The family of the late Bomet Governor Joyce Laboso is embroiled in a legal dispute with Stanbic Bank over a Sh537 million loan advanced to a family-owned company.
The lawsuit has placed Mr Edwin Abonyo, the widower and administrator of Dr Laboso’s estate, at the centre of the controversy.
Dr Laboso's younger sister, Judy Cheptoo Laboso, has sued Mr Abonyo and the bank, challenging the legitimacy of the loan.
Also named in the case before Justice Roseline Korir of the High Court in Bomet is another of Dr Laboso’s sisters, Ms Mary Chepkirui Laboso.
The dispute revolves around a loan that Stanbic Bank advanced eight years ago to Itibo Limited, a company incorporated in 2015 with Dr Laboso, Cheptoo, Ms Mary Laboso, and Mr David Kipkoech Langat as directors.
The bank provided financing to the company for the construction of a tea factory in Sotik, Bomet County.
The loan was secured using three title deeds for properties in Kericho County indicated in court documents as Kericho/Kapletundo/Chemakel Block 1/28, Kericho/Kapletundo/Chemakel Block 1/44, Kericho/Chemakel/Kapletundo Block 1/45.
Ms Cheptoo contests the use of the properties as collateral, claiming that shareholders were unaware of the loan.
The properties, she argues, were held in trust by Dr Laboso for the beneficiaries of their late mother Rebecca Chebet Laboso’s estate.
The bank is seeking to dispose of the properties to recover the loan advanced to Itibo Company Limited, a position contested by Ms Judy Laboso on the strength that the shareholders were not aware of the facility secured from the bank.
The High Court last year blocked the bank from auctioning the properties charged for the loan that was advanced to the company until the case is heard and determined.
Itibo company applied for $524,000 from Stanbic Bank on March 17, 2017, which was approved, with a partial amount released.
The company, as per documents tabled in court by Stanbic Bank, could not raise the $1.9 million that was required to access the full loan, leading to only $322,395 being released by the bank.
Following the financial hiccups faced, the company was expected to make a deposit of Sh15 million by March 23, 2020, to forestall a recall of the loan by the bank, but it could not raise the amount, leading to the move to auction the charged properties.
The money loaned to the company was meant to construct a tea factory on the outskirts of Sotik town in Bomet county, which ran into headwinds following the death of Dr Laboso on July 29, 2019, and a challenge by family members of the legality of the titles charged by the bank.
Court filings also show that the bank gave the company Sh40 million to finance its working capital, asset finance of $3,113,000 for the importation of two tea processing machinery, and the purchase of other machinery and assets for its business undertakings.
The court heard that the Sh40 million loan advanced to the company had since grown to Sh91 million due to nonpayment.
Ms Cheptoo sued the Stanbic bank, Mr Abonyo and Ms Chepkirui, claiming the loan was secured without her consent and that the parcels of land charged were held in trust by Dr Laboso for the beneficiaries of the estate of their late mother Rebecca Chebet Laboso.
Ms Cheptoo filed the case in March 2022 after receiving a notice from the bank with the intention to sell the properties to recover the loan. She said she had no knowledge of minutes or resolutions passed by the shareholders authorising the resolutions for the company to take a bank loan.
Still, Ms Cheptoo argued that the bank acted casually in advancing the loans as there were serious irregularities including the lack of a company seal affixed to the charge documents, and there was no letter of offer prior to the preparation of the charge.
In court filings, Ms Cheptoo has claimed that her sisters – Joyce and Mary – did not use the money advanced by the bank to the benefit of the company.
Mr Collins Sabatia, the Stanbic Bank’s Manager for non-performing loans (business solutions), told the court that the loan was advanced to the company on the strength of a search done at the Ministry of Lands on the properties charged.
Mr Sabatia, while testifying in the case before Justice Korir, stated that the bank was not aware of a dispute between the directors of the company at the time the money was processed.
Mr Edwin Abonyo, the husband to the late Dr Laboso, told the court that he was aware that the bank had advanced a loan to the company which was later restructured for nonpayment on the strength of a letter he wrote to the institution.
Mr Abonyo told the court that the three blocks of land charged for the loans at the bank emanated from the estate of his mother-in-law, the late Rebecca Laboso who was a prominent farmer and former civic leader in Bomet county.
He stated that the estate of the late Dr Laboso did not take a loan from the bank as the facility was taken by Itibo Company Limited, which he (Mr Abonyo) is not a director, though he was privy of its financial dealings by being the husband to the late Governor.
Mr Abonyo was taken to task on how he used the company letterhead to author a letter to the bank on March 13, 2020, acknowledging the default of the loan, yet he was not a shareholder, director, or employee of the firm.
“I am related to the company by association, but I am not a director. An employee gave me the letterhead of the company which I used to write a response to inquiries from the bank over the loan,” Mr Abonyo told the court.
He testified that he was aware of the money loaned to the company by the bank and he knew who made withdrawals but not the details.
He admitted to knowing how the funds were used and that it was utilised for the purpose it was intended for as there is work done on the ground.
Mr Abonyo said as a result of the letter he wrote to the bank, the loan facility to the firm was restructured with the second batch of the funds not released due to issues relating to the ability to repay.
He however admitted that the letters from the bank were addressed to Itibo Limited and not to him as a person.
While being questioned by Elizabeth Kariuki Wainaina, the advocate for the bank, Mr Abonyo revealed that the estate was in dire financial stress and the bank wanted to repossess the property to get their money.
“What I did (writing a letter to the bank) was in good faith for my relatives as we lost track of some of the Indian nationals who were involved in the business,” Mr Abonyo said.
He said it was the responsibility of the bank to do due diligence on the status of the properties charged for the loan.
“I was shocked to later learn the charge was irregularly registered – shocked the bank did not do due diligence before processing the loan. All along, I knew due diligence had been undertaken by the bank,” Mr Abonyo stated.
“Joyce (Dr Laboso), did not touch even a cent from Itibo Company Limited but put money in it. She held 40 percent shares of the company, most of which were in trust for the children of her late siblings,” Mr Abonyo said.
He added: “There were questions as to how Joyce held 40 percent of the shares, while Judy held 13 percent, Mary 12 percent, and David 15 percent but I wish to clarify that she held most of it in trust for her late siblings (Lorna Laboso and Leonard Sang)and planned to hand it over when they were of age.”
The bank was put on the spotlight for advancing loans to a company without the approval of all the directors, and charging a property that was in the estate of a deceased person – Rebecca Laboso- and actively involved in a succession matter that is active in court.
