The Consolidated Bank which as of late July 2019 sought Treasury bailout in order to repay holders of its Ksh 1.6 billion corporate bond finds itself in trouble once again.
This time the reported trouble is an orchestrated fraudulent activity. To add on to the bank’s current woes, a contractor, Sketchers LTD has moved to court seeking to recover money from Consolidated Bank. The contractor alleges that Consolidated Bank in collusion with other persons (using the contractor’s company details) opened a bank account without obtaining consent from the company’s directors.
The details of the crime committed is that, though within its purview, Consolidated Bank did not conduct due diligence and as a result they opened a ‘clone’ account using the contractor’s details for other persons who impersonated and acted on behalf of the contractor.
As per the contractor’s affidavit, as a result of negligence from the Bank, the company has since lost money to the tune of Ksh.4,307,098 which Kenya Rural Roads Authority (KERRA) had deposited into the cloned account as payment for work done.
The affidavit also implicates one Mr. David Ndirang’u as the mastermind in the fraudulent operation in that he authorized the withdrawal.
Through A.I Onyango and Co. Advocates, the contractor finds the bank at fault for the offence of defrauding. The contractor further states that their company was approached and asked to drop the suit in return for the withdrawn money. Nevertheless, the contractor refused in that the company’s name had already been tarnished and only a legal recourse would be worth restoring the company as a credible contractor. A position which the company lost when a contracting government agency blacklisted the company for attempting to defraud after being asked for payment ‘twice’.
Furthermore, the contractor claims that the Kenya Revenue Authority has slapped the company with tax bills. The KRA are demanding withholding tax and VAT from the contractor’s company over the payments they have received from KERRA.
In the civil suit, the Contractor asks the court to compel Consolidated Bank to: a) repay the monies withdrawn, (b) compensate for general and punitive damages, (c) issue an apology to KERRA hence clearing the company’s name.
The court has set for hearing on September 10, 2019.
Recently Consolidated Bank have found themselves among the corporate bond issuers who have defaulted or restructured their debt thus shrinking on the back of investors’ loss of confidence.
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