Stanbic Bank Kenya and its Chief Executive Officer Joshua Oigara have moved to the High Court to challenge summons issued by the Directorate of Criminal Investigations (DCI) in a long-running Sh722 million dispute involving aviation company Air Afrik Aviation Limited.
In a petition filed before High Court Judge Chacha Mwita, the bank argues that the summons are unlawful, abusive, and meant to interfere with an ongoing commercial dispute that has already been addressed by the financial regulator.
Summons Issued While CEO Attended State Function
According to court documents, the Banking Investigations and Fraud Unit (BIFU) summoned Oigara on a day he was attending the Inua Biashara MSME Exhibition at the Kenyatta International Conference Centre, alongside President William Ruto.
The DCI informed the bank that it was investigating an alleged offence of fraudulent false accounting.
Stanbic contends that the summons relate to matters that were previously investigated and closed, and that the DCI is now being used to advance a dispute that is already before the Commercial Court.
CBK Had Cleared the Bank — Stanbic Tells Court
Stanbic’s lawyer, Kamau Karori, told the court that Air Afrik had earlier lodged a complaint with the Central Bank of Kenya (CBK) over the same transaction.
However, he said the regulator dismissed the complaint, finding that the bank acted lawfully when it reversed funds that had been erroneously credited to the aviation firm.
Karori further argued that Air Afrik subsequently filed a civil case before Commercial Court Judge Nixon Sifuna, which is currently pending determination.
“The alleged offence is premised on false, unjustifiable and erroneous presumptions that were previously investigated. The CBK did not find any wrongdoing on the part of the bank, and the second petitioner was not an employee of the bank at the time of the transaction,” Karori submitted.
He added that invoking criminal investigations in the circumstances amounts to an abuse of process.
Dispute Traced to 2016 South Sudan Transaction
In a supporting affidavit, Stanbic legal officer Janet Wanjohi explained that the dispute arose in February 2016, when Air Afrik was a customer of Stanbic’s South Sudan branch.
She stated that Stanbic received a credit advice from the Bank of South Sudan indicating that its settlement account had been credited with USD 7.2 million on behalf of Air Afrik.
Three days later, Stanbic credited the aviation firm’s account after deducting its commission, following which Air Afrik withdrew about Sh101 million.
However, Stanbic later realised that the funds had not actually been remitted by the Bank of South Sudan.
Bank Reversed Funds After Discovering Error
Wanjohi told the court that the bank froze further withdrawals and notified Air Afrik that the funds had been credited in error and would be reversed.
“The bank mistakenly credited the interested party’s account with its own funds. It therefore placed a ‘post no debit’ instruction to prevent further withdrawals and informed the interested party that the unutilised balance would be reversed,” she stated.
She added that several meetings and correspondences were held between Stanbic, Air Afrik, and the Bank of South Sudan in an effort to resolve the matter, but Stanbic maintained that it had no obligation to pay Air Afrik from its own funds.
Fresh DCI Summons Issued
Despite the CBK’s earlier decision, Stanbic says the DCI has now issued fresh summons requiring Oigara to appear at its Kiambu Road headquarters to record a statement over the eight-year-old dispute.
The bank argues that the criminal process is being used to pressure it in the commercial litigation, and is seeking orders to quash the summons.
The matter is pending before the High Court.