Jirongo fights CBK bid to recover Sh495m Dubai Bank loan

Former Lugari MP Cyrus Jirongo. PHOTO | FILE 

By BRIAN WASUNA, bwasuna@ke.nationmedia.com
Posted  Sunday, November 20   2016 at  17:31

Businessman and politician Cyrus Jirongo has moved to court challenging a decision by the Central Bank of Kenya (CBK) to place his company under receivership over Sh495 million that it owes the collapsed Dubai Bank.

The Kenya Deposit Insurance Corporation (KDIC), a CBK agency, placed Mr Jirongo’s Kuza Farms & Allied Limited under receivership alongside other companies that had defaulted on their loans at the time the lender was placed under statutory management.

Mr Jirongo claims that the receivership is illegal, contesting the amount his firm allegedly borrowed from Dubai Bank.

The former Lugari legislator further alleges that Dubai Bank has refused to furnish his firm with a statement of its account despite paying Sh117,040 that the collapsed lender demanded as costs for being furnished with the documents.

Kuza Farms was last year listed as one of Dubai Bank’s largest loan defaulters in an audit report done by Crowe Horwath.

Another firm associated with Mr Jirongo, Sololo Outlets, was also listed as a defaulter after failing to service a Sh103 million loan for more than three months.

The former Y2K‘92 chairman says that the KDIC has already sent unknown individuals to inspect Kuza Farms’ land in Chepkoilel, Trans Nzoia County, where it runs a salt manufacturing business.

Mr Jirongo wants Dubai Bank compelled to account for its loan repayment demand in court.

Dubai Bank was placed under receivership in August last year after the CBK found it to be in breach of several banking regulations.

The lender’s second-largest borrower, Richardson & David Limited, and its founder, Hassan Zubeidi, have challenged the KDIC’s decision to liquidate the troubled bank.

The suit is still ongoing at the Court of Appeal despite the auction of Dubai Bank’s assets in Nairobi and Nakuru in August this year.

Mr Jirongo says his firm only borrowed Sh100 million from Dubai Bank in the form of a debenture in 2009, a debt the former Lugari MP insists was fully repaid.

“Kuza Farms & Allied has previously complained to Dubai Bank concerning fraudulent withdrawals on its account. The sum of Sh495,289,931 demanded by the defendant is astronomical and not based on any contract.”

“To the plaintiff’s shock, Dubai Bank has now purported to appoint Peter Kahi and Anthony Muthusi as receivers over Kuza Farms. No written notice of the placement of Kuza Farms and the appointment of Mr Kahi and Mr Muthusi as receiver has been served on the applicant as required by the Companies Act,” Mr Jirongo says in court filings.