running”, is that it distorts the pricing of government securities and in effect the cost of domestic borrowing for Kenyan taxpayers.

    The probe was to shed light on how the Treasury and taxpayers could be paying a hefty price for borrowing in a market fraught with irregular transactions involving dealers and stockbrokers.

    Treasury bonds are the government’s most important avenue for bridging budget deficits by borrowing from the private sector.

    By distorting the pricing of treasury bonds, dealers in effect inflate the national debt burden by exerting upward pressure on interest rates, which the Treasury pays on the issued bonds.

    Some Treasury bond traders in commercial banks and brokers are believed to be skimming millions of shillings from off-the-market trading.

    A crooked dealer or trader uses knowledge of customers’ orders to buy bonds from an investor who is selling at a lower price. The trader then sells the  bonds to another person at a higher price and pockets the gain, often within a day.

    The lender was however cleared.

    SBM Bank four years ago bought Chase Bank, which collapsed on mismanagement and insider theft claims.

    Chase Bank collapsed in 2016 under the weight of massive withdrawals from depositors after massive fraud including insider loans of more than Sh13.62 billion advanced to directors, shareholders, employees and associates were unearthed at the bank.

    The bank collapsed when it had received Sh4.8 billion from creditors through a Sh10 billion bond issue.

    The Central Bank of Kenya (CBK) appointed the Kenya Deposit Insurance Corporation (KDIC) as a receiver for the bank for a period of twelve months.

    The CBK last year gave the nod to the KDIC to liquidate the assets of the bank that had not been auctioned to salvage some money for customers who had more than Sh100,000 in the bank.

    In 2018, Mauritian lender, SBM Bank carved out 75 per cent of certain assets and liabilities from Chase Bank in what was considered as cherry-picking ‘good assets.’

    During the Chase Bank deal, SBM valued the total assets acquired at Sh69.59 billion, with property, plant and equipment assigned a fair value of Sh1.25 billion.

    Total liabilities were valued at Sh66.68 billion while deposits from non-bank customers were Sh56.9 billion.

  • As Chase Bank Goes On Liquidation, Its Risk Manager Evaded Arrest And Fled To Qatar National Bank

    As Chase Bank Goes On Liquidation, Its Risk Manager Evaded Arrest And Fled To Qatar National Bank

    Disintegrated Chase bank asset liquidation was recently greenlighted and now joins Trade Bank, Postbank Credit Ltd, Kenya Finance Bank, Euro Bank, Prudential Building Society, Trust Bank and Dubai Bank.

    So many times we’ve seen, read and heard all over the news outlets and even experienced  and fell victim in cases of sabotaged banks, banks going into receivership and liquidation of banks. And always those held culpable are usually the Managing Directors, CEOs and etc but what these authorities ignore is the small – rotten fish in the Organogram and how they actually influence the services offered, whether a deal-loan or bond.

    Legally and ethically every deal needs to be authorized by some small fish – “puppets” mandated legally as per their job description so as to try and duplicate every illegal process as legal and such ‘puppets’ are the heads of departments and such “puppet” who I’m focusing on in this article this time is General Risk and Compliance management – Manager and one person of interest walking under the shadow is Michael Kimeu – who is currently the Head of Risk and Compliance Management at the Qatar National Bank and the Chair of Association of Certified Compliance Professionals in Africa (ACCPA).

    His public profile lubricates him , “Michael has over 14 years of experience within the Risk and Compliance sector in Africa. Michael was the Assistant General Manager for Risk Management & Compliance as well as the Head of Risk and Compliance at Chase Bank Kenya Limited. Prior to his role at Chase Bank, Michael served as the Internal Auditor and Treasury Risk Manager respectively at the Co-operative Bank of Kenya. He holds a Bachelor’s degree in Economics & Business Studies from Kenyatta University and a Global Executive MBA from the United States International University.”

    How sweet, right? But hold on!

    After indepth scrutiny and analysis, Kenya insights came to comprehend how he (Michael) was a snake in the grass in the collapse of Chase Bank in 2016 where he was the Risk and compliance general manager and prior to joining Chase bank, he was sacked by Co-operative bank on the grounds that led to the downfall of Chase bank. And with his presence in Qatar National bank, its just a matter of time before it crumbles down with Michael’s.

    Perhaps it’s of  importance to learn a little  about who and what are the roles of a risk manager in an organization or Co-operation before we carry on,..

    The duties under a Risk Management job description include the following:

    1. Designing and implementing an overall risk management process for the organisation, which includes an analysis of the financial impact on the company when risks occur

    2. Performing a risk assessment: Analysing current risks and identifying potential risks that are affecting the company

    3. Performing a risk evaluation: Evaluating the company’s previous handling of risks, and comparing potential risks with criteria set out by the company such as costs and legal requirements

    4. Establishing the level of risk the company are willing to take

    5. Preparing risk management and insurance budgets

    6. Risk reporting tailored to the relevant audience. (Educating the board of directors about the most significant risks to the business; ensuring business heads understand the risks that might affect their departments; ensuring individuals understand their own accountability for individual risks)

    7. Explaining the external risk posed by corporate governance to stakeholders

    8. Creating business continuity plans to limit risks

    9. Implementing health and safety measures, and purchasing insurance

    10. Conducting policy and compliance audits, which will include liaising with internal and external auditors

    11. Maintaining records of insurance policies and claims

    12. Reviewing any new major contracts or internal business proposals

    13. Building risk awareness amongst staff by providing support and training within the company

    From the above mentioned roles and responsibilities, we can agree on how vital Risk and Compliance Manager is. He was the ‘Puppet’ who would have assessed risk and stopped the looting when Makarios Agumbi, his credit counterpart James Mwaura and MD Duncan Kabui operated two ledger and squandered Ksh 6.2 billion, only audit to show they faked to have spent Ksh 7.5 billion when truly they only spent Ksh 1.3 billion.

    On December 30, 2015, a day to closing its books for the financial year, when the bank disbursed Sh1,023,900,000 to Camelia Investment, Coinbrook Holdings, Cleaopatra Holdings and Golden Azure Investment without adequate documentation or securities.

    Risk Manager risking his job to dine with the thieves seems to had been worth it as he pocketed the lions share.

    Despite these fraudsters involvement in cooperate frauds, they still find their way through their cronies to join other co-operations, organization without their track record considered a hindrance  like Daviel Mavindu, who was a senior official at Chase Bank, now chief executive of Rafiki Microfinance, Michael Kimeu now in Qatar National Bank.

    But for Qatar National Bank that has been linked to terrorism funding by the US intelligence, Kimeu fits their portfolio. The bank according to Kenya Insights research, held at least six accounts for the Qatar Charity, which is connected with the Muslim Brotherhood and is designated as a proscribed organisation in some countries for its links to terrorism.

    The bank has been on the spotlight over illegal dealings amounting to money laundering and data breaches which has put it in bad books with the international financial control circles.

    In cases related to money and banks – customer satisfaction, transparency is key or else customers ship out and once they ship out so is the business gone.

    Safety and Security of depositors money is also key and whenever one high ranking employees like Michael whose track record has been marinated with bad conduct  – he fails integrity and trust of the customers.

    Whoever let him secure the position despite his involvment in Chase bank heist, despite his tricks that led him to be sacked from Co-operative bank – has a mission to accomplish in Qatar National Bank and seemingly that’s why Michael was the best candidate fit for his mission.

    Therefore, It’s an Amber alert to fish out characters like Michael before its too late and a free advise to Qatar National Bank customers to take caution given his well documented history.

    Should the fate of Chase Bank befall Qatar’s National Bank, they’ll only have their lack of doing due diligence and hiring a staff whose past is well documented but ignored brushing  the interests of consumers aside.

    Worth noting that Kimeu was also fired from Co-operative Bank a top-tier bank in Kenya where he served at the same capacity as in Qatar National Bank due to his history before being picked up by Chase Bank that consequently collapsed.

    Even more shocking is that apart from currently working at the dubious Qatar National Bank  thats in league with the collapsed Dubai Bank,Kimeu is currently the Chair of Association of Certified Compliance Professionals in Africa (ACCPA) Chapter in Kenya as evidenced by the link. One is simply left flabbergasted and scratching their head on how a professional body could have its Chair a crook that was in the centre of the Chase Bank insider lending scam and was sacked from Chase when it went under. Don’t such professional bodies conduct a background check? Conduct basic due diligence of its committee members or is ACCPA  just a corrupt edifice filled with crooks amongst its ranks?