Cut roses producer Karuturi Global Limited has filed a claim of Sh12.9 billion against Stanbic Holdings in line with Justice Tuiyot’s ruling given on 19 January 2018.
Karuturi filed an appeal against CFC Stanbic Bank’s auction of its movable property in May this year for acting in bad faith when the auction began. The flower firm had been under receivership for four years for defaulting on a loan from Stanbic Bank.
Allegations Against Stanbic Bank
Karuturi has submitted more evidence that further solidifies its appeal case against the bank. The filing of the amended plaintiff accuses NSE-listed Stanbic Bank of fraud and mismanagement of Karuturi during receivership.
The amendment includes sections of a Deloitte forensic audit report which shows that Stanbic Bank and its receiver managers understated flower production sales worth Sh835 million and failed to account for flower stems valued at Sh169 million produced during the high season of February 10, 2014, to May 6, 2016.
Furthermore, the bank is alleged to have hidden local flower sales of Sh154 million which would have given KRA revenue amounting to Sh23 million. The bank also allegedly suppressed foreign exchange by Sh322 million and failed to account for accrued VAT refunds by Sh160 million.
Other allegations directed towards CFC Stanbic state that the bank extended itself credit facilities of Sh674 million during receivership and for failing to pay Karuturi’s former workers.
The 3,200 workers have expressed their complaints in writing to various authorities including COTU Secretary General and Central Bank Governor, Directorate of Criminal Investigations. Additionally, the workers have filed a criminal case against Stanbic bank for embezzlement, falsification of accounts resulting in loss of service benefits to the workers, among other reasons. The matter is under investigation as the workers demand the arrest of the bank’s managers.
Stanbic is also accused of destroying guarantors’ biological assets worth Sh2.6 billion.
Wrongfully Accused of Defaulting?
According to Karuturi, CFC Stanbic had no right to appoint receivers as the firm had not defaulted the Sh259 million loan from the bank.
“The plaintiffs, in good faith and in fulfilment of their contractual obligations, nevertheless substantially repaid the term loan and had as at the date of filing this suit paid USD734, 443 (Sh73million),” Karuturi said in a statement.
The firm further argues that by February 28, 2014, it further reduced the loan by repaying Sh40 million.
Karuturi now questions how the bank spent Sh1.6 billion during receivership to recover Sh400 million.
The Defendants
The amended plaintiff has listed other defendants besides Stanbic namely PwC Kenya Director Muniu Thoithi, former PwC country manager Kuria Mucheru, and receiver managers Kieran Day and Ian Small appointed in 2014.
The appeal case will be heard on July 9, 2018.
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