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High Court Rules In Favour Of CS Linturi In Ksh.21M Fraud Case


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The High Court has ruled that Ksh.21.8 million be reimbursed to Atticon Limited, a company associated with Agriculture Cabinet Secretary Mithika Linturi against Aldai MP Mary Keitany.

The case which 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 court found out that after the bank analysed the application form, it offered a Tawarruq Local Purchase Order Finance Facility of Ksh.20 million on the terms and conditions contained in the Letter of Offer dated April 11, 2018 (“the Letter of Offer”).

The Bank had claimed that upon signing the Letter of Offer and complying with the conditions precedent, it disbursed Ksh.20 million to the Company’s account on April 13, 2018, and that the sum was repayable within six (6) months from the date of disbursement.

The bank further claimed that on December 27, 2018, EPZA paid a sum of Ksh. 28,813,554.00, 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 Ksh.28,813,554.00 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,” ruled the judge.

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 the Bank a duty to know their customers.

The court also found out that since the Bank was negligent in making unauthorized advances to the Company, it cannot recover the amount advanced to the Company.

“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 an appearance or filed defense, the case against them is uncontroverted,” the ruling reads.

The court agreed to the company’s request to recover Ksh.21,846,607.25 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 Ksh.15,300,000.00 paid by Jubilee Insurance Company Limited on 17th May 2018, Ksh.3,616,992.00 and Ksh.2,125,145.20 paid by the Ministry of Interior Coordination of the National Government on 18th May 2018 and 2nd July 2018 respectively and Kshs. 804,570.00 paid by the Ministry of Defence on 31st December 2018.


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