Kenya Akiba Wants to Be Paid Sh390 Million By Central Bank

Nation Correspondent

16 June 2011

Nairobi — A micro-finance company closed down six years ago is seeking payment of Sh930 million from the Central Bank of Kenya (CBK).

Kenya Akiba Micro-Finance Limited, says it was shut down on orders of the governor of CBK and the commissioner of police in 2005.

Akiba says it was raided by 11 police officers attached to the banking fraud investigations department (BFID) of CBK, who took away clients’ securities worth Sh2 billion.

It alleges that it was closed down for using the word “Finance” in its business name.

BFID was allegedly executing a directive to close down all institutions, which did not have licences under the Banking Act.

CBK has disputed that it instructed BFID officers to carry out investigations and close those institutions using the word “Finance” and were suspected of flouting banking laws.

On Thursday, the commercial division head, Mr Justice Muga Apondi, was told the company was dealing with financial issues that included offering financial services.

Its branches in Kitengela and Ongata were also closed down during the alleged raid.

But CBK told the judge that the officers who allegedly raided the financial institution based at Lonrho House were police officers answerable to the commissioner of police.

Justice Apondi ordered that a structure of CBK management hierarchy be filed in court to establish whether BFID is one of the departments.

The plaintiff (Kenya Akiba) told the judge that it was discriminated against, since no other institution was closed down during the raid.

CBK published a notice in the print media on October 31, 2004 purporting to “outlaw and criminalise the use of the word “finance”.

Deposits

Vide that notice the mother bank “required those businesses that had no licences under the Banking Act to cease taking deposits from members of the public at the pain of legal action being taken against them.”

Kenya Akiba is, therefore, asking the court to declare that the closure of its business was selective, illegal, unjustified and amounted to trespass. It also says its rights to trade were infringed on.

The institution is also seeking orders to a mandatory injunction to lift the embargo on its business and also unfreeze its bank accounts.

Justice Apondi directed the case to proceed on June 20,2011.

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