Home » Gulf Bank Loses Sh21 Million Case Against CS Mithika Linturi’s Firm

Gulf Bank Loses Sh21 Million Case Against CS Mithika Linturi’s Firm

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In a recent legal development, the High Court has ruled in favor of Agriculture Cabinet Secretary Mithika Linturi, dismissing a case filed by Gulf African Bank against a firm associated with a company at the center of an ownership dispute between Linturi and Adai Member of Parliament Maryanne Kitany.

Justice David Majanja found the bank at fault for failing to verify the authenticity of Atticon Limited’s shareholders before granting a loan of Sh20 million.

The judge emphasized that the bank could only pursue individuals Douglas Kailanya, Dorothy Chepkirui, and Billy Onyango, who took the loan, rather than the firm itself. However, since the trio did not appear or respond to the case, the ruling went uncontested.

Due to the bank’s negligence in providing unauthorized funds to the company, Justice Majanja stated that the bank cannot recover the amount disbursed to Atticon Limited.

Instead, the bank can seek recovery from Kailanya, Chepkirui, and Onyango, who allegedly executed guarantees in favor of the bank and benefited from the funds. Consequently, the judge ruled that the trio should reimburse Atticon Limited Sh21 million.

The case revolves around a loan application by Atticon to Gulf African Bank in March 2018 to finance a construction contract with the Export Processing Zone Authority (EPZA).

The bank claimed that Kailanya, Chepkirui, and Onyango, as directors of Atticon, provided joint and personal guarantees before the loan was granted. The agreement stipulated that any payments made by EPZA would be channeled through Atticon’s account.

However, Gulf African Bank alleged that EPZA paid Atticon Sh28 million, which was redirected to Family Bank instead. The bank argued that Atticon failed to repay the loan amount, which reached Sh21.9 million by February 2019.

In response, Atticon denied that Kailanya, Chepkirui, and Onyango were its directors and asserted that it had no relationship with Gulf African Bank. Atticon claimed that Linturi and Emily Nkirote were the true directors and had not delegated any powers to the trio to conduct business on behalf of the company.

Atticon further accused Gulf African Bank of negligence for omitting the name of Joseph Gitonga M’limbiine, who allegedly posed as a director.

EPZA also denied any involvement with the bank, stating that they awarded Atticon a construction tender but did not receive any board resolution indicating the appointment of one Belinda Shitsama as Atticon’s representative.

EPZA received a letter naming Nkirote as the authorized representative and instructing all payments to be sent to Family Bank. The authority also alleged that Lilian Muge sought to gain unauthorized control over Atticon.

Examining the EPZA letter, Justice Majanja concluded that there was no promise to channel funds through Gulf African Bank, contradicting the bank’s claims.

EPZA’s communication acknowledged receipt of instructions and only promised to process payment certificates upon receiving funds from the National Treasury.

The ruling brings a victory to the Agriculture Cabinet CS, who sought a refund of Sh21.8 million that was disbursed to individuals falsely representing Atticon Ltd for a project loan.

Justice Majanja held Gulf African Bank accountable for negligence in disbursing funds to unauthorized persons posing as directors of Atticon Ltd.

The judge dismissed the bank’s claim for a refund, declaring that the bank should have exercised due diligence and made proper inquiries to ensure the account holders’ authenticity.

This legal dispute highlights the importance of accountability and diligence in financial transactions and serves as a reminder of the potential consequences for negligence in banking practices.