CBK: It’s too late to block Dubai Bank liquidation process

The Central Bank of Kenya (CBK) has ruled out stopping the ongoing Dubai Bank liquidation process.

The financial institutions regulator in its response to a case filed by a depositor to stop liquidation of the collapsed bank told the court that no intervention could be made, as it was already late.

Richardson and David limited, which claimed to be a depositor, moved to court last week Friday seeking to stop the process, and further blocking CBK's subsidiary Kenya Deposit Insurance Corporation from dismantling the bank's ICT system.

But the liquidator through lawyer Njoroge Regeru told Justice Erick Ogola that the application had been overtaken by time as process of paying protected depositors had already started.

“The application is late in the day as the liquidation process is at advanced stage and orders sought have been overtaken," the court heard yesterday.

Justice Ogola heard that the banking law shields KDIC from any court injunctions once it has assumed control of an institution.

Lawyer Regeru also argued that the engineering firm (Richardson and David limited) could be compensated if the court found that the liquidator was in error when winding up the financial institution.

The application by the engineering firm added a new twist to the case filed by KDIC seeking to freeze former Dubai bank's chairman Hassan Zubedi's assets.

The corporation claimed that six title deeds out of 344, all worth Sh650 million were missing and there was risk that some properties could be disposed of.

The court heard yesterday that Mr Zubedi's lawyers or four other companies allegedly linked to him hold documents associated with his properties. Zubedi, who managed the collapsed financial institution as chairman, is said to own Africa Energy Limited, Suleiman Enterprises Limited, Kamp General Engineering, KEMU Salt Parkers and Maestro Properties Company, which have been sued alongside him.

According to court records, Dubai Bank owes depositors and creditors more than Sh1 billion. KDIC in its application told the court that it was apprehensive that if the properties were not secured it would be impossible to pay outstanding dues.

Yesterday Mr Regeru told the court that: “There are strong grounds that existed for placing Dubai Bank Limited under receivership and subsequently under liquidation including lack of the statutory minimum requirement of five directors and its capital below statutory minimum of Sh 1 billion."

The case will continue on Friday.