Chase Bank saga revived as CBK, Deloitte are sued - Beaking Kenya News

Beaking Kenya News

Where It All Happens

Breaking Kenya News

Translate

Wednesday, 5 June 2019

Chase Bank saga revived as CBK, Deloitte are sued

Chase Bank
By BRIAN WASUNA
More by this Author
Law firm Muma & Kanjama Advocates and two church groups have sued the Central Bank of Kenya, consultancy Deloitte & Touche and owners of collapsed Chase Bank in what could open the floodgates for thousands of clients in collapsed lenders to get refunds for their losses, if the suit succeeds.
The plaintiffs have faulted Deloitte & Touche and the CBK for giving Chase Bank a clean bill of health despite the lender’s questionable operations that saw it close for over two years before being sold to Mauritius’ SBM Bank.
Chase Bank’s former chairman Zafrullah Khan and ex-managing director Duncan Kabui have also been enjoined as respondents in the suit.
THE TAKEOVER
SBM took over Chase Bank in August, 2018 after investing Sh8.6 billion in the collapsed lender. Chase Bank’s 3,100 depositors will access 75 per cent of their savings in three phases over three years.
The remaining 25 per cent will depend on whether the Kenya Deposit Insurance Corporation wins a recovery suit it has filed against Chase Bank’s shareholders.
The CBK placed Chase Bank under the care of the Kenya Deposit Insurance Corporation in April, 2016 after the lender was forced to reclassify its Islamic banking assets as insider loans.
In the end, this meant that Chase Bank had initially underreported its insider loans which were actually Sh8 billion.
FRESH TWIST
In a fresh twist, Good News Church of Africa and The Gospel Furthering Bible Church Trust have joined Muma & Kanjama Advocates in asking the High Court to order Chase Bank’s auditors and the CBK to cover the uncertain 25 per cent balance of their deposits.
The suit is likely to attract the keen eyes of audit firms, especially those that offer services to banks, as well as thousands of Kenyans who have lost money in collapsed banks over the years.
The period between August, 2015 and April, 2016 saw Dubai Bank, Imperial Bank and Chase Bank collapse while holding deposits of nearly Sh100 billion.
The plaintiffs want the court to award them Sh127.6 million to cater for the 25 per cent hit they may take with Chase Bank’s collapse, and interest that they would have earned on their deposits.
DELOITTE'S DEFENCE
Both Deloitte & Touche East Africa and its sister firm Deloitte & Touche Tohmatsu Limited have been enjoined in the case that has been presented in the format of a class action suit.
Deloitte & Touche insists that it carried out its duties as Chase Bank’s external auditors.
The East African wing of the global consultancy insists that Deloitte & Touche Tohmatsu is a UK-based company limited by guarantee and cannot be punished for the sins of a sister company.
The plaintiffs in the suit argue that Deloitte & Touche East Africa audited Chase Bank’s Islamic banking arm for three years, hence cannot claim to have not known that the Islamic banking assets were being wrongly classified as “other assets”.
They also blame the CBK for opting to place Chase Bank under receivership despite receiving five takeover bids for the collapsed lender.
But Deloitte & Touche East Africa insists that it did not owe Chase Bank’s customers any duty to ensure that the lender was financially healthy. The case returns to court on June 16.

No comments:

HOME

Pages