The giant Equity Bank is facing Sh117million lawsuit in what appears to be one of the hard hitting scandalous lending fraud.
The court ruled that Equity Bank has been charging its client nonexistent loans and illegally seized and auctioned his car through unregistered auctioneer a decade ago.
Through a court decree, Equity Bank has been ordered to meet to the cost of the suit and release the vehicle in question unconditionally.
Milimani Commercial Court acting Chief Magistrate Mr C. Obulusta delivered his ruling on June 4, 2013.
In his decree, the magistrate restrained the bank by themselves, servants or agents from disposing the vehicle registration number KSA 705 Mercedes in model.
He further decreed the court might give further relief to the complaint as it may deem fit. The James Mwangi led Bank is grappling with allegations of rampant cases of internal fraud of loans processed using clients particulars without their knowledge.
The bank is at pains to explain the circumstances under which the irregular loan suspected to have been processed internally came into being facilitated through identity theft of account holders.
Investigations by The Informer has established that Kung’u’s lawyers, Mugo wairimu Advocates slapped the embattled financial institution with demand and notice to institute legal proceedings to push for compensation of all daily expenses accrued since 2002.
The demanded cumulative damages amounting to Sh117, 693,688 have been audited by Certified Public Accountants, Njehia& Associates.
According to the auditor’s report seen by us, the demanded cumulative costs payable by Equity bank are; motor vehicles expenses Sh107,326,536, clothing expenses Sh1,142,620, loan irregularly recovered Sh324,531 and cost of replacing car Sh8,900,000 totaling to Sh117,693,688.
According to the complainant, in 2002, Sammy Kimani Kung’u, through his registered firm, Wema foundation Trust Co.Ltd, sought a bank loan from Equity but the plea was declined since his missing car was more than ten years old the minimum benchmark the bank had put to secure a loan with the vehicle serving as collateral.
“We have been retained by the above mentioned client who has instructed us to address you as hereunder…be that as it may, our instructions are to, demand which we hereby do, the immediate payment of the sum of Kenya shillings one hundred and seventeen million six hundred and ninety three thousands six hundred and eighty eight (Kshs. 117,693,688) to our client being the loss and damage incurred by our client,” part of the demand notice dated July 2, 2013 reads.
The court found out that indeed, the claimant had no debt with the bank at the time and the said auctioneer working jointly with the bank’s debt recovery department, Vantage Business Repossessors whom the court held they were unlicensed at the time were instructed to repossess the vehicle. Vantage towed the vehicle from the parking at Uchumi Supermarket within the Nairobi central Business District without notice.
There was no prior notice by the bank either through its debt recovery department of alleged default to service what was proved to be nonexistent loan. Equity Bank indicated that Kung’u who owns Wema Trust Foundation Limited had an outstanding loan of Sh162, 643 with the bank.
Currently, according to Kung’u his missing vehicle and loads of clothes are yet to be found. He further alleges the bank has withheld the log book a copy of which is in our possession.
Worse still, the plaintiff alleges the bank opened a parallel account in his name, Ac No:7054 where Sh48, 000 was cashed in after it was deducted from his legitimate account AC No: 30449 without his consent.
An audit report on expenses incurred by the complainant effective September 2004 until last month when the case was determined claimable from Equity Bank are clearly tabulated into motor vehicle expenses, clothing expenses, loan irregularly recovered and cost of replacing the car.
In the auditor’s report, the plaintiff has made a declaration that the schedules presented are a true and fair view of all the expenses suffered over the decade old period.
The auditors, Njehia & Associates, PIN NO: A001198292A and VAT NO: 013911T have complied the using an annual rate of 24 per cent, a presumed Equity Bank average lending rate over the years.