Three Court of Appeal judges ruled that CBA — which has been
fighting for the title deed after Equity gave up the fight had failed to prove that it had a right to the
property when it sought orders stopping its auction by Co-operative Bank
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Bank Chairman John
Murugu MD Gideon Muriuki
and Harambee Sacco Chairman Macloud Malonza
|
A court case surrounding a piece of land worth hundreds of
shillings situated in Riruta that measures approximately 0.2 hectares pitting
three major commercial banks in Kenya has finally been concluded in favor of Cooperative
bank. The case underlines why it is critically important for financial
institutions to conduct a due diligence.
Due diligence is a
legal term referring to the process by which a person interested in acquiring a
business or a security in a business or corporation undertakes a fact-finding
audit of the processes, undertakings and other procedures and policies of the
business it intends to take an interest in, so as to determine its value,
assess risks and ascertain compliance with the law and all regulations to which
the business is subject.
The three banks namely Commercial Bank of Africa, now known
as NCBA, Equity Bank and Cooperative bank of Kenya were all fighting in court to
gain control of the Riruta land in a case where the family of Patrick Njuguna
Kang’ethe who held bank accounts in the three banks managed to secure loans
running into hundreds of millions of shillings by depositing a faked title deed
of the original that was at the time being held by Cooperative bank.
Evidence presented in court showed that on April 8, 2010,
Patrick Njuguna Kang’ethe, Edward Njuguna and George James Kireru Kang’ethe,
all trading as Patrick Kang’ethe & Sons, went to Co-op Bank and borrowed
about Sh166 million. As security, they deposited an original title, which was
registered in the name of Patrick on August 29, 1997. A legal first charge was
duly registered against the title on September 10, 2010, and there were no
other obstacles. The bank still has in its possession the original documents.
Three Court of Appeal judges ruled that CBA — which has been
fighting for the title deed after Equity gave up the fight had failed to prove that it had a right to the
property when it sought orders stopping its auction by Co-operative Bank
It is now evident that a little bit of keenness on the part
of Equity and NCBA banks as exhibited by Cooperative bank legal teams could have
saved the two banks huge losses. Two years ago a research carried out by Cytonn
investments suggested that Cooperative bank of Kenya under the able leadership
of CEO Godeon Muriuki was ranked among the 10 best financial institutions in
sub Saharan Africa
The others on the list from Kenya were Kenya Commercial Bank
Group, NIC Bank, and I&M Holdings; they managed to beat 36 other banks in
the region.
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