Equity Bank Kenya Limited has been blocked from adjusting interest rates on loans advanced to its former head of internal audit, who was sacked in October 2024 over a Sh1.5 billion cash loss, pending the determination of his case.
According to documents before the court, Mr Bildad Khaemba Fwamba borrowed Sh83 million from the bank between 2010 and 2023. While issuing the orders, High Court judge Agnes Kitiku said Mr Khaemba stood to suffer if the bank was allowed to increase the interest rates on the loans. Mr Khaemba has challenged his termination, saying it was not based on valid reasons.
He said the bank had sent him a letter on November 27, 2024, stating that his mortgage interest rates would be adjusted from six percent per annum, while the staff equity release loan would rise from eight percent per annum to 13 percent.
Justice Kitiku said Mr Khaemba would suffer if the properties charged to the bank as security are sold in case he is unable to service the loans because of the increased rates.
The bank, the judge ruled, would not be much affected “as it holds titles to the charged properties and the claimant continues to repay the advanced loans and interest at the contracted rebated interest rates.”
Noting that the bank had not said that Mr Khaemba defaulted in loan repayment, Justice Kitiku said Mr Khaemba had “satisfactorily demonstrated that he stands to suffer irreparable loss if the order sought is not granted.”
Milimani Law Courts.
Photo credit: File| Nation Media Group
Mr Khaemba said he was fired on October 9, 2024, following claims of fraudulent loss of funds at the lender’s salary processing department.
He said he was informed that the bank had opened an investigation into fraudulent Real Time Gross Settlement(RTGS) transactions on the bank’s salary processing platform, leading to a potential loss of substantial amounts. RTGS is a system for transferring large sums of money between banks in real-time on a transaction-by-transaction basis.
His dismissal letter had indicated that “several omissions or commissions, failure or negligence” linked to his role and responsibilities in the audit function were being examined as part of the investigations.
Mr Khaemba maintained that the allegations in the letter were vague and generalised in nature as they did not specify the alleged negligent acts.
He said he was employed by the bank in 2001. At the time, it was trading as Equity Building Society. He rose from the position of compliance manager to become the group chief internal auditor for Equity Group Holdings PLC.
He said that, during his service, he was transferred on several occasions, promoted, seconded, and designated within the bank as well as within the group in various positions.
The auditor said that during the incident, he was on secondment to Equity Group Holdings Ltd, and reporting to the group director.
Mr Khaemba said he had only been seconded to the Kenyan Unit for two months from February 15, 2024, up to April 15, 2024.
During the said period, Mr Khaemba said, his focus on the Kenyan Unit was on the preparation of the board audit committee meeting, which was to be held on March 5, 2024, and other strategy preparations.
In its submissions before the court, the bank said Mr Khaemba was reassigned to Equity Bank Kenya from February 15, 2024, as the director of internal audit and was responsible for appraising the adequacy of internal controls through review of information system controls and other control mechanisms.
Bildad Khaemba was fired in 2024 after the Sh1.5 billion cash loss.
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He was also required to periodically report to the board audit committee on significant issues related to the bank’s risk management, control, and governance processes, as well as resultant management action plans.
The lender said the termination was done by the law, due process was followed, and there were valid grounds for his sacking.
Equity Bank added that Mr Khaemba was not entitled to rebated interest rates, which are fringe benefits only applicable to those in employment.
The lender said granting an injunction would amount to reinstatement of benefits that are only due to employees.
Further, the lender said Mr Khaemba had not shown that he is not able to pay interest at commercial rates or has any difficulties in paying the interest at such rates, which he is obligated to pay and has been paying.
