About 12 years ago, Policemen of the Banking Fraud Investigating Unit (BFIU) and Central Bank of Kenya (CBK) officials led by late Moses Gituma and Mr Ezekiel Chebii raided and closed down the Kenya Akiba Microfinance Limited’s main offices at Lonrho House for allegedly engaging in illegal banking practices.
This led the company to a loss of over Ksh90 million in terms of fixed assets and Ksh764 million to external loans to clients.
During the raid, CBK and BFIU took away with them loan files, security documents, computers and computer software.
At the time, pyramid schemes were a national crisis and Kenyans had lost billions.
Kenya Akiba was registered to operate hire-purchase but CBK claimed that the institution was operating a fully fledged bank, contrary to the law when they ordered a close down. Consequently, former Imenti MP Gideon Mwiti Irea and four other directors were charged with several criminal offences.
A few days after the raid, Akiba under criminal case 2474 of 2005 at the chief magistrate’s court filed a counter lawsuit seeking Ksh930 million in damages and interests, alleging that CBK acted unlawfully by shutting down its headquarters and offices in Ongata Rongai, Kitengela and Voi.
Six years later, on September 23, 2011 Mr Irea and his co-accused were acquitted by commercial Judge Alfred Mabeya who held that the directors did not break any law. In fact, in May 2012 the same judge ordered CBK to pay Akiba Ksh1 billion after he ruled that the regulator acted unlawfully in closing down the business. The judge said that the raid on the company offices not only broke the firms backbone as a commercial entity but also ruined many businesses of more than 10,000 of Akiba’s customers as well as affected the livelihoods of 300 employees.
Even after the criminal case was thrown out CBK did not return items its officers took with them during the raid.
As at 31st October 2005 Akiba’s master payroll stood at Ksh2,123,000 per month inclusive of statutory deductions. Due to the nature and circumstances surrounding the closure of the company, this was construed to be an infringement of the employment contracts entered into between the company and its employees where “in the event of summary termination of employment without notice to the employee, the company shall be liable to pay 3-months salary in lieu of notice. As such the company owed its employees Ksh6,369,000 as at November 2, 2005 following closure of the company. These salaries remain unpaid to-date and thus have continued to accrue interest at the rate of 12% p.a.
Since then, CBK filed for a stay of the ruling pending appeal but this was rejected on February 1, 2013 by then court of appeal judges David Maraga, Erastus Githinji and Wanjiru Karanja who ruled that the appeal ought to go full hearing, something that CBK is yet to do five years later and Akiba is accusing CBK lawyers of stalling the case on flimsy grounds.
As per a financial forensic report prepared in October 2013, Akiba was claiming Ksh2.8 billion for losses incurred since 2005 when its operations were halted. It is now claiming more than Ksh4.5 billion.
In January this year, the two parties agreed to settle through mediation but these efforts flopped denying Kenya Akiba micro-finance and it’s customers their pay and deserved justice.
In a letter dated May 23, 2018 addressed to Ms Elizabeth Tanui, the mediation deputy registrar in the mediation registry at the Milimani Law courts, appointed Ms Lumallas Eunice as a mediator.
Ms Lumallas would later say that the two parties could not reach a consensus, leaving the case in a stalemate.
“Having conducted mediation between the parties do hereby report that the parties have not reached a settlement,” said Ms Lumallas.
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