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The Diamond Trust Bank (DTB) chief executive has been summoned to appear in court on Monday to address a Sh174 million dispute involving Mombasa tycoon Bayusuf Mohammed’s widow, Noor Ali Islam Jeizan, and the bank.
Senior Resident Magistrate David Odhiambo directed Murali Natarajan to provide details about the contentious transaction.
The Director of Public Prosecutions (DPP) moved to court seeking to compel DTB to disclose information to the Banking Fraud Investigations Unit regarding who authorised the loan and the subsequent internal transfers. This followed testimony by DTB’s Head of Corporate for the Mombasa region, Martin Mbithi, who told the court that an email detailing the transaction could not be retrieved due to its age.
Mbithi also claimed the bank received verbal instructions for the money transfer and that the system sometimes swapped funds between accounts automatically, without explicit instructions.
The magistrate gave DTB seven days to produce the email detailing who sought the loan and documents on the internal transfers.
The case is one part of a broader legal battle between DTB and Islam, which also includes an appeal before the Court of Appeal.
In her appeal, Islam is seeking to block DTB from auctioning her property to recover the disputed amount. She contends her late husband’s loan was fully repaid and that the bank owes her an additional Sh17 million.
Halt auction
A High Court judge previously declined to halt the auction, prompting Islam to move to the appellate court. She argued that selling the property would render her children and elderly mother homeless.
“The property scheduled for auction is a residential house where my children and elderly mother live. Unless the orders sought are granted, they will be left destitute,” she told the court.
The conflict stems from a loan issued by DTB to Bayusuf Limited, a company owned by Islam and her late husband.
DTB initially sold off a yard and trucks belonging to the company, alleging loan default. The agreement stipulated a repayment interest of 26 per cent per annum.
The bank then moved to auction the family’s residential property last year to recover additional funds, despite Islam’s claim that the loan had been cleared. Islam alleged that DTB created fictitious accounts, resulting in the disputed Sh174 million.
She further argued that her late husband’s loan had been fully repaid by 30 June 2011, with a surplus of Sh17 million following the sale of the first secured property.
Islam has accused DTB of withholding crucial documents that would support her claims of fraud. She argued that the bank’s actions during the loan restructuring process in 2011 were irregular and intended to legitimise unauthorised overdrafts.
She also alleged the restructuring was initiated shortly after her husband’s death, when she was mourning and unable to seek independent professional advice.
“I lost my husband, who was my best friend, and the ordeal took a toll on my children. I was not in the right state of mind and was never given an opportunity to seek professional advice,” she said.
An audit by Omenye and Associates, a certified public accountants firm, reportedly found no justification for the loan restructuring. According to the audit, the restructuring aimed to cover irregular operations on one of the company’s accounts.
DTB, however, maintains that it provided all necessary documents in 2021, as per a consent agreement with Islam. The bank cited an independent report from the Interest Rates Advisory Centre, which supported its claim that Bayusuf Limited owes the bank the disputed amount.
DTB described Islam’s requests for additional documents as a “fishing expedition” and insisted its claims were legitimate.
Islam has also sought intervention from the Central Bank of Kenya (CBK), but the regulator stated it could not proceed with investigations as DTB had not provided full disclosure of the loan’s details.
The outcome of the court proceedings, including the summoned testimony of DTB’s Chief Executive, could shed light on the Sh174 million dispute, which has transitioned from a civil to a criminal matter.
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