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Citizen Weekly

Sunday, 8 March 2015

Dubai Bank bosses in big trouble with court

It is a battle of titans as directors of Dubai Bank are fighting to save themselves from an imminent jail term over contempt charges after they failed to honour court sermons in case they are accused of defrauding Kwanza Estate Limited.
Dubai Bank managing director Binay Dutta and its chairman Hassan Zubedi are accused of allegedly defrauding Kwanza Estate Ltd, a company owned by former Kanu Nakuru branch chairman Geoffrey Asanyo millions of shillings in a business deal that went sour.
The case which has since seen the bank’s managing director as the first casuality, after the resigned, is not threatening the freedom of the two but also the existence of the institution given it erodes the customers’ confidence on Dubai Bank.
Court documents indicate that since the order of “show cause why not to be held for contempt” was issued by the Mombasa court against the two, they have been battling with claims that either they were sick, travelled or not served but Asanyo through his lawyer Philip Nyachoti is pushing for the directors to stand trial for disobeying the court.  
In November last year, Dutta told the court that he tendered his resignation letter to the institution.    
Dutta told Justice Mary Kasango that he was still calling shots at the bank but that “the decision to go is in the hands of the Dubai Bank board of directors’’.
The two had disobeyed the court order that they deposit Sh167 million and Sh197 million in interest pending the hearing and determination of the case triggering a contempt proceedings against them.
Judge Mary Kasango sitting in Mombasa issued summons against the two to show course why they should not be committed to a jail term for disobeying the order issued on March 31 2013.
According to court documents, Asanyo had opened three accounts with the Dubai Bank company one for US dollars, another for Kenya shillings and the other for sterling pounds.
Asanyo had opened three accounts with the Dubai Bank company one for US dollars, another for Kenya shillings and the other for sterling pounds.
On March 2012, Kwanza Ltd applied for a loan of Sh143 million from the National Bank of Kenya to purchase Watamu Beach Hotel and Kilulu Island in Malindi.
Later the company asked for enhancement of the loan from Sh143m to Sh160m and used the properties as security.
In April the same year, the bank agreed to grant the company an overdraft of up to Sh160 on charge on the properties.
Dubai Bank then received Sh167m on March 6 and 8, 2013 from Asanyo sent through Housing Finance Company of Kenya as call deposit into the accounts at 18pc interest.
As the loan transaction was under way, Dubai Bank chairman Hassan Zubeidi allegedly entered a different agreement with Asanyo to procure financing arrangements for a project called Talent Youth Academy between the government and Point Streak Technologies, a Canada-based company. The financing was to be procured on or before March 19.
Asanyo gave Mr Zubeidi Sh200m as commission and negotiation fees for the deal but Zudeidi failed to secure the financing.
The documents indicate that Asanyo instructed him to deposit the money into one of the company’s accounts then remit it to the National Bank for the purchase transaction.
Instead of first depositing the money in one of the Kwanza Estates accounts and then claim from Dubai Bank they only debited the company’s account with Sh200m creating a huge overdraft accumulating enormous interests and penalties
The court summoned  Zubeidi and Dutta to appear to show course why they failed to obey the order issued by the court on August 2013.
“The duo should come and show cause why they should not be commit to civil prison for disobeying the court order issued to them to deposit the Sh167m and interest of  over Sh197m within 45 days from March 31 2013,” directed Justice Kasango.
The judge directed Asanyo through his counsel Philip Nyachoti to serve the duo through registered post mail service, email and their advocate Ahmednasir Abdikadir.
Recently,the court adjourned the case after Zudeidi’s lawyer claimed that he was sick and that he required a six months bed rest.
The bank has also been linked to a dubious account that froze Mumias Sugar Company millions of shillings in dirty payments.