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| Atul Shah |
Five banks are in danger of losing billions of shillings after
former Nakumatt CEO Atul Shah ‘conned’ the lenders. He used his company
Collogne Investments, which owned a Sh2 billion property in Nairobi to get
loans from multiple lenders by depositing the same collateral. He got Sh3.6
billion from DTB Bank , Sh 900 million
from Standard Chartered, Sh1.9 billion from Kenya Commercial Bank , Sh328
million from Bank of Africa, Sh126 million from UBA and Sh104 million from GT
Bank. The banks will lose the security once Bank of Africa auctions the
property on August 24. 2020.
The case mirrors one in which Commercial Bank of Africa, now
known as NCBA and Equity Bank lost nearly Sh500 million through a title deed
fraud racket after the Court of Appeal ruled that Co-operative Bank of Kenya
had the right to a property situated in Riruta Satellite used to acquire loans
from the three banks.
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.
Back to Atul Shah’s story, the evidence produced before High
Court judge Mary Kasango indicates that the property was used as security to
tap loans from other banks.
“The charged property is also charged to other banks and if
the plaintiff does sell the same all other creditors stand a chance of losing
their security and that the defendant bank is well secured by the charge over
the charged property,” Mr Shah said in court papers. This means that the banks
offered Nakumatt billions of shillings on the strength of the retail chain’s
cash flow.
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