Bank ordered to preserve Sh41m after claimants’ lawyer’s death
Spire Bank branch on Koinange Street in Nairobi. Cash-strapped Spire Bank, which was recently acquired by Equity Bank, has been ordered to preserve more than Sh41 million held in an account at the Waiyaki Way branch in Nairobi following the death of an advocate.
What you need to know:
- Cash-strapped Spire Bank, which was recently acquired by Equity Bank, has been ordered to preserve more than Sh41 million held in an account at Waiyaki Way branch in Nairobi following the death of an advocate.
- The money, which is proceeds of a court award, belongs to at least 43 former employees of Nairobi Water and Sewerage Company.
- High Court judge Maureen Odero directed that no withdrawals should be made from the account until further orders are issued by the court.
Cash-strapped Spire Bank, which was recently acquired by Equity Bank, has been ordered to preserve more than Sh41 million held in an account at Waiyaki Way branch in Nairobi following the death of an advocate.
The money, which is proceeds of a court award, belongs to at least 43 former employees of Nairobi Water and Sewerage Company.
High Court judge Maureen Odero directed that no withdrawals should be made from the account until further orders are issued by the court.
The bank was further ordered to produce a statement of account for the period beginning the time the funds were deposited in March 2013 to November 3, last year.
The former employees said the money was banked by their lawyers — Michael Owuor and Company Advocates. However, the court heard that Owuor passed on before the money had been remitted to them.
The former employees also claimed that the advocate’s wife, Risper Owuor, and a law firm appointed by the Law Society of Kenya (LSK) to take over the management of Mr Owuor’s firm, had made attempts to withdraw the money.
The former workers asked Justice Odero to direct that the funds be held in safe custody.
“There is nothing to disprove this claim. If the money had actually been disbursed, then I have no doubt that S.N. Thuku and Associates would have (provided) evidence to prove such payment,” noted the judge.
The former City Hall workers sued Nairobi Water and Sewerage and obtained a favourable ruling from the Employment and Labour Relations Court in February 2014.
After succeeding in the case, the court ordered that Sh41,152,605 be remitted to their lawyer but the advocate died before disbursing the money to them.
They were apprehensive that the money might be withdrawn before the case was determined and, therefore, moved to court seeking to protect the purse pending the determination of their case.
“I am satisfied with the merit of this application. There is a need to preserve the funds deposited into the advocate/client account on behalf of the workers,” ruled the judge.
Lifeline
The troubled lender was acquired by Equity Bank after approval of the deal by National Treasury Cabinet Secretary Njuguna Ndung’u last month.
Equity Group offered the lender a lifeline despite its accumulated losses of about Sh10 billion.
The National Treasury and shareholders of both banks gave the nod to the deal, much to the delight of Mwalimu National Sacco, which acquired the bank from tycoon Naushad Merali.
Central Bank of Kenya (CBK) Governor Patrick Njoroge said in a gazette notice that Equity would acquire certain assets and liabilities from Spire in a deal akin to that of SBM and Chase Bank in August 2018. The acquisition took effect on January 31, 2023.
Mwalimu Sacco has maintained that their woes in the bank started after Merali withdrew his deposits worth Sh1.7 billion, which at the time was equivalent to a fifth of all the bank’s deposits.
The bank lost Sh2.2 billion in the three years following Merali’s move, with the withdrawal of 81.3 per cent of the cash or Sh1.79 billion happening in under a year.
Spire Bank, formerly known as Equatorial Commercial Bank (ECB), started its operations in 1984 as a non-bank financial institution and converted into a commercial bank on December 13, 1995.
It then merged with Southern Credit Corporation Limited on June 1, 2010, and retained the name ECB. Four years later, in December 2014, Mwalimu Sacco acquired a majority stake at more than Sh2.7 billion and changed its name to Spire Bank Limited.
