The employees who accuse CFC Stanbic for demanding more money than it lend to Karuturi owners say the South African based lender is responsible for the poverty that struck their families since Karuturi was placed under receivership, 3 years ago.
“We bring this matter to your attention due to a very peculiar sequence of events, leading to a very cruel outcome for us and our dependents, presented below: In 2012, CFC Stanbic Bank offered Karuturi Limited a loan of USD 6,590,000. After disbursing USD 4.04 million, CFC stopped the loan disbursal. When asked why by Karuturi, they gave no response. Due to this sudden stop in cash flow, the next installment payment was late,” read a statement presented to the Permanent Secretary at the National Treasury and copied to Central Bank Governor, Mr. Patrick Njoroge.
The statement goes on to say, “CFC took this as a cue to recall the loan and put the farm under Receivership. Karuturi then paid CFC 10% of the total loan amount (400,000 USD) as gesture of goodwill that they will repay the loan and to regain control of the farm, but to no avail. CFC took over Karuturi Limited’s assets.”
The employees also claims that Receiver managers appointed by CFC Stanbic Bank showed a loss, and borrowed from CFC Stanbic Bank to finance their loss making operations. “This continued for the duration of the Receivership of 23 months. In the meantime, the farm’s assets were deteriorated, production numbers were reported as lower than ever and the sales reported plummeted as well,” reads the statement.
CFC Bank is also blamed for continuing to lend to its Receivers money through an overdraft facility. “This led to the CFC appointed Receivers loosing over USD 16 million of the banks money: all in the pursuit to recover a USD 4 million loan for the bank.”
The employees also claim that the Receivers didn’t pay their wages on time and now have been left jobless with no compensation.
“We request the Central Bank of Kenya to look into the operations of CFC Stanbic bank to enquire who approved this misadventure on their part, spending USD 16 million to recover a loan of USD 4 million. Please help us with your expertise in the manner. We don’t want to stand ignored in the fight of CFC Stanbic Bank versus Karuturi Limited,” reads the employees’ plea to CBK governor.
