Ex-Imperial Bank boss’ family hits back at CBK

Imperial Bank founder Abdulmalek Janmohammed’s family has hit back at the Central Bank of Kenya (CBK), terming the suit seeking to seize its assets as an attempt to give depositors false hope of recovering the S4 billion that was stolen from the troubled lender.

Janco Investments — a company owned by Mr Janmohammed, his mother and two brothers — says Imperial Bank’s receiver managers only filed the suit to create an impression that it can recover the colossal amount, and deflect attention from the CBK’s failure to effectively supervise the bank.

Mr Janmohammed’s family wants the High Court to dismiss a suit Imperial Bank filed through its CBK-appointed receiver manager, arguing that it risks having their assets attached to recover S4.9 billion the long-serving executive is accused of stealing from depositors in a scheme that lasted 13 years.

Mega fraud
Four of Mr Janmohammed’s nieces, his nephew and Janco Investments have all denied colluding with him to defraud depositors of the colossal amount.

The CBK reckons that Mr Janmohammed used a network of 20 companies and individuals to execute and cover up the mega fraud that has shaken Kenya’s financial services sector to the core after the regulators shut it down last month, citing risks to depositors’ funds.

“Mr Janmohammed’s salary and dividends over the years run into hundreds of millions if not billions and the same were wisely invested. The suit is merely a fishing expedition designed to create false hope that Imperial Bank has some chance of recovering some money by casting its net far and wide.
“It is equally confusing that Imperial Bank purports to sue third parties over its own internal failings. The suit is frivolous and a classic case of abuse of the court process,” Mr Janmohammed’s kinsmen say.

Janco has filed a separate suit seeking to be struck out of the proceedings on grounds that no cause of action has been taken against it.

Mr Janmohammed’s mother Gulshan, his brothers Mehdi and Salim are yet to respond to the suit. Also enjoined in the case are Naeem Shah, who succeeded Mr Janmohammed as managing director after his September death and deputy managing director James Kaburu.

Lawyer Ahmednasir Abdullahi is representing Mr Janmohammed’s family, Mr Shah and Mr Kaburu in the suit.
Mr Abdullahi wants the court to lift an order granted last month freezing assets and bank accounts owned by the defendants. He argues that Imperial Bank failed to provide adequate evidence to show that Janco will move its assets out of the country unless stopped by the court.

Mr Shah and Mr Kaburu lifted the lid on the massive loss of funds when they informed Imperial Bank’s directors of the racket shortly after Mr Janmohammed’s death but have not been spared punishment – having been included in the list of individuals whose assets the regulator wants seized.

The two held that Mr Janmohammed had coerced them into making irregular and illegal transfers while threatening them with “dire consequences” if they did not comply with his instructions.

Every single cent

Imperial Bank has filed two suits in court seeking to recover every single cent of the S4 billion Mr Janmohammed allegedly stole from depositors.

The first suit seeks to recover S4 billion from 20 firms and individuals believed to have colluded with Mr Janmohammed in the scheme, while the second seeks to liquidate assets the Imperial Bank founder left to his family.

Imperial Bank’s shareholders have asked the court to allow them to join the first suit as complainants, arguing that they had also planned to take action against the network of 20 companies and individuals Mr Janmohammed allegedly used to rob depositors of S4 billion.

Mr Janmohammed’s family now claims the CBK falsified the allegations it has made against Mr Janmohammed.

Aliya, Amynmohammed, Tanseem, Rehana and Shaista Janmohammed insist that their uncle built his vast multibillion-shilling estate strictly from his salary as managing director of Imperial Bank and dividends he got as a shareholder, which run into billions of shillings.

They admit to being beneficiaries of a trust Mr Janmohammed set up for his kin, but insist that they have never received any money or assets from the trust.

Court documents show that Mr Janmohammed and his associates used 12 companies to open accounts at Imperial Bank into which they deposited massive amounts of cash that was then moved out of the bank before the accounts were immediately closed.

W. E. Tilley — one of the companies implicated in the scam — would receive bulk payments in a US dollar account on instructions from Mr Janmohammed. The funds were then transfered to another account in the bank where the dollars would be converted into Kenya shillings.

The money would then be transferred to the accounts of other companies linked to Mr Janmohammed, W.E. Tilley and its directors in installments of between Sh10 million and Sh100 million every week.

Imperial Bank’s receiver manager reckons that the fraudulently acquired funds earned interest and that while the principal amounts were wired to the accounts of various firms, the interest was sent to three bank accounts linked to Mr Janmohammed and members of his family. The transfers were made by a section of the bank’s top managers, including current managing director Mr Shah and Mr Kaburu.

Some of Imperial Bank’s top managers, including Mr Shah, deposited S,058,439,474 in an account named Hanscombe Management Limited that Mr Janmohammed had allegedly used since 2002 to hold money stolen from the bank’s savers.

Janco Investments adds in its response that it is a separate legal entity from Mr Janmohammed and cannot be asked to account for the actions of its shareholders.

“Janco Investments is a complete and separate legal personality from Mr Janmohammed and his employment with Imperial Bank had nothing to do with Janco. It is not a necessary party to the suit. It is sued as a trophy defendant for sensational and propaganda grounds,” Janco says.

Imperial Bank had in its suits claimed that Mr Janmohammed’s family and Janco have been holding some property in trust for Imperial Bank, something the defendants have all denied. The suit comes up for hearing before Justice Olga Sewe on December 1.