Once upon a time, when the likes of Ketan Somaia and Kamlesh Pattni were running this town, the other notable person was Ajay Shah, one of the founders of Trust Bank Ltd.
Shah was in a class of his own. Flamboyant, rich and well-connected, he was the blue-eyed-boy of the Kanu era — he turned everything he touched into gold.
Last month, in a little-publicised case, the Court of Appeal threw out an 18-year-old case in which Trust Bank had sued Shah for hatching a scheme to defraud the bank of $2.7 million and Sh267 million.
Like Pattni before him, and after long drawn out court cases, Shah is walking away into freedom, albeit slowly.
He had also sued the Deposit Protection Fund for damaging his reputation after taking over his bank and wrongly accusing him of fraud.
When Shah reigned, Parliament had been told that he had used the influence of the late Kariuki Chotara to gain Kenyan citizenship after arriving in the country in the early 1980s on a work permit, and that, on December 1, 1986, he became a Kenyan.
Parliament was always intrigued by how a man who was earning Sh3,000 when he arrived had grown into a millionaire after just a few years.
To cut the long story short, Shah had opened a bank.
His bank was a title sponsor of the Safari Rally in its final years and President Daniel Moi would be there to flag off the cars.
The bank was a popular sponsor of table tennis, too, but there is little to write home about on his management style.
Under Shah, Trust Bank was put under statutory management by the Central Bank on September 18, 1998 and it went down with billions of depositors’ money.
What happened might never be known and the Court of Appeal has rendered its view on this matter. We also don’t know who is to blame, and we might never know.
In one of the remaining cases, three Court of Appeal judges — William Ouko, Gatembu Kariuki and S. ole Kantai — ruled: “No proof was rendered to show that (Ajay Shah and his co-accused Praful Shah) used their positions in (Trust Bank) and using Trust Agencies Limited … to defraud the (bank).” The cases against Trust Bank insiders have been collapsing like dominoes.
It all started on May 30, 2013 when High Court Judge Eric Ogola found the two former executive directors of Trust Bank — Shah and Praful Shah — “guilty of misfeasance and breach of trust”.
He ordered them to pay Sh1.5 billion to the then Deposit Protection Fund “being the amount due in the account of Trust Capital Services Limited”, a company the two controlled.
They had also been found guilty of allowing the company to overdraw its accounts at the bank “without proper security” to the tune of Sh241 million.
The judge had established that, at the time the bank was wound up, its business was carried out with the intent to defraud creditors and for other fraudulent purposes, and that the two former directors were parties to the scheme.
According to the liquidator, Trust Bank lost Sh241,442,376 within a span of seven days in September 1998 through an account not registered in the bank but which was being operated by Shah and Praful.
He said: “It is evident that money was withdrawn through Trust Capital Services without sanction of the bank through an account which did not exist. What worries most is how the massive withdrawals were done within a space of seven days.”
Following this ruling, whose import was that individuals bore the liability of the companies they had invested in, Shah went to the Court of Appeal and on June 17, 2016 the order of the trial court was not only set aside but also all its consequential orders. That meant Shah was free.
The appellate court had found that the matter was “time-barred”, stating: “We are of the considered view that the cause of action by Deposit Protection Fund against (Ajay Shah) … was commenced more than six years from when the cause of action arose on September 16, 1998.”
And finally, it said that the Sh241 million — said to have been overdrawn without security — “was never lost or stolen … Deposit Protection Fund Board bore the legal and evidential burden to prove loss of Sh241,442,375.80 but did not discharge it.”
Last month, another of the pending Shah case was also dismissed. It was an interesting case that was badly crafted — perhaps deliberately.
In the case, Trust Bank Ltd had sought to recover $2,693,258 and Sh266,888,741 plus compound interest, general damages and costs from Shah and three employees of the bank.
It claimed that the four had allegedly embezzled the money through fraudulent schemes.
Ironically, Trust Bank had not sued the company that had taken the money — a loophole that saw the entire case collapse dramatically.
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