A court has ordered Absa Bank Kenya to compensate a couple over Sh234 million over the fraudulent sale of their shares in various companies.
In his judgement, Justice Alfred Mabeya noted that a valuation report showed that as per the Nairobi Securities Exchange data, the current market value of the couple’s shares is Sh231,188,156.
The plaintiffs were also awarded interest and costs of the suit.
Justice Mabeya further observed that when the couple—Stanley Mwangi Gachungu and Bilha Waruguru Mwangi—bought the shares, they expected to benefit from accompanying goodies, like dividends, bonuses and interest.
“The value given to shares is not only in the number of shares alone, but the whole intrinsic value carried by that one share. When the plaintiff came to court to seek justice for their shares, they did not only look at recovering the actual number of shares lost but those shares together with all the benefits that had been lost,” he stated.
In 1991, Mwangi and his wife used the shares’ certificates in more than 10 firms to obtain loans from the lender with which they operated a current business account.
They signed blank transfer forms that they left under the custody of Absa Bank.
Upon fully repaying the loan, the couple did not request the release of the share certificates as they had hoped to use the shares to secure more loans with the bank.
In court papers, they disclosed that they used to run a meat-roasting joint and purchased the shares as a plan for their retirement.
However, in 1998, they discovered that they no longer received dividends from their shares.
They later rudely found out that Absa had sold their shares to companies including East African Breweries Plc (EABL) and BAT Kenya.
But this is just the tip of the iceberg.
In the last year, endless scandals coupled with a sharp deterioration of services have marred the reputation of Absa Bank Kenya.
Leaking of client’s sensitive information
In November 2022, we informed our esteemed readers that a Mombasa High Court ordered the financial institution to pay a transport firm Sh1.5 billion as compensation for leaking its confidential information to third parties; an act of financial sabotage.
New Mega Africa Ltd filed the case, in which it claimed billions for suffering losses due to blatant negligence.
The company transports clinker from Kenya to Tororo, Uganda for the manufacture and processing of cement and other related products within the East African region.
Its director David Abai argued that the leaking of the firm’s financial statement scared its lenders, who refused to lend the firm money on an account that it had gone broke and lacked the financial capability to service loans.
Following the leakage, the firm’s creditors and other suppliers descended upon it, seriously interrupting the business operations to the extent of almost grounding it.
This unfortunate incident occurred simply because Absa failed to maintain the secrecy of the client’s account by printing its financial statements without authority or consent and sharing the same with strangers without its express consent.
A month after we extensively covered this grave injustice, more of the bank’s hidden skeletons were unearthed.
Copyright infringement
This time around, Absa’s legal saga with a local trader over possible infringements of user rights found its way to the floor of the National Assembly through Sabaoti MP Caleb Amisi.
Mr. Amisi noted that Barclays changed its name to “Absa Bank Kenya” despite the previous registration of a similar title “Absa Kenya Limited” and the issuance of a certificate of incorporation.
The Absa name was registered in 2007 for a period of ten years and was renewed in 2017 for another ten years.
According to records from Registration of Business Services at the State Law Office, Absa Kenya Limited was registered on November 17, 2006, and the company is active to date.
Further, the website absa.co.ke was registered on September 13, 2005, and has been active ever since.
After announcing the decision to change its holding company name from Barclays Africa Group Limited to Absa Group Limited, Kenyan entrepreneur Edward James Njoroge Njuguna went to court, alleging infringement of the trademark.
In his submissions, Njoroge said that his firm, Absa Kenya Limited, had suffered greatly because of the alleged infringement and its trading partners had canceled various transactions.
Poor servcies
Aside from the endless legal troubles, customers have also been criticizing Absa’s deteriorating services.
During a spot check on social media, this blog discovered a wave of complaints directed towards their technical team, which is blamed for gross incompetence.
The myriad of inconveniences range from a malfunctioning USSD system, issues with internet banking and extremely slow services accompanied by poor communication.
Simple tasks like asset finance and card applications can take up to four weeks to be done.
As noted in a previous protest letter which we highlighted on this blog, customers have to bribe corrupt officials at the financial institution to fast-track their requests.
“ABSA Bank should stop selling customer information and bank statements, they should stop asking for kickbacks and bribes from small businesses to get loans,” the letter dated Friday, 11th November 2022, reads in part.
Adding: “The likes of Sophie Omondi, Wycliff Makori and senior bank staff should be sent home. Oath to secrecy especially to banking staff should be paramount.”
The bank’s CEO Yusuf Omari has been on a massive PR drive, paying off local media outlets to sing his praises and shift attention away from the glaring ills at the company.
Before his promotion to the top spot, Mr Omari previously served as the COO, and oversaw some of the worst scandals at the bank during his tenure.
Acting alongside the then-CEO Jeremy Awori, they facilitated Dr Fred Matiang’i’s money laundering project for the Ruaraka Land scam, where up to Sh2bn was deposited to the bank and withdrawn into various accounts within hours.
The duo also helped criminals to hide Sh17bn in fake currency, which was nabbed by Flying Squad officers at the bank’s Queen’s Way Branch in 2019.
A year later, the bank was suspended from forex trading by the Central Bank for engaging in money laundering.
In a statement, CBK said Absa bank had flouted anti-money laundering rules after its management failed to provide information about some specific foreign exchange trades that it conducted in March 2020.
During the suspension period, the financial regulator said, Absa Kenya could not transact in the interbank foreign exchange market.
The bank was also ordered to reverse the market positions that were created as a result of the flagged transactions.
During Awori’s tenure, Absa Kenya was linked to various sexual scandals, tribalism, and underpayment of employees.
His successor, Mr Omari, seems to be happily extending this toxic culture, on top of monumental fraud which goes on unchecked by the toothless CBK.
How long will this keep happening? How much is enough?
We vow to keep highlighting these matters until those responsible are finally held accountable.
